Tax Times: FAQs Answered

Holly Banfill

Q. I receive a T4 from my employer. Are there any additional deductions I can claim on my taxes?

A. The most frequently claimed expenses are child care, medical, tuition, donations, and moving costs. What is important to remember is you must have a receipt for these expenses. This can be either the physical receipt, or a cancelled cheque or charge on your credit card statement. When claiming these expenses, it is important to remember the following:

• Child care: Only one parent/guardian can claim this expense


• Medical: 3% of your net income is deductible up to a maximum of $1813


• Tuition: Must have an official T2202A from the institution. Be sure to check with your school if you are unsure. Note of caution: with the rapid expansion of online education, only Canadian institutions are recognized by Canada Revenue Agency. What this means is, if your take courses online through a foreign school, it will be disallowed. Canada Revenue Agency requires students to physically attend the foreign institution.


• Donations: Must be a registered charity. The registration number will appear on your receipt.


• Moving expenses: If you move during the year for work or full-time studies, your new home must be forty kilometers closer to your new place of employment or school. The allowable expenses are the mover costs, fuel, accommodations, method of travel to your new home, costs associated with sale/purchase/rental of new, as well as previous, residence. This includes legal fees, realtor fees, and other costs associated.

Q. Am I eligible for a GST credit?

A. You are eligible for a GST refund if you are 19 years of age and have filed a tax return for the applicable year. GST rebates are calculated based on your net income. In addition, if you are married or living common law, only one partner can claim a GST refund.

Q. I had a baby in 2005. When will I receive my Canada Child Tax Benefit?

A. Canada Child Tax Benefits are not automatic upon birth of a child. You must apply for the benefit with proof of the birth (birth certificate, baptismal certificate, hospital record, etc.) Similar to the GST credit, only one parent can claim this benefit and in general, if the parents do not live in the same household, the parent who is primarily responsible for the child should receive the benefit.

Q. I am self-employed. How do I file my tax return?

A. Self-employed individuals fall into two categories: those who provide professional services such as lawyers, accountants, chiropractors, and doctors, or those running small businesses. The information required by Canada Revenue Agency is similar; however, the forms are slightly different. Professionals use a form T2032 and small business owners use a T2124. The information reported is:

• Fees/Sales
• Expenses including: Advertising/promotion, Insurance, Interest & bank charges, Maintenance & repairs, Office, Dues/subscriptions, Professional development, Salaries/wages, Travel, Telephone, Utilities, Auto (expenses used must reflect the proportion of your car used in the normal course of business, and can include such expenses as fuel, repairs & maintenance, insurance, license & registration, parking, car washes, and lease payments), Home expense (expenses used must reflect the proportion of the house used to run your business, and can include such expenses as heat, hydro, mortgage interest, property taxes, repairs & maintenance).

Many people work full time in addition to running a business on the side. Be careful when preparing your tax return: you should not use losses incurred by your secondary employment (small business) to try to boost your tax refund from your primary income.

Q. Should I invest in RRSPs?

A. Everyone needs to consider their financial future once they retire. As a general rule of thumb, you should not contribute to RRSPs if you have any outstanding debt other than a mortgage. However, many employers offer a matching program where they will contribute a percentage based on what the employee pays in. While this is an excellent way to build your future retirement savings, consider carefully the long-term effect of high-interest debt: it may not outweigh the benefits gained by the employer’s contributions.

Q. Should I file my own tax return or use a professional service?

A. People who receive a T4 and have standard expenses can complete their own taxes very efficiently with the new tax software generally available though office supply retailers. If you have a more complicated return (small business, professional service, own rental property, have foreign income, etc.), it is in your best interest to seek a professional service to help guide you through the tax preparation.