Tax Breaks and Credits Often Overlooked by Canadian Taxpayers

Tax deductions in Canada

Every year in Canada, millions of dollars in tax deductions and credits go unclaimed. With literally hundreds of tax credits and tax deductions available to eligible Canadian taxpayers, it can be easy to overlook some. In this article, we will discuss some overlooked tax deductions and credits that can save you quite a bit on your tax return.

1. Moving Expenses

If you’ve relocated for work, you may be eligible to claim a wide range of moving expenses for you and your family. Some conditions apply but, generally, if you move to a home that’s at least 40 km closer to your new place of employment, you can claim associated moving costs. Commonly overlooked moving expenses are:

  • Travel expenses for your family including vehicle expenses, accommodations, and meals.
  • Fees for changing your address on documents or identification such as your driver’s license, vehicle registration, or other legal documents.
  • The cost of utility hookups and disconnections.
  • The expense of title transfer for your new home.

If you move late in the year, a portion of your moving expenses may have to wait to be claimed. Moving expense claims are limited to the income you earn at the new job that year. If you move in December, there’s not much time to up your limit. Don’t worry. Any unused moving expenses can be claimed the following year.

Eligible expenses include vehicle expenses (fuel), meals, accommodation (hotel), as well as costs related to selling your old home and/or buying a new one.

2. Carryforwards

Carry-forward amounts are tax deductions and credits that you can set aside for future use. For example, if you managed to bring your tax payable down to zero with only a portion of your deductions and credits available, the remainder can be “banked” (carried forward) for use in a future year.

Typical examples of carryforwards are unused RRSP contributions, tuition fees, donations, and losses (capital and business).

Most of these carry-forward amounts can be found on your Notice of Assessment or by visiting your My Account portal on the CRA’s website.

For the most part, the CRA will not apply these carry-forward amounts automatically; it is up to you to use them when needed. Therefore, it is important to keep track of these amounts to make the most of them.

3. Carry backs

Sometimes, you can change the past! For any deduction or credit that you omitted in a previous tax return, you can go back up to 10 years and adjust that return.

Moreover, some of the amounts in your current year's return can be claimed retroactively. For example, if you incurred a capital loss during the year, you can carry back this capital loss to one or all of your three prior years’ tax returns and use it against capital gains earned in any of those years. To do so, you must file a T1A form with your tax return.

4. Medical expenses

Medical expenses can add up quickly in the run of a year. Everything from routine dental visits to prescriptions to doctors’ fees could earn you a credit at tax time.  It’s not that Canadians miss claiming medical expenses altogether, but there are many missed expenses, and some are more often missed than others.

  • To get the most out of your claim, it’s usually best to have one spouse claim all the medical expenses for the immediate family (you, your spouse, and kids under 18).

  • If you support a dependant, such as an elderly parent, don’t forget to claim those expenses too. These medical expenses are not claimed by you, your spouses, and minor kids. The medical expense credit for other dependants is claimed separately.

  • If you’ve had to travel more than 40 km one way to seek medical care, you may be able to claim medical travel expenses for the trip. For longer trips (over 80 km) meals and accommodations may also be claimed.

  • renovation or construction expenses - the amounts paid for changes that give a person access to (or greater mobility within) their home because they have a severe and prolonged mobility impairment or lack normal physical development.

  • medical services provided by qualified practitioners - service fees paid to authorized medical practitioners.

  • Don’t forget about any private insurance premiums you pay throughout the year. Those costs may be eligible medical expenses too.

You can see, many types of expenses are eligible for the medical expense tax credit, and it pays to know what they are.

5. Disability

If you have a medical condition that seriously impedes your day-to-day functions, you could be eligible for the disability tax credit. Your condition would have to be certified by a medical practitioner and confirmed by the CRA.

The practitioner will indicate how long you have had this condition. If it has been several years, you can go back and adjust previous tax returns to claim this credit retroactively.

The disability amount is one of the most valuable Canadian tax credits, worth about $1,500 for an adult and even more for a child. Even if you can’t take advantage of the entire credit — e.g. because your income isn’t high enough — the unused part of this credit can be transferred to a wide range of people.

Those who need life-sustaining therapy, those with a marked restriction in any one of the following categories, or significant limitations in two or more of the categories might be eligible for the credit:

  • Walking
  • Mental functions
  • Dressing
  • Feeding
  • Eliminating (bowel or bladder functions)
  • Speaking
  • Hearing
  • Vision

6. Union/Professional Dues and Licensing Examination Fees

Most union dues are deducted directly from your paycheck and appear on your T4 (box 44). If you’ve paid any other amounts to a union or professional organization, be sure to keep the receipts for tax time. If you pay insurance premiums related to your profession, keep track of the cost. Doctors, for example, can claim the cost of malpractice insurance.

If you’re required to pass a certification or licensing exam for your profession, that cost may qualify as a tuition expense. Nurses, for example, may claim the cost of yearly licensing fees on Schedule 11 as a tuition amount. If you are reimbursed by your employer for these fees, they are not eligible expenses.

7. Carrying charges

One of the most often overlooked deductions is your “carrying charges,” which can reduce your taxable income. It’s not surprising that these are often missed since the name “carrying charge” isn’t exactly crystal clear. Even if you don’t have very complicated investments, you may have to carry charges that include:

  • Some of your investment advisor’s fees on non-registered investment accounts (but not their commissions)
  • Fees for some investment advice
  • The cost to have someone prepare your tax return but only if you have income from a property or business (if you have just a T4 and a few donations, unfortunately, you can't claim the expense of your tax preparation software)
  • The interest you paid on money you borrowed to try and earn investment income

8. Student Loan Interest

Interest paid on a student loan is an often-overlooked credit. This non-refundable credit applies to interest paid on eligible loans – not all types of loans qualify. For example, if you opened a student line of credit to fund your studies, that interest isn’t deductible. Student loan interest can be carried forward for up to five years. If you don’t need the deduction this year, consider carrying it forward.

9. Childcare Expenses

If you pay for childcare so you can work, attend school, or run your business, you already know that these expenses are tax-deductible. But did you know that other expenses also qualify? Along with the usual fees from daycares or in-home providers, most overnight camps and summer day camps are also eligible for the deduction.

10. Employment Expenses

From home office costs to tradesperson’s tools, if you incur certain expenses related to your job, you may qualify for a deduction at tax time. Be sure to obtain a signed form T2200 (Declaration of Conditions of Employment). This form, which is completed by your employer, outlines exactly what types of expenses you can claim as well as any reimbursements you’ve received.

We Can Help Minimize Your Tax Bill and Maximize Your Refund.

Feel free to reach out to Filing Taxes at 416-479-8532. Schedule an NTR engagement appointment with us and take the first step toward proper management of your finances and ensure you comply with CRA reporting and payroll deductions.

Disclaimer: The information provided on this page is intended to provide general information. The information does not consider your personal situation and is not intended to be used without consultation from accounting and financial professionals. Salman Rundhawa and Filing Taxes will not be held liable for any problems that arise from the usage of the information provided on this page.

Written By:
Salman Rundhawa
Salman Rundhawa is the founder of Filing Taxes. Salman provides valuable tax planning, accounting, and income tax preparation services in Toronto, Mississauga, Oakville, and Hamilton.

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