Tax filing season—a few last-minute tips It is personal income tax filing season once again. The following are a few last-minute tips to help you minimize your tax burden:
File your tax return and pay your taxes on time: If you owe tax, you must file your tax return before midnight on April 30, 20141 or risk unnecessary interest and penalties. If you are self-employed, you have until June 15, 2014 to file your income tax return, but any taxes owing must still be paid by April 30.
Maximize tax credits for charitable donations: For 2013, the federal credit is 15% on the first $200 of donations, and 29% on the rest. If you and your spouse2 collectively donated more than $200 last year, the tax credit will be larger if only one of you claims the entire amount. There is now also a new “super credit” for first-time donors. If you and your spouse have not claimed any charitable donations since 2008, you are eligible to claim this credit which provides for an additional 25% tax credit on up to $1,000 of donations. This new super credit can only be claimed once in the 2013 to 2017 tax years.
Claim capital losses to offset capital gains realized in the past three years: If you realized a capital loss in the current year in excess of current year capital gains, check to see if you reported a capital gain in any of the three previous years. Capital losses can be carried back for up to three tax years and forward indefinitely.
Don’t forget about pension income splitting: If you’re receiving certain pension income, you’ll be able to allocate up to half of that income to your spouse. To qualify for pension income splitting, the pension income must satisfy certain criteria. For example, although it includes lifetime annuity payments under a registered pension plan, it doesn’t include payments under the Canada Pension Plan (CPP) or Old Age Security (OAS) payments.
Don’t forget your foreign reporting requirements: If you’re a resident of Canada, you must declare your income from all sources—Canadian and foreign. In addition, if the total cost of your specified foreign property exceeds CAN$100,000 at any time in 2013, you have to report certain information about your foreign investments on your tax return (Form T1135). The rules are complex and there can be significant penalties for failing to file the form or include complete information. For 2013 reporting only, the filing deadline is July 31, 2014.
1The CRA has extended the 2013 filing deadline to May 5, 2014.
2Any reference to "spouse" also includes a common-law partner.
April 14, 2014