How can I minimize my income taxes in Canada? I'm sure you've asked yourself this question before, especially when it's time to file your personal income tax return. To get the best answers, I have asked a tax accountant named Allan Madan.
Allan Madan of Madan Chartered Accounts is an expert provider of income tax preparation in Oakville. In the following interview, he shares with us, the best 5 ways to minimize your taxes today which are as follows.
1. How to minimize taxes tip one: Purchase Tax Efficient Investments
Choosing investment products that will produce a high rate of return is obviously important. However, making sure the investment products that you purchase do not attract a large amount of tax is equally important, but is often overlooked by investors.The tax rates applicable to the different types of investment income are listed below (based on an individual in the highest tax bracket):
* Interest - 46.4%
* Ineligible dividends - 31%
* Eligible dividends - 25%
* Capital gains - 23%
* Return of capital - 0%
Interest bearing investments, such as bonds and GIC's, result in the highest rate of tax, where as investments, such as mutual funds, that have a return of capital component result in no tax whatsoever.You should consult with a financial advisor and a provider of income tax preparation services in Oakville to make sure your retirement portfolio is made-up of tax efficient investments.
2. How to minimize taxes tip two: Contribute to Registered Retirement Savings Plan's (RRSP's)
"The second way to minimize taxes in Canada is to contribute to your RRSP's," says Allan Madan, provider of income tax preparation services in Oakville. RRSP's have two major tax benefits. Firstly, contributions made to a RRSP are tax deductible, which will greatly reduce the amount of personal taxes that you have to pay. Secondly, any investment income or gains earned inside a RRSP are not subject to tax. As a result, you will end up with a much larger retirement portfolio if you invest in RRSP's, than if you only bought non-registered investments.
See the website links at end of article for more pertinent information.
3. How to minimize taxes tip three: Write-off employment expenses
"The third way to minimizes taxes in Canada is to write-off employment expenses," says Allan Madan, provider of income tax preparation services in Oakville.The following employment expenses are tax deductible:
* Car expenses, if you are required to use your car for your job
* Home office expenses, if you are required to work from home
* Cell phone
* Tools and supplies
* Salary paid to an assistant
In order to deduct employment related expenses on your tax return, you must have your employer complete Form T2200, "Declaration of Conditions of Employment."
4. How to minimize taxes tip four: Deduct income tax preparation fees
The fourth way to minimize taxes in Canada is to deduct tax return preparation fees paid to an accountant.Tax preparation fees can be deducted on your personal tax return in the following circumstances:
* You are self employed
* You received investment income (e.g. interest, dividends, other investment income)
* You received rental income
5. How to minimize taxes tip five: Claim 2010 Personal Tax Credits in Canada
"The fifth way to minimize taxes in Canada is to claim personal tax credits," says Allan Madan, provider of income tax preparation in Oakville. The following 2010 personal tax credits in Canada are listed below:
* Basic personal amount (everyone receives this credit) $10,382
* Child amount (for each child born in 1993 or later) $2,101
* Age amount (greater than 65 years and net income less than $32,507) $6,446
* Pension income amount (if you receive a pension) $2,000
* Disability amount $7,329
* Spousal amount ($10,382 - spouse's net income) $10,382
* Eligible dependant amount $10,382
* Amount for infirm dependants 18 or older $10,382
* Children's fitness tax credit $500
* Medical expense tax credit amount spent
* Tuition tax credit amount spent
* Education tax credit (full time per month) $400
* Textbook credit (full time per month) $65
* Canada employment amount $1,051
This interview was with Allan Madan of Madan Chartered Accountant Inc. Allan Madan is a Tax Accountant, and preparer of Income Tax Returns. Allan enjoys working with individuals, business owners and investors on accounting and tax matters. Madan Chartered Accountant 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 expert Income Tax Preparation by Madanca Chartered Accountants. To learn more, see: Income Tax Preparation Oakville and Tax Accountant in Oakville today.
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