Tax Credit : Tax tips
Research and Development
If you carry out research and development, including software development, you may qualify for a SR & ED income tax credit by filing the appropriate form with the Canada Revenue Agency.
Qualifying Ontario labour expenditures
Small Ontario corporations will be entitled to a new 20% refundable tax credit based on qualifying Ontario labour expenditures incurred after June 30, 1998 to create interactive digital media products.
Hair transplant costs paid to a doctor
Hair transplant costs paid to a doctor will generally qualify as medical expenses and will give rise to tax credit for Canadian Income Tax purposes. However only medical expenses in excess of 3% of income will be eligible for the tax credit.
Foreign Withholding Tax
You are generally entitled to receive a tax credit on your Canadian Income tax return for the amount of foreign withholding tax paid on amounts received from other countries. In effect CRA recognizes the foreign tax that you have paid as a reduction of your Canadian income tax liability.
Joint custody of a child
If separated or divorced parents have joint custody of a child, only one of them may claim the equivalent to married credit under the Canadian Income Tax Act. If they cannot agree on who will claim the exemption, neither may claim it.
Investing in a labour sponsored investment fund
Investing in a labour sponsored investment fund through your RRSP will give you a 15% tax credit in Ontario, in addition to the RRSP deduction.
Tax credit for severe physical or mental impairment
A taxpayer who suffers from severe physical or mental impairment is entitled to a tax credit for Canadian income tax. A form T2201 must be filled out by a physician and submitted to the tax department.
Charitable tax receipts
As of Jan 1, 2005, charitable tax receipts issued by registered Canadian charitable organizations under the Canadian Income Tax Act must include the name of the Canada Revenue Agency and its website http://www.cra.gc.ca/charities.html.
Renovating your kitchen?
If you are renovating your kitchen, Habitats for Humanity will remove kitchen cupboards and appliances and provide a Canadian income tax receipt for the value of anything they can reuse.
One spouse should claim all the family charitable donations
One spouse should claim all the family charitable donations for Canadian Income Tax purposes to maximize the overall income tax credits available. You can also carry charitable donations forward since the donation credit is available for donations made within the five preceding years.
The lower-income spouse should claim all medical expenses on behalf of the entire family
The lower-income spouse should claim all medical expenses on behalf of the entire family for Canadian Income Tax. The lower your net income, the more you can claim in eligible medical expenses. But since the credit is nonrefundable the spouse who is making the claim should have sufficient income to absorb the entire credit.
Maintain proper documentation to claim the new transit-pass tax credit
A taxpayer who uses public transit should be sure to maintain proper documentation to claim the new transit-pass tax credit on his or her 2006 and subsequent personal Canadian income tax return. The credit applies to monthly or longer passes for transit.
Good news for corporations and individuals across Canada with SR&ED credits
The federal government has announced plans to extend the carryforward period for unused federal investment tax credits earned before 2006 to 20 years from the current 10. This measure, which would apply to credits earned in taxation years between 1998 and 2005, is good news for corporations and individuals across Canada with SR&ED credits that were set to expire in the next few years. Credits earned after 2005 are already eligible for a 20 year carryforward.
To be considered married
From a Canadian income tax perspective, you don’t have to make a trip to the altar to be considered married, since the meaning of spouse includes a common law spouse. This could affect the amount of your GST credit and other credits, and restrict your ability to claim the equivalent -to-married credit for a dependent family member. These rules are equally applicable to same sex relationships.