Non-deductible RRSP Fees Paid

If you pay an administration fee or management fee for your RRSP plan, the fees are not deductible for income tax purposes. You should talk to your financial advisor and see if he can make a reasonable allocation of these fees to a non-registered account. By doing so, the fees may be tax deductible. This tax savings tip can be achieved with just a simple phone call.

If you do pay a fee within your registered plan, pay the fee yourself each year. Do not simply have the money paid from the account. This will allow your RRSP to grow unhindered. Your payment will not be considered a contribution to your RRSP, which is good because it allows more of your money to remain invested and earning income.

The Institute of Chartered Accountants of Alberta provides information for Tax Tips as a public service.

General Tax Tips #9: Union Dues are Deductible
If you pay trade union or professional organization dues, keep your receipts or proof of payment because they are deductible. With the exception of your T4 slip, do not include your receipts with your return. However, you should keep them in case Canada Revenue Agency asks to see them.
Look into deductions associated with your union and professional memberships for your 2003 return.
The Institute of Chartered Accountants of Alberta provides information for Tax Tips as a public service.

Union Dues are Deductible

If you pay trade union or professional organization dues, keep your receipts or proof of payment because they are deductible. With the exception of your T4 slip, do not include your receipts with your return. However, you should keep them in case Canada Revenue Agency asks to see them.

Look into deductions associated with your union and professional memberships for your 2003 return.

The Institute of Chartered Accountants of Alberta provides information for Tax Tips as a public service.

Deductions When You Move for Work

If you moved in 2003 to work or carry on business in a new location, you may claim certain moving expenses up to the amount of your income from your new work location. To be eligible, your new residence must be at least 40 kilometres closer to your new work place and you may not claim any expenses your employer paid on your behalf. Expenses that your employer has reimbursed you or expenses that you have received an allowance for are not deductible unless the reimbursement or the allowance is included in calculation your income.

You may claim mover's transportation, storage charges, personal transportation costs for you and your family, and lodging and meals for up to 15 days, near your former or new residence.

Plus, if you sold your old residence, you can claim the costs of selling that residence as well as legal fees and property transfer taxes in connection with the purchase of your new residence. If you move for work, look into deductions when you file your return.

The Institute of Chartered Accountants of Alberta provides information for Tax Tips as a public service.

Transferring Income Tax Credits to Your Spouse

You can transfer some income tax credits to your spouse.
Transferable credits are the age credit, disability credit, pension income credit, and spouse's education and tuition fee credits.

If you are able to reduce your tax payable to zero without using all the available credits, you should transfer some of these unused credits to your spouse's return. You can also claim the unused portion of a disability credit for a disabled brother, sister, aunt, uncle, niece or nephew who either resides with you in a self contained domestic establishment or is dependent on you by reason of infirmity.

Don't let your credits go to waste.

The Institute of Chartered Accountants of Alberta provides information for Tax Tips as a public service.

Child Care Expenses

You may be able to deduct your child care expenses if they were incurred to enable you or a supporting person to earn employment or business income, attend secondary or post-secondary school, or engage in grant research.

Attendance at a secondary or post-secondary school means attending at least one course that is at least 3 weeks long for 10 hours per week or 12 hours per month. A supporting person includes your spouse, the parent of the child, or the person who claimed the child as a dependant and who lived with you at any time in the year and at any time in the first 60 days of the following taxation year. An eligible child is defined as a child of the taxpayer or the taxpayer's spouse, or a child dependent on the taxpayer or the taxpayer's spouse and whose income for the year does not exceed the basic personal amount for the year. The child has to be under 14 years of age at some time in the year. However, the age limit does not apply if, during the year, the child is dependent on the taxpayer or the taxpayer's spouse, and has a mental or physical infirmity.

The maximum deduction is $7,000 for each child under 7, $10,000 for each child whom you are claiming the disability tax credit, and $4,000 for each other child under 16 but the maximum deduction may not exceed two-thirds of your earned income. The deduction can only be claimed by the lower income person unless the lower income spouse attends secondary or post secondary school, is mentally or physically infirmed, or is for a period of at least 2 weeks was in a prison, hospital, or asylum.

Child care expenses can include day care, nursery school, day sports school, lodging at a boarding school or camp, and certain babysitters.

Complete Form T778, Calculation of Child Care Expenses Deduction, and file it with your income tax return.

The Institute of Chartered Accountants of Alberta provides information for Tax Tips as a public service.

Medical Expenses

Don't forget your medical expenses on your tax return.

You can claim a tax credit for medical expenses for any 12-month period ending in 2003. Just look for the consecutive 12-month period when the sum of expenses is the highest.

