Do you want to learn how to minimize your personal income tax return? Do you live in Mississauga Ontario Canada and wonder if you're paying too much tax? If so, then this interview with Allan Madan, a local Tax Accountant with offices in Mississauga and Oakville of Ontario Canada, is for you! Read on to learn what this income tax return preparation expert has to say to Canadian individual tax payers and discover his advice for "The 5 Best Ways to Minimize Personal Income Tax in Canada".
1. Deduct all employment expenses
The number 1 way to minimize personal income tax in Canada is to deduct all employment expenses possible.
As an employee, you can deduct the following expenses on your return:
- Travel expenses
- Cost of supplies (including cell phone air time and long distance calls)
- Salary paid to an assistant
- Office rent
- Union and professional dues
- Legal fees incurred to collect salary, wages, retiring allowances, severance payments, and child/spousal support payments
- Car expense (fuel & oil, maintenance and repairs, parking, toll charges, insurance, lease costs, tax depreciation)
Before you can deduct the above employment expenses, you must meet two conditions:
- You are required to pay for employment expenses in order to carry out your employment duties and this is stated in your employment contract; and
- Your employer must complete form T2200, Declaration of Conditions of Employment.
Allan Madan, advises you discuss this tax strategy with your accountant.
2. Purchase mutual funds and similar investments jointly with your spouse
"The number 2 way to minimize personal income tax in Canada is to own income producing investments jointly with your spouse," says Allan Madan.
By doing so, 50% of the income from the investments will be included in your taxable income and the other 50% will be included in your spouse's taxable income. This is much more effective than including 100% of the investment income in only one spouse's taxable income.
3. Write-off fees to prepare the return
The number 3 way is to deduct preparation fees. Fees paid to prepare your income tax return can be deducted in the following circumstances:
- If you own investments, such as mutual funds or shares
- If you own a rental property
- If you are self employed
Make sure that you ask for a receipt from your accountant or consultant to support deduction claim.
4. Claim home office expense
"The number 4 way is to deduct home office expense", says Allan Madan. As a self employed person, you can deduct a portion of the following expenses related to your home:
- Insurance
- Property taxes
- Mortgage interest
- Condo fees
- Maintenance and repairs
- Utilities
- Rent (if you do not own)
The percentage of the above expenses that can be deducted is calculated as follows: (Total square feet of home office / Total square feet of home) x 100%
5. Make business purchases towards the end of the year
"The number 5 way to minimize personal income tax in Canada is to make business purchases towards the end of the year, if you are a business owner," says Allan Madan.
The reason being is that those business purchases will be tax deductible in the current year, and the tax refund resulting from those purchases will be received when you file your tax return in the following year. However, if you wait to make those same business purchases until the beginning of next year, you will have to wait one full year to receive the related tax refund.
Allan Madan advises, you speak with your tax consultant, before undertaking this strategy.
This interview was with Allan Madan, a Tax Accountant, and preparer of Income Tax Returns in Mississauga. Allan often challenges himself to find new answers to the question, "How to minimize personal income tax in Canada?" Allan enjoys working with individuals, business owners and investors on accounting and tax matters. His accounting firm is Madan Chartered Accountant, which has offices in Mississauga and Oakville in the Greater Toronto Area of Ontario Canada.
Author Resource:-
Phillip Maguire interviews and writes about exemplary products and professional services in Canada such as professional Mississauga Accountants like Allan Madan. To learn more, see: Tax Accountant Mississauga and Income Tax Return Mississauga today.
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