78 Tax Tips for Canadians for Dummies (ISBN - 0470676582)

411 Pages·2021·3.03 MB·English

Christie Henderson,
CA, CFP, TEP
Brian Quinlan, CA, CFP, TEP
Suzanne Schultz, CA, CFP

• Apply tax-saving strategies
throughout the year

• Maximize your deductions and
credits

• Minimize tax on investment income

• Avoid an audit

Learn to:

Making Everything Easier!™

78 Tax Tips
For Canadians

Open the book and find:

• What to do if you’re missing
receipts or slips

• How to reduce your tax through
charitable donations

• The non-taxable benefits you
should negotiate for

• Home office expenses you can
deduct

• How to sell your business in a tax-
savvy way

• Which insurance products can
help cut your tax bill

• Ways to split your income to pay
less tax

• How to maximize your childcare
and medical expense claims

Christie Henderson is a managing partner with
Henderson Partners LLP. Brian Quinlan is a partner
with Campbell Lawless Professional Corporation.
Suzanne Schultz is a financial planner with RBC
Dominion Securities.

$24.99

ISBN 978-0-470-67658-5

Personal Finance/Taxes

Go to Dummies.com®

for videos, step-by-step examples,
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You work hard for your income — keep more of it
in your wallet with this concise, practical guide. Compiled
by a group of skilled accounting professionals, these
78 smart strategies offer something for everyone,
whether you’re an aggressive investor or someone
struggling with debt, an employee or self-employed,
a student or retiree. With succinct tips explaining just
what you need to know for year-round tax-planning,
this book is an essential reference that just may save
you thousands of dollars!

• Get started with the basics — understand the
different types of taxes, find out how to organize
your tax records, and investigate how to handle
disagreements with the Canada Revenue Agency

• Protect your income — use taxable benefits to
your advantage, discover which expenses you can
deduct, and claim all the credits available to you

• Run a tax-smart small business — choose the
ownership structure that’s right for you, maximize
your capital cost allowance claim, and realize tax
wins through income losses

• Reduce the taxes you pay on investments — explore
tax-efficient investment vehicles, discover the best
strategies for income properties, and make the most
of capital losses

• Claim all the credits available to you and your family

— ensure that you don’t miss a credit and that you
claim all acceptable expenses to realize the greatest
possible savings

• Keep taxes low in retirement — find out when to
take your CPP/QPP pension, how to manage RRIF
withdrawals, and which credits you can claim to
reduce your tax burden

• Create an estate plan that leaves more for your
heirs — consider strategies that reduce your estate’s
exposure to income tax and probate fees

Hold on to more of your money
and build your wealth with
these tax-saving strategies!

78 Tax Tips For Canadians

Henderson
Quinlan
Schultz

spine=.8160”

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78 Tax Tips
For Canadians

FOR
DUMmIES

‰

by Christie Henderson, CA, CFP, TEP
Brian Quinlan, CA, CFP, TEP
Suzanne Schultz, CA, CFP

78 Tax Tips For Canadians For Dummies
®

Published by
John Wiley & Sons Canada, Ltd
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Henderson, Christie

78 tax tips for Canadians for dummies / Christie Henderson, Brian Quinlan, Suzanne Schultz.

Includes index.

ISBN 978-0-470-67658-5

1. Income tax—Law and legislation—Canada—Popular works. 2. Tax returns—Canada—Popular works. 3.
Tax planning—Canada—Popular works. I. Quinlan, Brian, 1960- II. Schultz, Suzanne, 1971– III. Title. IV.
Title: Seventy-eight tax tips for Canadians for dummies.

KE5682.H45 2010 343.7105’2 C2009-906378-6

KE5682

KF6290.ZA2H45 2010

Printed in the United States

1 2 3 4 5 RRD 14 13 12 11 10

About the Author

Christie Henderson, CA, CFP, TEP, is managing partner of
Henderson Partners, LLP, a mid-sized firm in Oakville, Ontario. She
obtained her Chartered Accountant designation with Ernst & Young
serving high net worth clients in the Tax and Wealth Management
Practice. She is a Certified Financial Planner and a Trust and Estate
Practitioner. In addition, she has completed the CICA’s In-Depth Tax
Course, the Canadian Securities Course, the Canadian Investment
Funds Course and is a member of the Canadian Tax Foundation.

