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Common Deductions and Requirements

We specialize in helping you maximize your tax savings by identifying all eligible deductions and credits.

 

Whether it’s Motor Vehicle expenses, Employment Condition Expenses, Business Expenses, or Personal Tax Credits, we simplify the process and ensure you get the most out of your tax return.

 

Let us guide you to greater savings this tax season!

Allowable Motor Vehicle Expenses

You can deduct expenses incurred to operate a motor vehicle in pursuit of earning employment income.

 

The types of expenses you can deduct include:

  • fuel and oil;

  • maintenance and repairs;

  • insurance;

  • licence and registration fees;

  • capital cost allowance

  • eligible interest you paid on a loan used to buy the motor vehicle.

  • eligible leasing costs.

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Use Form T777 to calculate this deduction.

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You must provide a signed copy of the Form T2200 Declaration of Conditions of Employment from your employer.

 

Employment Condition Expenses and Business Expenses 

 

Business Expenses occur for 2 reasons, you are Self Employed or you have/ or are using portions of your home or personal expenses to properly execute your regular employment. 

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Both of these are utilizing similar requirements, however for regular employment you are required to fill out Form T777, for Self Employment you are required to fill out Form T2125.​​

For Self Employed, please see Self-Employed and Pros and Cons

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If it is for regular employment, your employer is required to give you a form outlining all relatable expenses you may have incurred to assist you in your position and include but are not limited to Office Positions, Trades and much more. Collectively with your T4 your employer must complete and give you a Form T2200 Declaration of Conditions of Employment 

The execution of the T2200 produces the Form T777 that becomes a part of your T1 Return. 

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As an employee who utilizes personal items to execute your work for your employer with the T2200 form, you can deduct any reasonable current expense you paid or will have to pay to earn business income. The expenses you can deduct include any GST/HST you incur on these expenses less the amount of any input tax credit claimed. You cannot deduct personal expenses. Common Business Expenses are listed below:

 

Use Form T777 to calculate this deduction.

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​Please note for Trades, additional items like Tool Allowances, Meals and Expenses for outside work, Shifts exceeding common hours, Forestry Workers and more can also be processed as a deduction and produces a variant form of the T777, please inquire for more details on these expenses. 

 

 

Again, please note, you must provide a signed copy of the Form T2200 Declaration of Conditions of Employment from your employer.

 

It is VERY COMMON for Employers to not be aware of Payroll Compliance and not properly execute T4s T4as and the appropriate documentation that must accompany these like T2200, Letters and details pertaining to your individual career or Trade. 

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If you have questions do not hesitate to reach out. 

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Canadian Pension Plan (CPP) and Employment Insurance (EI)

Each year the maximum contribution for CPP and EI changes. Annually the adjustments to this are set and the employee and the employer are required to both contribute to these funds. A new adjustment to this is for the 2024 year with the introduction of the CPP2. 

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Canada Pension Plan (CPP) Contributions

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The Canada Pension Plan (CPP) contributions shown on your T4 are based on your pensionable earnings for the year. You’ll see your contributions listed in Box 16 of your T4 slip. This amount reflects what you’ve contributed to CPP through payroll deductions.

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CPP Contribution Limits

Each year, there is a maximum limit on pensionable earnings, which affects the total amount you and your employer can contribute. Your contribution is typically matched by your employer, meaning you’ll see an equivalent contribution on their end to support your CPP savings.

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Why CPP Contributions Matter

CPP contributions are an important part of your retirement savings. They fund your eligibility for future CPP retirement benefits, as well as disability and survivor benefits if needed. The contributions you make now will help secure income for you in retirement, making it essential to understand what has been deducted from your earnings.

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Self-Employed Individuals

If you are self-employed, you’re required to contribute both the employee and employer portions. These contributions will be reflected when you file your taxes, as self-employed individuals do not receive a T4 slip with these deductions.

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CPP Changes 2024

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As of recent changes, there’s now an additional component called CPP 2, which aims to increase future retirement benefits.

 

Here’s a breakdown to help you understand these contributions on your T4 slip:

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  • Regular CPP Contributions (Box 16): Your contributions to the traditional CPP plan are shown in Box 16 on your T4. Both you and your employer contribute equally, based on a percentage of your pensionable earnings up to a yearly maximum. These contributions ensure you’ll have a stable source of income when you retire, as well as coverage for disability and survivor benefits.

