Here are the best ways Canadians can get a bigger tax refund this year

Tax season is upon us.

If you’re dreading filing your taxes this year, the motivation you might need is the possibility of getting a bigger tax refund.

With inflation and the skyrocketing cost of living, this extra money is needed by the government more than ever.

So how do you increase your tax refund? By lowering your taxable income and reducing as much as possible the tax debt you owe to the government.

That’s where tax deductions and credits come in. With so many choices, navigating what to focus on can seem overwhelming.

Do not worry! Daily Hive spoke with financial planner and paid accountant Ed Rempel about the best ways to maximize your tax return.

First, what information should you have on hand before filing your taxes?

Before deciding which tax deductions and credits you want to claim, Rempel says you need to make sure you have the proper receipts.

Of course, you’ll need the usual T4 and T5 tax returns for your income, but the savings come from deductions and credits that likely won’t come with supporting documentation.

“It’s beneficial for you to collect all deductible expenses and have receipts or receipts for them,” says Rempel. “They should have receipts for donations and medical care, but need to track certain expenses like work-from-home expenses.”

He adds that it’s also helpful to keep track of your carried forward balances or deductions and credits from your last tax return that you haven’t claimed.

“A good number can be claimed in the years to come,” he explained.

Tax credit vs tax deduction

Before we dive into the different types, it helps to understand the difference between a tax credit and a deduction.

Simply put, deductions reduce the taxable portion of your income, while credits reduce taxes owed.

Which guarantees you a bigger tax refund, says Rempel, if your income is over $50,000 a year, tax deductions are your best friend.

“The main difference is that tax deductions reduce your taxes based on your tax bracket, while tax credits reduce your taxes based on the lowest tax bracket, which is around 20% “, he explained.

He gives the example of a person with an annual income of $80,000 who would be in the 30% tax bracket.

“A $10,000 tax deduction lowers your tax by $3,000, while a $10,000 tax credit lowers your tax by $2,000,” he said.

He adds that many state benefits are based on your taxable income. So if you apply for the Canada Child Benefit (CCB) as a parent, you can get a larger refund if you have tax deductions.

The best deductions and credits to maximize your tax return

Contribute to your RRSP

“The higher the income, the better it works,” Rempel said.

For example, if your income is over $162,000, your maximum deposit for 2022 is $29,210. Since you are in the 45% tax bracket, you should get a tax refund of $13,000.

If you’re not sure how much to contribute to your RRSP to get the most bang for your buck, Rempel says it’s based on:

  • RRSP contribution required to reach your retirement goal
  • Contributions required to maximize your life RRSP space
  • How much you can contribute to your current marginal tax bracket
  • Your current RRSP contribution limit (which you can find here)
  • Your available money (or how much you could borrow)

Use this RRSP calculator to estimate the amount of your tax refund.

claim moving expenses

If you got a new job last year and had to move at least 40 km closer to your new place of work, you can deduct all your moving expenses.

Yes, this means you can claim the costs of flights, moving, selling your property, breaking a lease or mortgage and temporary accommodation, which can add up to a lot.

Claim self-employment or homework expenses

If you own your own business and work from home, you can deduct expenses related to working from home. You can also claim car travel expenses, but be sure to keep this information.

If you are not self-employed but still work from home, you can still claim these costs. Last year, eligible employees received up to $500 if they worked from home for 250 days or less.

There are no updates on this franchise this year.

ask for donations

If you donated to many causes this year, you might get some good karma. Rempel says that after the first $200, you can recoup between 40% and 50% of donations each year.

Apply for childcare costs and family allowances

You can deduct child care expenses such as daycare, summer camps, and child care providers such as nannies as a deductible.

As Rempel said, government benefits like CCB are based on your taxable income, so claiming a child care expense deduction could help you get a bigger refund.

claim medical expenses

Don’t throw away your bills and prescriptions for dental exams, no need to buy gluten-free products if you have celiac disease, and insulin pens! Medical expenses like these can be claimed as non-refundable tax credits.

Subtract the interest on the loan to invest

“Borrowing money for investments can be the best long-term wealth-building strategy for the right people if done correctly,” Rempel said.

If you borrow a large sum of money to make investments, the interest can essentially be deductible and earn you a huge refund.

balance brought forward

Didn’t you claim tax deductions or credits from tax year 2021? no perspiration

Rempel says many of them can still be claimed years later.

As an example, he cites RRSP contributions that you were unable to deduct last year. You can factor this into your tax deductions this year for a larger refund.

For college students, Rempel says tuition is capped based on income, so you may have unused credit to claim.

