There are a number of ways to reduce the amount of tax you owe, and keep more money in your pocket at tax time.
1. Any income you earn in a registered retirement savings plan (RRSP) is usually exempt from tax as long as the funds remain in the plan. RRSPs, you save for your retirement and get a break at tax time too.
2. As long as you stay within your contribution room limit, you will not pay tax on any income you earn from investments in your tax-free savings account.
3. Does someone in your family regularly take the bus, train, subway, or ferry to work? You may be able to get a non-refundable tax credit for the cost of the transit passes by claiming the public transit amount.
4. Have you retired and now receive a pension? You can split up to 50% of eligible pension income with your spouse or common-law partner to reduce the overall taxes you pay.
5. Do you work in the trades? Tradesmen can deduct part of the cost of eligible tools purchased throughout the year.
6. Did you buy your first home in 2010? Check out the home buyers’ amount to see if you qualify for a credit.
7. Are you a single parent receiving the Universal Child Care Benefit (UCCB)? The Government of Canada released new UCCB measures in the 2010 Budget that may apply to you.
For people who are self-employed
8. Did you purchase a computer for your business after January 27, 2009, and before February 2011? If so, you may be eligible for a 100% computer capital cost allowance.
9. Did your business employ an apprentice? A salary paid to an employee registered in a prescribed trade in the first two years of his or her apprenticeship contract qualifies for a non-refundable tax credit for the employer.
10. Did your business (which is not a primarily child care services business) create licensed child care spaces for the children of your employees? If so, you may be eligible for the investment tax credit for child care spaces for each new child care space you created.