  • CPP 2 Contributions (Box 17): As of recent enhancements, CPP 2 is a supplementary contribution intended to gradually increase the retirement benefits available in the future. Also contributed to by both you and your employer, CPP 2 is designed to help cover a larger portion of your pre-retirement income when you retire.

  • Why It Matters: Together, CPP and CPP 2 aim to provide more comprehensive retirement coverage. While CPP 2 contributions result in a slightly higher deduction now, they are an investment toward receiving a more substantial retirement benefit.

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Understanding your CPP and CPP 2 contributions can help you see how these deductions benefit you in the long term, offering more secure retirement options. If you have any questions about your contributions, your employer should be able to offer you guidance, or please book a no-cost appointment to discuss. 

 

Employment Insurance (EI) Contributions

 

Employment Insurance (EI) provides you with temporary financial support if you lose your job, take parental leave, or need to take time off for certain other life events. Here’s what you need to know about your EI contributions:

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  • How Contributions Are Calculated: EI contributions are based on your insurable earnings, which include most types of employment income. These earnings are shown in Box 24 on your T4 slip, with the actual EI contributions listed in Box 18. Both employees and employers contribute to EI, though employees pay a slightly lower rate.

  • Why It Matters: These contributions ensure that you’re eligible for benefits if you need temporary income support due to unemployment, sickness, parental leave, compassionate leave, or other eligible situations.

  • Benefit of Contributions: By contributing to EI, you’re building a safety net. Should you need to access EI benefits, the amount you receive will depend on your average insurable earnings and the length of time you contributed.

 

Understanding EI contributions can help you see how this safety net supports you during life’s unexpected events.

 

For further clarification on your EI deductions, your employer should be able to offer you guidance, or please book a no-cost appointment to discuss.

 

First Time Home Buyers Tax Credit: 

It is important to stay apprised with the changes in previous years up to 2023, if you just purchased your very first home, you may qualify for a credit worth $750.00!​

This must be the first home you (or your spouse) has owned within the last 5 years.​

This is a $5,000.00 credit, however it is important to see this is actual cash surrender value, AKA real money, you actually only get back about 15% of the $5,000.00 credit that you're claiming, but still worth pointing out!!

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As of 2023 this has changed to be noted as the HBTC. 

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The First-Time Home Buyers' Tax Credit (HBTC) in Canada was recently increased to provide more support to eligible homebuyers. For the 2023 tax year onward, this credit has doubled, allowing first-time homebuyers to claim up to $10,000 on their tax return. This non-refundable credit can reduce your tax owing by up to $1,500, providing a boost to help with the financial aspects of buying a home​.

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To qualify, you or your spouse/common-law partner must have purchased a qualifying home and neither of you should have owned a principal residence in the past four years. The credit amount can be split between partners but cannot exceed the total $10,000 limit. When filing your taxes, this amount is claimed on Line 31270 of your return​.
 

This adjustment aims to ease homeownership costs slightly for those entering the market, though it remains a non-refundable credit, meaning it can only reduce your tax owing to zero but does not result in an additional refund if your tax is already below $1,500.​

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GST/HST Tax Credit & Payments

The goods and services tax/harmonized sales tax (GST/HST) credit is a tax-free quarterly payment that is based on family income.

To receive the GST/HST credit, including any related provincial credit, you have to file a tax return for each year you want to receive the credit, even if you have no income to report.   If you have a spouse/common-law partner then both parties must file a tax return and the first return assessed by the CRA will receive the credit payments for the family.

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GST/HST New Housing Rebate

The New Housing Rebate allows you to recover a part of the GST/HST that you paid on the purchase price or cost of building a new, or substantially renovated house.

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What type of housing qualifies?

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These types of housing qualify for the rebate:

  • a house that you built, substantially renovated or on which you built a major addition on land that you own or lease (you can do the work yourself or hire someone to do it);

  • a new mobile home (this includes a modular home) or a new floating home that you bought from a builder (this includes a vendor);

  • a new or substantially renovated house (including a condominium unit) that you bought from a builder (building and land);

  • a new or substantially renovated house that you bought where you lease the land from the builder under the same agreement to buy the house and the lease is for 20 years or more, or gives you the option to buy the land;

  • a share of the capital stock in a co-operative housing corporation (co-op) that you bought; or

  • a non-residential property that you converted into your house

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You will need to complete Form GST190, or Form GST191. Please see the reference guide to determine

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Lifelong Learning Plan (LLP)

The Lifelong Learning Plan (LLP) allows for you to remove funds from your Registered Retirement Savings Plan (RRSP) to pay for qualified education expenses for yourself, spouse, or common law partner.

