Tips for Maximum Tax Refunds in Canada
Before the March 1, 2010 deadline, taxpayers are asking themselves crucial tax related questions: Should I put my money in a Tax Free Saving Account (TFSA) or in my Registered Retirement Savings Plan (RRSP)? When is the right time to move to another province? Should I file taxes even though I have not made much money in the 2009 tax year? Can I get any tax deductions for my medical costs in the 2009 tax year?
An RRSP is a special financial vehicle account designed to help you save money and invest towards your retirement needs. It creates savings at the time of filing your taxes of up to 30%, which is the average Canadian tax rate. A TFSA uses money after taxes which once deposited accumulates tax-free interest at the time of your future withdrawal.
If you are moving to another province, from a tax perspective you are subject to the tax rates of the province in which you reside on December 31 of any calendar year. Therefore, it is beneficial to move to a province with higher tax rates after January 1 so that you can benefit from the lower tax rate in your province for the previous year.
If you have not made much money in the 2009 tax year, it is still important to file your taxes since you will be able to benefit from such government programs as Canada Child Tax Benefit, a GST/HST credit, and other tax rebates. Students who are in the Repayment Assistance Program are often asked for their Notice of Assessment which is only received when the taxpayer files their taxes.
In order to claim your medical expenses in the 2009 tax year, these expenses must exceed 3% of your net income. You can benefit from tax breaks, more likely, if you claim all medical expenses for you, your spouse or common-law partner, and your dependents who are under 18 years of age on a single tax return. Additionally you will be able to claim all travel costs provided that you have travelled more than 40km to get to the medical facility for treatment.