If you are self-employed, you can deduct the cost of working from home based solely on your use of the space to generate business income.

However, Rempel says you can defer this to claim next year’s business income deduction.

Charitable donations are capped at 75% of your income, but can be deferred for up to five years, depending on the financial advisor.

Finally, moving expenses can only be deducted based on your income for that year, but if you started later in the year and didn’t earn enough, you can claim them back. Next year.


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Canada’s emergency wage subsidy ‘really was a blank check for businesses’: Canadians for Tax Fairness

Some of Canada’s biggest companies have received a pandemic grant to keep their employees on the payroll, but a new report reveals that in many cases these big companies have actually cut jobs while lining their pockets shareholders.

These findings, from a report by Canadians for Tax Fairness, should irritate Canadians and underscore the double standard, said NDP Finance Critic Daniel Blaikie. Canadian National Observer in an interview. It is “outrageous” for the federal government that the Canada Revenue Agency (CRA) is “chasing” some people who applied for and received financial assistance through emergency programs like the Canada Response Benefit. emergency (CERB) to repay the money, he added. .

Now the federal government is unwilling to grant any kind of amnesty to low-income people who have CERB debt, Blaikie said.

Get daily news from Canada’s National Observer

“I think it’s a really big difference in how people are treated,” he said. “The richest and most fortunate are treated with kid gloves, while the most desperate and with the least repayment are treated like criminals.”

During the first year of the COVID-19 pandemic, the federal government introduced a number of support programs, some aimed at Canadians – including CERB – and others aimed at businesses, the most significant of which was the Canada Emergency Wage Subsidy (CEWS). . Last May, the CRA notified more than 250,000 Canadians that they were not eligible for the CERB or related benefits and that they had to repay the money received.

Although “wage subsidy” is in the title, the terms for businesses to receive the CEWS were broad and it was “truly a blank check for businesses,” the report said.

Of 74 public companies that avoided paying at least $100 million in taxes, half received funds from the CEWS, Canadians for Tax Fairness found. The vast majority of companies examined in the report have at least one subsidiary in a tax haven, pay dividends to shareholders and engage in share buybacks. More than half of companies reduced their total workforce in 2020 despite the federal subsidy.

The study only looks at the largest public companies that avoid taxes, so these results may be “just the tip of the iceberg,” said report author DT Cochrane, an economist at Canadians for Tax Fairness.

“Most of our criticism is directed at the government for not having the right rules in place to ensure this is not abused and not researching how this money was actually used,” Cochrane said. Canadian National Observer. Going forward, corporate support programs like CEWS should publicly disclose the amount and duration of support, prevent recipients from paying bonuses to executives and shareholders or increasing dividends, have a way to recoup misappropriated funds and to support large companies only on a case-by-case basis. base, the report said.

Of the 37 public companies analyzed by Cochrane, 11 are involved in the oil and gas sector, including Imperial Oil, Enbridge, Suncor, TC Energy and Canadian Natural Resources Ltd.

Some of Canada’s biggest companies have received a pandemic grant to keep their employees on the payroll, but a new report reveals that in many cases these big companies have actually cut jobs while lining their pockets shareholders.

Despite a slump in sales early in the pandemic, these businesses were “extremely profitable,” Cochrane said. Suncor and Imperial Oil more than quadrupled their second-quarter net profits from 2021 to 2022, and Canadian Natural Resources Ltd. more than doubled their net profits over the same period.

“They have the ability to support their employees without accepting these government grants,” Cochrane said.

Blaikie wants the federal government to make it clear which companies received how much money so that accountability can be held.

The report recommends measures to reclaim corporate tax revenue for the common good, including a windfall tax that the NDP has long called for. The federal government has proposed a one-time tax of 15% on profits over $1 billion for big banks and insurers for fiscal year 2021, but there is no indication that a one-off tax is on the horizon in all sectors.

The 2022 Fall Economic Statement also proposed a 2% tax on corporate stock buybacks, which the federal government says would increase federal revenue by about $2.1 billion over five years to from 2023-2024.

Taxing a percentage of what companies report to shareholders is another possible solution proposed in the Canadians for Tax Fairness report. Recommendations also included increasing the corporate tax rate and closing tax loopholes.

It’s no secret that the federal government must invest in a myriad of sectors of the economy to meet Canada’s climate goals; a massive transformation of industries and energy systems is needed to reduce the pollution responsible for global warming.

A just national transition to a low-carbon economy will be “incredibly costly”, Cochrane said. “When you inject money into the economy, it inevitably ends up in company coffers for all sorts of reasons.