Also keep in mind, you can add the medical expenses of your spouse and dependents to your own medical expenses and you can include payments to private health insurance plans, fees to optometrists, opticians, dentists, and chiropractors. Your expenses also include costs of prescription eyeglasses, contact lenses, and dentures. Reasonable incremental construction costs to make a new principal residence suitable for a disabled person are also included in medical expenses. The tax credit is available only on the portion of these expenses that exceed the lesser of 3 per cent of your net income or $1,755.

You may not claim the specific portion of any medical expenses that have been reimbursed by a medical plan.

The Institute of Chartered Accountants of Alberta provides information for Tax Tips as a public service.

The Canadian Education Savings Grant

The Canadian Education Savings Grant (CESG) is made for contributions made to a Registered Education Savings Plan (RESP) after 1997 for a beneficiary 17 years of age and under. It will be paid directly into the RESP. The life time limit for any one beneficiary is $7,200.

The CESG is equal to 20% of the first $2,000 annual contribution to an RESP (up to $400 per year per child) for the benefit of children under 18 years of age. If the contributor does not make a contribution to the RESP in one or more years, there are carry forward provisions that can increase the CESG maximum from $400 to $800. The maximum annual RESP contribution is $4,000 per beneficiary.

If the beneficiary does not use the CESG for education, the grants must be repaid to the government.

The CESG will only be available for 16 and 17 year olds if the RESP contribution made before the year in which the child became 16 either totaled $2,000 or was at least $100 per year in any four years before the year in which the child became 16.

Set up and make contributions to a RESP for your children to qualify for the CESG.

The Institute of Chartered Accountants of Alberta provides information for Tax Tips as a public service.

Tax Credits for Those Over 65

Your age could be worth money at tax time. If you were 65 years of age or older in 2003, then you may be eligible for some tax breaks.

You may be eligible to claim a tax credit depending on your income level for being 65 years of age or older. You may also claim another tax credit for an amount equal to the lesser of $1,000 and the “pension income” you included in income in the year.

Eligible pension income includes payments you receive from superannuation or pension plans, the income element of annuity payments and RRSP annuities or payments from registered retirement income funds.

The pension credit is also available to individuals under age 65 on life annuity payments from superannuation or pension plans and on certain annuity payments arising by virtue of the death of a spouse.

The maximum age credit occurs at net incomes of approximately $28,193 or less and declines to zero if the net income rises to approximately $53,440. If you were 65 or older during 2003, consult the advice of a Chartered Accountant to find out which tax breaks you're eligible for.

The Institute of Chartered Accountants of Alberta provides information for Tax Tips as a public service.

Pension Income Credit

If you are 65 or older, you should try to have at least $1,000 of income qualifying for the Pension Income Credit. Income from pension plans, RRSP annuities, RRIFs, and certain annuities qualify for this tax credit.

Old Age Security and Canada Pension income will not qualify for this tax credit.

If you are 65 or older and your only pension income is Old Age Security and Canada Pension, and you have an RRSP, you can qualify by transferring a sufficient amount of RRSP funds into a RRIF or annuity for the qualifying income.

If you are under 65 and receiving income from a pension plan, or as a result of the death of your spouse, receiving income from RRSP annuities, RRIFs and certain annuities, you also qualify for the credit.

If you have qualifying pension income, but cannot use this credit, it can be transferred to your spouse.

Make sure you qualify for the Pension Income Credit. Consult the advice of a Chartered Accountant for more information.

The Institute of Chartered Accountants of Alberta provides information for Tax Tips as a public service.

Charitable Donations

You can claim all of your 2003 donations plus any donation made in any of the previous five years that have not been claimed before.

If you are married, claim all the donations on one spouse's return. This is because the first $200 of donations is only eligible for a reduced tax credit. By claiming donations on one return, you will avoid having the first $200 of donations being subject to a reduced tax credit twice.

You don't have to claim your donations made in 2003. If, for example, your other deductions are sufficient to eliminate your federal taxes, then there is no benefit in claiming the donations in this year. But don't worry, you can still claim your 2003 donations in the next five years.

You are required to attach the official receipts to your tax return. Pledge slips, cancelled cheques, credit card slips and other proofs of payment are not acceptable. If you have lost your official tax receipt, contact the charity for an official duplicate.

Receipts from Canadian charities and athletic associations must contain a statement that it is an “official receipt” for income tax purposes and show the name of the organization, its address, the registration number assigned to it by the Minister of National Revenue, the date, and the amount of the donation.

The Institute of Chartered Accountants of Alberta provides information for Tax Tips as a public service.