Do you know what are tax deductions or tax credits that you can claim on your tax return? A quick look at this list before filing your taxes will help you minimize your taxes payable. If you know what you could claim at least you will be able to ask a question to your tax professional.
As a resident of Canada and in some cases, a non-resident will need to file a tax return every year. Generally, this return is called “T1 General Personal Information and Benefit return”. This form changes every year, and you have to select this form published by CRA for that particular year. A non-resident or a foreign person may have to file a different type of form.
We have tried to categorize this form into the following major sections and prepare a checklist for each section, which we think should be glanced at before working on the return. From this checklist, you may check the items that may apply to you and then look into further details and scenarios that may be applicable to you.
Major sections of T1
Generally, you report the following primary income sources that are taxable on your T1 personal income tax and benefits return. The total of these sources is reported as “Total Income.”
Total income from all major sources
You may be entitled to claim certain deductions from the total income reported above. Your above total income less these deductions is your “Net Income.”
Generally, the following major Deductions that you can claim.
In addition to the above deductions, you may also be entitled to claim few more deductions. Your taxable income is determined as your “Net Income” from above minus the following deductions.
Major other deductions that may apply to you.
Once you arrive at your taxable income for the year, you need to work out your total taxes payable, including your federal and provincial taxes payable. You may be entitled to certain non-refundable federal tax credits from these taxes payable that you can deduct from your total federal taxes owed.
Non-refundable tax credits
There are specific federal and provincial tax credits that you can directly deduct from your taxes payable to certain limits.
In addition to the above credits, you may also be entitled to claim the following refundable credits, taxes paid or deducted, and incentives from your total taxes payable.
Refundable tax credits, incentives, and taxes paid.
After deducting the above items, you arrive at your net income taxes payable. You need to pay your taxes owing on or before April 30th. Your tax return filing deadline usually by April 30th of the following year unless you or your spouse reports business or professional income. If you or your spouse reports income from a business or profession, your tax return filing deadline is Jun 15th. However, in both scenarios, you need to pay your taxes owing by April 30th.
You report your net income from your business or profession as under the above total income sections. The business or your professional expenses and deductions you may be entitled to claim from your gross business or professional income have not been outlined above. You may please refer to our blog “Business Expense” for those expenses and deductions.
You can pay your taxes owing from your online banking platform. For further details, please visit our other blog, “CRA Payment.”
You can file your tax return electronically, or you can mail printed copies to your CRA tax center. When you file your tax return electronically, it gets processed faster. We provide electronic tax filing services for all types of personal tax returns.
The items have been described in a summary form and include major items that are generally applicable in most personal taxes. You may need to contact your accountant for a comprehensive analysis of your tax situation.
RKB Accounting has expertise in cross-border taxation and has been providing accounting and taxation services for the last fifteen years in Canada and USA. RKB services include incorporating a business on both sides of the border, bookkeeping, sales tax, payroll, and corporate and personal income tax. RKB’s expertise includes cross-border tax planning, long-term tax planning, helping business start-ups, business structure planning, and resolving complex tax matters. RKB a CPA(Delaware), CA(India), and CIA(USA) has over 25 years of experience in accounting and taxation in dealing with various countries in the world.
Disclaimer: Information in the blog/post/article has been presented for a broad and simple understanding. This is not legal advice. RKB Accounting & Tax Services does not accept any liability for its application in any real situations. You need to contact your accountant or us for further information.