Tax Tips

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By Gail Vaz-Oxlade

If you still haven't done your tax return, remember you need to get it in the mail no later than April 30. But don't wait until the last minute to do your return. Leave yourself some breathing space before you do your final check-over of your return to make sure you've claimed everything to which you're entitled and to check your arithmetic.

The most common mistakes people make when filing their returns centre around not claiming all deductions and credits for which they are eligible. For example, people who have employment expenses sometimes fail to claim GST rebates on eligible expenses such as the capital cost allowance on a car, gas and repairs. Parents often have to be reminded to claim all their child care costs. Child care expenses include everything from a nanny to occasional baby sitting. Regardless of your baby-sitter's age, as long as you get a receipt you can claim the expense. While you don't have to submit those receipts with your return, you must keep them in case they are requested by Revenue Canada for verification.

If you have children in university, make sure they file their own returns. If your children do not need all their tuition fees to reduce their federal tax payable to zero, those fees may then be transferred to you. But this is only possible if your children file returns.

One often-overlooked deduction is available to people who have changed jobs or have moved. You can claim eligible moving expenses such as moving costs, travel costs, accommodation, temporary living expenses, and, in some cases, costs associated with selling your former residence. Information is available in the General Income Tax Guide, so if you've moved this year, pay special attention to the appropriate section.

Another mistake couples make is that they think they must claim their charitable donations individually, based on the name on the receipt. That's not so. Charitable donations may be claimed by either spouse and should all go on one spouse's return to maximize the tax credit. You are entitled to a 17 percent tax credit for amounts up to $200, and 29 percent on amounts above $200. By consolidating your receipts you may be able to claim a higher percentage credit.

People also often overlook the medial expense tax credit. The deduction most people forget about is that if you belong to a health plan to which you contribute at work, your premiums are considered an expense. Medical expenses should be claimed by the lower income spouse to maximize the tax benefit. And remember that the amounts need not have been incurred during the calendar year. Expenses for any consecutive twelve-month period that ends in 2007 can be used, so choose the period that will be most beneficial. You can claim medical expenses paid in any 12-month period ending in 2007 and not claimed in 2006. Generally, you can claim all amounts paid, even if they were not paid in Canada.

People with dependents in nursing homes can claim medical and attendant care costs as part of their medical expenses. These are the most expensive costs associated with a nursing home, so this can result in a significant tax credit. Most nursing homes identify the portion that is eligible for the credit on their bills.

Don't to forget to claim the Ontario Property and Sales Tax Credit which includes the sales tax credit, and rental or property tax credit. Unlike federal tax credits, the Ontario tax credit is a refundable tax credit so this can actually generate a refund for lower income earners. And don't forget to report all your interest income. Revenue Canada is getting increasingly better at cross referencing information slips such as T5s to your social insurance number. If you don't report the income on your tax form, they are more likely to catch the omission. This could delay your refund and keep the file open at Revenue Canada, which can have long-term repercussions.

Take the time to re-check your return carefully. It's worth the investment of a few extra minutes to avoid paying more tax than absolutely necessary.

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