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ALL of the following conditions must apply:

  • The student must be a full-time student (or a part-time student if he or she meets the disability conditions).

  • You (the RRSP owner) have to be a resident of Canada.

  • The student has to enrol in a qualifying educational program at a designated educational institution.

  • The participation in the Lifelong Learning Plan (LLP) has to be done before the end of the year the student reaches the age of 71 years old.

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You cannot use the LLP to finance education or training expense of your children.

There are many rules and conditions for participating in the LLP. We suggest you refer to LLP Guide RC4112:

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Meals and Entertainment Expense

The most you can deduct for meal expenses is 50% of your claim during eligible travel periods. Long-haul truck drivers are an exception to this 50% rule.

They can claim 80% of meals during an eligible trip. 

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This deduction is used in many areas and only the most common are noted here for what was listed above please note that, you will need to fill out a Form TL2 Claim for Meals and Lodging as well as provide a signed copy of the Form T2200 Declaration of Conditions of Employment from your employer.

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Medical Expenses

Line 330 the total eligible medical expenses you or your spouse or common-law partner paid for:

  • yourself;

  • your spouse or common-law partner; or

  • your or your spouse's or common-law partner's children born in 1999 or later and who depended on you for support.

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Medical expenses for other dependants must be claimed on line 331. Please refer to the comprehensive list of eligible medical expenses tax deductions:

  • Payments to medical practitioners, hospitals, etc.

  • Care of individual with mental or physical impairment

  • Care in a self-contained domestic establishment

  • Care due to lack of normal mental capacity

  • Care in an institution and care and training in a school

  • Transportation and travel expenses of patient and accompanying individual

  • Artificial limbs, aids and other devices and equipment

  • Products required because of incontinence

  • Eyeglasses

  • Oxygen tents

  • Guide and hearing-ear dogs and other animals

  • Bone marrow or organ transplants

  • Renovations and alterations to a dwelling

  • Rehabilitative therapy

  • Devices and equipment prescribed by regulation

  • Preventive, diagnostic and other treatments

  • Drugs, medicaments and other preparations or substances

  • Dentures

  • Premiums to private health services plan

  • Medical expenses paid or deemed to have been paid

 

For further information on medical expense tax deductions:
IT519, Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction

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Moving Expenses

Did you know that if you move more than 40km and get a new job you can claim your moving expenses? 

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Claim your moving expenses as a tax deduction this is inclusive of real estate fees, movers, land transfer tax, and legal fees.

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There are even some moving expenses that can be claimed without receipts inclusive of travel and mileage using a simplified method.  If you moved within the last few years and didn't make any claims on your tax return, perhaps you'll want to discuss the possibility of filing an adjustment to a previously filed tax return with your tax professional. These claims can be worth a lot of money, and they're often missed

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Registered Education Savings Plan (RESP)

The RESP is a plan in which a benefactor can deposit funds to be used for education by one or more beneficiaries.

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The benefactor is considered a Subscriber. Generally, anyone can be a Subscriber. You and your Spouse, or Common-law Partner can be joint Subscribers.

Generally, anyone can be a beneficiary to a RESP. However in a family plan, where more than one beneficiary is named, the beneficiary must be a blood or adoptive relative of the original subscriber.

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When a beneficiary begins to draw on the plan, income on the contributions are paid out in the form of educational assistance payments (EAPs). The beneficiary will include the EAPs, but not the contributions on their tax return.

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Subscribers, for their part, cannot claim the contributions made to a RESP on their tax return.

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Read informational publication RC4092: Registered Educational Savings Plan

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RRSP and Pension Contributions. 

 

RRSP:

Registered Retirement Savings Plan (RRSP) and pension contributions are essential tools for reducing taxable income and planning for a secure retirement. It’s important to review your contributions and ensure they’re accurately reported for tax adjustments and potential credits.

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Key Points for Tax Filing:

  • Tax Deduction for Contributions: Contributions made to your RRSP or pension plan can be deducted from your taxable income, helping to lower your overall tax bill for the year.

  • First-Time Home Buyer’s Plan (HBP) Repayment: If you’ve used funds from your RRSP under the First-Time Home Buyer’s Plan, remember that repayments are required to begin the second year after your withdrawal. Ensure that you allocate an annual repayment amount on your tax return each year, or this amount will be added to your income.