Christie’s clientele consists largely of entrepreneurial owner manag-
ers and their businesses, professionals, executives and their fami-
lies. Her expertise is in providing comprehensive tax and financial
planning. She also specializes in retirement, investment, estate and
business succession planning.

Christie is a respected media expert on tax and personal finance to
CBC, The Globe and Mail, Global/CH TV and others.

Christie was the recipient of the 2009 Institute of Chartered
Accountants of Ontario’s Award of Distinction and has been nomi-
nated one of Canada’s “Top 40 under 40” and for the RBC Canadian
Women Entrepreneur Awards. Christie enjoys a busy life at home
with her husband, Kirk, and their three boys. She spends her spare
time running marathons, hiking and skiing.

Brian Quinlan, CA, CFP, TEP, is a partner with Campbell Lawless
Professional Corporation in Toronto. He works with individuals and
owner-managed businesses to maximize cash by minimizing tax.
Brian serves as a contributing editor at Canadian MoneySaver
Magazine; he has been a guest on a number of TV and radio call-in
shows and is a frequent speaker at tax and financial planning semi-
nars. He has instructed tax courses for Ryerson University and the
Institute of Chartered Accountants of Ontario.

Brian has two income-splitting vehicles: Andrew, 19, and Tara, 16.

Suzanne Schultz, CA, CFP, is a financial planner with RBC
Dominion Securities in Hamilton, Ontario. She is the host of the
HGTV series House Poor and is regularly featured in the media pro-
viding practical financial advice to Canadians on matters ranging
from tax to investing to renovating on a budget.

Suzanne graduated from Dalhousie University, then went on to
obtain her chartered accountant designation while working for
KPMG. She completed the CICA’s in-depth tax course, the certified
financial planner designation, and is securities and insurance
licensed. Suzanne has spent many years working in the investment
industry providing tax and estate planning advice to clients across

the country. She has helped a wide range of clients with their con-
cerns, including high-net-worth individuals, owner-managers, and
those with cross-border issues. She also enjoys teaching and has
been a featured speaker at many Canadian financial services
events.

Aside from her career, Suzanne enjoys a busy family life with her
husband, Kevin, sons Carter and Ben and daughter Claire, and can
usually be found at the arena during the hockey and lacrosse
seasons.

Acknowledgments

With three authors contributing to this book, we’d like to recognize
the following people for their assistance: First, a special thank you
to our families for their patience and support while we wrote. It’s
no small feat keeping up with family and work obligations while
writing a book on the side, and the encouragement of our families
was essential to getting this project done. Another thanks to our co-
workers, too numerous to mention, for being there to throw tax
ideas around with, making us all better tax professionals.

A sincere thanks to our editor, Robert Hickey, copy editor, Kelli
Howey, Project Coordinator, Pauline Ricablanca, and the staff at
John Wiley & Sons Canada for helping to transform what is normally
a very dry subject into one that is fun to read and easy to
understand.

Publisher’s Acknowledgements

We’re proud of this book; please send us your comments at http://dummies.custhelp.
com. For other comments, please contact our Customer Care Department within the U.S. at
877-762-2974, outside the U.S. at 317-572-3993, or fax [phone].

Some of the people who helped bring this book to market include the following:

Acquisitions and Editorial

Editor: Robert Hickey
Copy Editor: Kelli Howey
Project Editor: Pauline Ricablanca
Cartoons: Rich Tennant
(www.the5thwave.com)

Composition

Project Coordinator: Lynsey Stanford
Layout and Graphics: Samantha Cherolis,
Timothy Detrick, Melissa K. Jester,
Christine Williams
Proofreader: Leeann Harney
Indexer: Claudia Bourbeau

John Wiley & Sons Canada, Ltd

Bill Zerter, Chief Operating Officer
Karen Bryan, Vice-President, Publishing Services
Jennifer Smith, Publisher, Professional & Trade Division

