Tax Deductions Most Frequently Missed
By Ross A. Libbey, BBA, CA
Everyone should pay their taxes, but nobody wants to pay more than they have to. Every year, many taxpayers overpay simply because they fail to claim all of the common deductions and credits they are entitled to. Before you submit your next return, check the following list. It represents the most frequently over-looked tax breaks available to typical, working Canadians.
Equivalent-To-Spouse Credit
Taxpayers can claim the equivalent-to-spouse credit if they were single, divorced or separated and supported a qualified relative who lived with and was dependent on them at any time during the year. The equivalent-to-spouse credit is calculated in the same way as the spousal credit. The following restrictions apply:
- If the dependent is not a child, he or she must be a Canadian resident.
- If a child is claimed as dependent, he or she must have been under 18 years of age at least in part of the tax year, unless the child is mentally or physically infirm.
- Only one dependent can be claimed under the equivalent-to-spouse credit.
- Only one claimant is entitled to credit with respect to any particular dependent.
- The credit cannot be claimed in cases where the taxpayer is subject to court-ordered support obligation.
To be eligible, it is not necessary that the dependant have lived with or been supported by the taxpayer for the entire year.
Charitable Donations
The CRA allows a federal tax credit on charitable donations of 17% for the 1st $200 and 29% on amounts over $200 up to a maximum of 75% of net income. The corresponding provincial tax credit for Ontario residents is 6.05 per cent of the first $200 and 11.16 per cent of any amount over $200.
Spouses can pool their contributions to maximize the tax break. Furthermore, contributions need not be claimed in the tax year they were made, but can be carried forward for up to 5 years. Donations under the $200 limit can be accumulated and claimed in later years to qualify for the higher credit allowance.