  • Methods for HBP Repayment: Repayment of your HBP can be made by contributing to your RRSP each year and designating it as an HBP repayment. Alternatively, if you don’t make the annual required contribution, the repayment amount will be added to your taxable income for that year.

  • Pension Income Splitting: If you’re receiving pension income, certain types of income may be eligible for splitting with a spouse or common-law partner, potentially reducing your household tax burden.

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Taking advantage of RRSP and pension contributions can help you maximize tax savings and meet compliance requirements. I

 

t’s recommended to review and discuss these with a tax professional to optimize your contributions, credits, and repayment plans.If you have questions talk to us today. 

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A reminder on this to be used for tax adjustments and credits.

Also, if this was used for first home buyer, we must allocate repayment on account.

 

ENSURE THAT THIS IS DISCUSSED. You must either repay using contributions or this must be done at the time of filing.

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Pension Contributions and Tax Filing

Contributing to a pension plan is a great way to secure retirement income while also receiving tax benefits each year. Understanding how these contributions impact your taxes is important, especially as they appear on your T4 and may qualify you for tax credits or deductions.

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Key Points for Pension Contributions:

  • Tax Deduction for Pension Contributions: Contributions made to your pension plan lower your taxable income for the year. You’ll see these contributions reported on your T4 slip, typically in Box 20 for Registered Pension Plan (RPP) contributions.

  • Pension Adjustment (PA): The Pension Adjustment amount, shown in Box 52 on your T4, represents the value of the benefits accrued in your pension or deferred profit-sharing plan over the year. This amount reduces your RRSP contribution room for the following year, helping the CRA manage retirement savings limits.

  • Pension Income Splitting: If you are receiving pension income from an employer plan (such as RPP income), you may be eligible for income splitting with a spouse or common-law partner. This can lower your household tax liability by transferring a portion of your pension income to your partner, provided you meet the eligibility requirements.

  • Reporting on Taxes: Pension contributions are deducted directly from your income and reflected in your taxable income calculation. You don’t need to do any additional reporting for contributions themselves, but you should check that all contributions and adjustments are accurately listed on your T4 slip.

Reviewing your pension contributions with a tax professional can help you make the most of available deductions, credits, and strategies to minimize taxes now while supporting your long-term financial goals. If you have questions talk to us today. 

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Canada Workers Benefit (CWB) previously the Working Income Tax Benefit (WITB)

The Canada Workers Benefit (CWB), previously known as the Working Income Tax Benefit (WITB), is a refundable tax credit designed to support low-income individuals and families. Eligible individuals can claim the CWB to receive a credit that helps boost their income and provides additional support.

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Eligibility Criteria:
Age and Residency: You must be 19 years or older on December 31 of the tax year and a resident of Canada for income tax purposes throughout the year.
Income Requirements: You need to earn a minimum of $3,000 in employment or self-employment income to qualify.
Claiming the CWB:
You can claim the CWB on line 45300 of your Income Tax and Benefit Return. Additionally, if you have an eligible spouse or dependent, you may claim a portion of the CWB on their behalf.

Eligibility for an Eligible Spouse:
An eligible spouse must meet all of the following:

  • Was your spouse or common-law partner on December 31 of the tax year.

  • Was a resident of Canada throughout the tax year.

  • Was not a full-time student for more than 13 weeks unless they had an eligible dependent at the end of the year.

  • Was not confined to a correctional facility for 90 days or more during the year.

Eligibility for an Eligible Dependent:

  • An eligible dependent must meet the following:

  • Was the child of you or your spouse/common-law partner.

  • Was under 19 years old and lived with you on December 31 of the tax year.

  • Was not eligible to claim the CWB for themselves for that tax year.

Advance Payments Option:
Eligible individuals and families can apply for advance payments of the CWB, receiving up to 50% of the credit throughout the year. Any remaining CWB amount owed to you will be paid after your Income Tax and Benefit Return is assessed.

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The CWB provides valuable support to working Canadians, helping to reduce financial strain and increase disposable income for those who need it most

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Please note that each year changes to how deductions and other common requirements to create T1 is made, there are backdated forms that may not be listed above for anyone required to do several years of taxes at one time, please note that it is very important that you call for discussion as anything 2 years or more will incur a review and additional steps to fulfill deductions and more will need to be discussed. 

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Deductions are typically where CRA is set to do random reviews, and it is imperative that you have the right documentation and can produce proof of these deductions. 

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For more information, please see TYPES OF REVIEW.

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