As the tax filing deadline approaches, below are some reminders to help you prepare and file your personal income tax return and maximize your tax savings. It’s important that you have all required tax documents before you prepare your return, in order to avoid having to file an amendment. In addition, you may want to have your 2020 tax return and the Canada Revenue Agency (“CRA”) – and, if applicable, Revenu Québec – Notice of Assessment handy in case you need to refer to tax information from the previous year.
Tax Receipts
All Individuals
Salaried Income (T4/R1)
Investment Income (T5/R3)
Trust and Mutual Fund Income (T3/R16)
Limited Partnership Income (T5013/R15)
Trading Summary/Realized Gain/Loss Report
RRSP Contribution Receipts – For contributions made during the 2021 calendar year, and during the first 60 days of 2022.
RRSP Withdrawals (T4RSP/R2)
RESP Withdrawal Receipts (T4A/R1)
Foreign Securities Report
Interest Expenses and Carrying Charges – Including Fee Letter(s) for any applicable management fees relating to fees for
non-registered fee-based account(s).
Charitable Donations – You can combine your charitable donations with your spouse (or common-law partner) and claim on
one income tax return for maximum tax savings.
Political Contributions
Moving Expenses
Tuition Expenses (Form T2202A/R8)
Child Care Expenses
Home Office Expenses
Employment-related Expenses (including Form T2200/TP-64.3)
Note: For Canadians who received Federal COVID-19 benefits in 2021, such as, the Canada Recovery Benefit (“CRB”), the Canada Recovery Sickness Benefit (“CRSB”), and the Canada Recovery Caregiving Benefit (“CRCB”), the CRA will be issuing a T4A slip by the end of February to report these amounts received, as they are taxable. Residents of Quebec will receive both a T4A and a RL-1 slip.
Retirees
Registered Retirement Income Fund, Locked-in Retirement Income Fund, or Prescribed Retirement Income Fund Withdrawals (T4RIF/R2)
Old Age Security & Canadian Pension Plan Benefits (T4A-OAS, T4A-P, R2)
Other Pension/Annuity Income (T4A, R2)
Helpful Reminders and Tips
Individuals
If you realize capital losses in the same taxation year that a significant capital gain is triggered, the tax liability on the capital gain can be reduced. Also, any net capital losses can be carried forward indefinitely or carried back to offset net capital gains reported in the three previous taxation years. Remember to report the sale of your principal residence, if applicable.
Employees
During the COVID-19 pandemic, many employees worked from home for much of 2021. As a result, the CRA has again simplified the process to claim home office expenses for 2021, which will allow employees (with modest expenses) to deduct an amount of up to $500 (up from $400 in 2020) without the need to track detailed expenses. The allowable amount will be based on the amount of time spent working from home and will generally not require a signed form from employers. Employees who worked from home more than 50% of the time over a period of at least four consecutive weeks in 2021 due to COVID-19, will be eligible to claim a (temporary) flat rate deduction of $2 for each day they worked at home in that period, plus any other days they worked from home in 2021 due to COVID-19, up to a maximum of $500. Employees with larger claims for home office expenses can still choose to use the existing detailed method to calculate their home office expenses deduction. Revenu Québec announced that it will again parallel these Federal changes for Quebec provincial income tax purposes for 2021.
Business Owners
Incorporated small business owners can use their lifetime Capital Gains Deduction to shelter up to $892,218 (2021) of capital gains on the sale of shares of a qualifying small business corporation. The Capital Gains Deduction can only be claimed on an actual sale (or deemed disposition) of qualifying shares.
Retirees
Consider pension income-splitting to strategically lower family taxes by taking advantage of your spouse/common-law partner’s lower marginal tax rate. Canadian residents receiving eligible pension income can transfer up to 50 per cent of this income to their spouse or common-law partner. A T1032 – Joint Election to Split Pension Income form (or Schedule Q for Quebec taxpayers) must be completed.
For more information on this topic, ask your BMO financial professional for a copy of the article, Pension Income-splitting Provides Tax Planning Opportunities for Couples.
Please note that this checklist is not a comprehensive review of the subject matter, and it’s important to consult a professional tax advisor for assistance in your particular situation.
For more information, please speak with your BMO financial professional.
BMO Private Wealth provides this publication for informational purposes only and it is not and should not be construed as professional advice to any individual. The information contained in this publication is based on material believed to be reliable at the time of publication, but BMO Private Wealth cannot guarantee the information is accurate or complete. Individuals should contact their BMO representative for professional advice regarding their personal circumstances and/or financial position. The comments included in this publication are not intended to be a definitive analysis of tax applicability or trust and estates law. The comments are general in nature and professional advice regarding an individual’s particular tax position should be obtained in respect of any person’s specific circumstances.
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