Publishing and Editorial for Consumer Dummies

Diane Graves Steele, Vice President and Publisher, Consumer Dummies
Kristin Ferguson-Wagstaffe, Product Development Director, Consumer Dummies
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Kelly Regan, Editorial Director, Travel

Composition Services

Debbie Stailey, Director of Composition Services

Table of Contents

Introduction ....................................................... 1

About This Book ........................................................................ 1
How This Book Is Organized .................................................... 1
Icons Used in This Book ............................................................ 3
Where to Go From Here ............................................................ 4

Part I: Tips for Everyone ..................................... 5

#1: Understand the Essentials . . . . . . . . . . . . . . . . . . . . . . .7

Understanding Where the Numbers Come From ................... 8
Knowing You Have the Right to Pay Less Tax...................... 10
Reducing Your Tax Bill with Tax Credits .............................. 11

#2: Understand the Different Types of Taxes . . . . . . . . .12

A Tale of Two Income Taxes................................................... 12
GST/HST .................................................................................... 15
Alternative Minimum Tax ....................................................... 15
International Taxes .................................................................. 16

#3: Get Free Money from the Government . . . . . . . . . . . .17

Claiming GST Credits ............................................................... 17
Benefiting from Provincial Tax Credits ................................. 18
Receiving Child Benefits ......................................................... 18
Obtaining Refunds for CPP or EI Overpayments ................. 18
Knowing What to Do If You’ve Paid Too Much Tax ............. 19
Claiming Other Benefits .......................................................... 19

#4: Set Up a Good Recordkeeping System . . . . . . . . . . .21

Keeping Good Books and Records ........................................ 21
Knowing How Long to Keep Your Tax Records ................... 24
Dealing with Missing Information Slips and Receipts ......... 24

#5: Know When Your Tax Return Is Due . . . . . . . . . . . . .28

Due Date for Regular Folk ....................................................... 28
Due Date When You’re Self-Employed .................................. 29
Special Due Dates in the Year of Death ................................. 29

78 Tax Tips For Canadians For Dummies
viii

#6: Choose the Preparation Option
That’s Best for You . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30

Using Your Computer vs a Pencil to Tally Your Taxes ....... 30
Getting the Most from Tax Pros ............................................. 32

#7: Figure Out How to File Your Return . . . . . . . . . . . . . .34

Turn It In Online: Electronically File Your Return ............... 34
Paper Filing: The Old-Fashioned Way ................................... 37
TELEFILE: By Invitation Only .................................................. 37
Money in the Bank: Direct Deposit of Your Tax Refund ..... 38

#8: Know Where to Turn for Help . . . . . . . . . . . . . . . . . . .39

Surfing Your Way to Tax Help ................................................ 39
When and How to Get Help from the CRA Itself ................... 40
Where to Get Forms and Other Information ........................ 42

#9: Reduce Your Tax by Giving to Registered
Charities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43

Make Donations That Qualify for Tax Savings ..................... 43
Know the Tax Savings from Making Charitable
Donations .............................................................................. 44
Review the Amount of Charitable Donations You
Should Claim ......................................................................... 44
Bump Up Donations at the End of the Year .......................... 45
Combine Your Donations With Your Spouse/Common-Law
Partner’s Donations ............................................................. 45

#10: Take Advantage of Special Rules
for Charitable Donations . . . . . . . . . . . . . . . . . . . . . . . .46

Donate Assets Rather Than Cash .......................................... 46
Donate in the United States .................................................... 47

#11: Be Wary of Charity Fraud and Charity
Tax Shelters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48

Check the Charity’s Registration ........................................... 48
Look at Your Official Receipt.................................................. 48
Take Care in Investing in Charity Tax Shelters .................... 49

#12: Respond Promptly to Requests from
the CRA for Information . . . . . . . . . . . . . . . . . . . . . . . . .50

CRA’s Verification Process ..................................................... 50
Figuring Out What the CRA Is Looking For ........................... 51
The Consequences of Not Replying to the CRA ................... 52