“We need a fairer tax system to ensure that the government can invest where it needs to invest.

Natasha Bulowski / Local Journalism Initiative / Canadian National Observer


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Tesla raises Model Y prices after expanding electric vehicle tax credit

Tesla (TSLA) takes the opportunity to impose price increases thanks to Uncle Sam.

On Friday, the IRS issued new guidance that changes the definition it uses to classify vehicles as SUVs, using the wording used by the EPA for electric vehicle tax credits. This then allowed many vehicles, such as certain versions of the Tesla Model Y, Volkswagen ID.4, and Cadillac LYRIQ, to use the higher MSRP price cap of $80,000 to exclude vehicle tax credits. electrical.

Like clockwork, Tesla has hiked the price of the long-range Model Y, currently the cheapest Model Y available, from $1,500 to $54,990. The Model Y Performance model also increased by $1,000 to $57,990.

Of course, these new prices are still significantly lower than what the vehicles cost before the massive price cuts Tesla initiated in early January, which the company used to stimulate demand (and also to address loopholes in eligibility for the electric vehicle tax credit to fix the 5 -model Y passenger vehicle versions).

Tesla Model Y price as of February 6, 2023

Also somewhat surprisingly, Tesla has dropped the price of the Model 3 sedan, with the RWD version of the Model 3 dropping from $500 to $43,490.

With higher price caps coming into play with new IRS rules, and CEO Elon Musk saying demand was outstripping supply on Tesla’s conference call last month, Tesla seems to have a lot more leeway. to set prices in this way since the $7,500 fee. credit is still at stake.

“[As] Tesla lifted the Model Y [prices] around $1,500 with the $55,000 cap no longer applicable and ultimately based on robust demand (2x production levels), we could see modest price increases in the coming months, giving Tesla more flexibility with the tax credit now in place,” Wedbush analyst Dan Ives said in a note today.

While some expect an EV price war given Tesla’s steep price cuts earlier, that scenario has not materialized. Ford was the only manufacturer to significantly lower the prices of its Mustang Mach-E SUV, a direct competitor to the Model Y. GM and Volkswagen refused to lower the prices of their electric vehicles.

The bottom line for consumers considering electric vehicles, and a Tesla Model Y in particular, would be to place an order now before prices are hiked again.

Tesla shares are higher, up more than 3% in early trading today and 60% year-to-date as demand appears to be improving here and around the world.

Pras Subramanian is a reporter for Yahoo Finance. you can follow him Twitter and further instagram.

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#Tesla #raises #Model #prices #expanding #electric #vehicle #tax #credit

Rishi Sunak fired party president over tax dispute

A demonstrator holds a placard criticizing Nadim Zahavi, outside 10 Downing Street in London on January 25, 2023. Rishi Sunak, the chairman of the Conservative Party, was sacked on Sunday. Toby Melville/Reuters

In a letter made public, the prime minister cites “serious breaches of the ministerial code” in support of his decision.

Downing Street announced on Sunday that British Prime Minister Rishi Sunak has sacked minister without portfolio and Conservative Party chairman Nadim Zahawi over a breach of the cabinet code linked to his tax disputes.

After an independent investigation,It is clear that there has been a serious breach of the Ministerial Codewrote the head of government in a letter published by Downing Street.Accordingly, I inform you of my decision to remove you from your position in Her Majesty’s Government.Rishi Sunak continued.

By sacking Nadim Zahawi instead of asking him to resign, Rishi Sunak wants to assert his authority, which he promised upon his arrival in Downing Street”Integrity, Professionalism and AccountabilityBritain’s prime minister on Monday instructed his independent ethics adviser to investigate whether Zahavi, who sits in the cabinet, violated a multi-million pound settlement paid to settle a dispute with tax authorities. Violated the cabinet code in respect of

neither declared guilty of the tax investigation of which he was the subject, nor updated his declaration of interests

Nadim Zahavi settled his tax debt with a penalty last year during his short-lived stint as finance minister in the government of former Prime Minister Boris Johnson. Then, with the arrival of Rishi Sunak in Downing Street in late October, he became chairman of the Conservative Party and minister without portfolio in the government.

Ethics consultant Laurie Magnus concluded that Nadim Zahavi should have declared the tax investigation he was the subject of and updated his declaration of interests after his dispute with the tax authorities was resolved. After 13 years in power, the Conservatives have seen their reputation tarnished by conflict-of-interest cases in recent years, fueled by allegations of corruption from the Labor opposition, which is far ahead in the polls.