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Every Canadian must file their own tax return every year, even if you have a spouse. There are ways to maximize your spousal tax situation using methods like income splitting and transferring deductions between each other. Generally, the spouse with the higher income and tax bill should maximize deductions first as they’re likely to be in a higher tax bracket.
Although many Canadians dread tax season, if you’re expecting a refund or claiming any benefits or credits such as the GST/HST credit or Canada Child Benefit, it can work out well for you. We're here to help you make the most of your tax return by highlighing some of the most popular tax breaks to take advantage of.
How to maximize your tax return in Canada
In order to maximize your tax return, you need to calculate your taxable income first and then lower it using as many tax deductions and credits as possible. A deduction reduces your taxable income, while a credit minimizes the amount of tax you owe.
When is the tax return deadline in Canada?
You need to file your taxes by April 30, 2024. The deadline is extended to June 15, 2024, if you're self-employed or have a spouse or common-law partner who is self-employed. All taxes owed must be paid to the CRA by April 30, 2024.
What tax deductions and credits can you use?
There are hundreds of credits and deductions you can take advantage of. Let’s look at 20 of the most common ones so you can increase your chances of getting a bigger refund.
1. Childcare expenses
If your child is under the age of 16 years old, you may be able to claim a deduction. Childcare expenses include daycare centres, summer camps, overnight boarding schools, and caregivers such as nannies. Generally, childcare expenses must be deducted by the spouse with the lower income.
Read more: 11 Family Benefits and Tax Tips Every Parent Should Know
2. Spousal & child support payments
Support payments sent to a former spouse and/or children can have a noticeable impact on your tax bill. Tax rules will vary depending on the type: spousal or child support.
3. Student loan interest
If you or your child is studying at a post-secondary institution, you can deduct the interest paid on a student loan if you received the loan under the Canada Student Loans Act, Canada Student Financial Assistance Act, Apprentice Loans Act, or similar laws in your province or territory. This deduction does not apply to something like a personal loan or line of credit. Apply this deduction if you owe taxes. Otherwise, it’s better to carry it forward. Interest can be carried forward and applied to any tax return for the next five years.
4. Maximize your RRSP contributions
Your RRSP contribution limit is 18% of your earned income from the last tax year, plus any unused amounts from previous years. Check out your latest notice of assessment or log into your CRA My Account to find out what your RRSP contribution limit is. It’s a good idea to maximize your RRSP contribution in any way you can. You can even transfer TFSA interest gains (which are tax-free) to bump up your RRSP contribution.
If you don’t currently contribute to an RRSP (Registered Retirement Savings Plan), it’s not too late to benefit from a significant tax deduction for the 2023 tax year. You have until February 29, 2024 to contribute. Use Wealthsimple’s free RRSP and TFSA calculators for more insights on how you can maximize your savings.
Read more: TFSA vs. RRSP in 2022: Comparing What’s Best for You
5. Property taxes (owners) & rental payments (tenants)
Landlords can use Form T776 to claim property taxes for the period in which a rental property was available for rent. Employed and self-employed tenants can claim partial rent payments as a home office expense if they use their home for employment or business purposes.
6. Association & union dues
Most professional association fees and union fees are tax-deductible, therefore lowering your taxable income.
7. Employment expenses
You can deduct work expenses such as cell phone bills and office supplies if your employer asked you to purchase them. Educators can also claim up to $1,000 of eligible teaching supplies.
8. Tuition expenses
Post-secondary tuition fees can be deducted. Qualifying students can check the tax form from their educational institution to learn how much tuition fees were paid this year.
9. Moving expenses
If you moved at least 40 kilometres closer to your work, a new business, or post-secondary schooling, you can claim expenses from that move. Qualifying expenses include storage costs, travel expenses, temporary living expenses, the cost of cancelling a lease, and more.
10. Medical & charitable expenses
You may receive a partial deduction for charitable donations and certain medical expenses, including any medical cannabis products you purchased as a patient. Spouses should consider pooling contributions on one spouse’s tax return for maximum benefit.
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11. Home Buyers’ Amount
You can claim a $5,000 tax credit if you purchased your first home and did not live in another home owned by you or your partner in the past four years.
12. GST/HST New Housing Rebate
You may qualify for the GST/HST New Housing Rebate if you did substantial renovations or purchased or built a new home. A similar provision exists for landlords under certain conditions.
13. Provincial & territorial credits
In addition to federal and provincial GST/HST credits, many provinces and territories have additional credits for certain segments of the population. These include safety-related home renovations for seniors in New Brunswick to climate action incentives in British Columbia. Check out your province’s website to see what credits you may be entitled to.
14. Capital gains - RRSP & TFSA
Always try to leverage your TFSA and RRSP accounts because the interest earned in these accounts are tax-free. While this won’t create a tax deduction, it will help you grow your savings.
15. Write off capital losses
If one of your investments goes sour and you sell it at a loss, you may be able to apply it against your taxable capital gains. If you don’t have enough capital gains to cover the loss, you can claim the leftover amount as a net capital loss. Net capital losses can be used to lower capital gains in any of the three preceding tax years or carried forward to future tax years. Keep in mind you can't deduct capital losses in tax-free accounts like RRSPs and TFSAs. Learn more about capital losses on the CRA website.
16. Self-employed business expenses
Small business owners can deduct various business expenses, including advertising costs, bank fees, office supplies, and travel expenses. Those who work from home can claim a portion of their utilities, insurance, and maintenance costs. Deductible amounts are based on what portion of the residence is used for business purposes.
17. Disability tax credit
The disability tax credit (DTC) helps disabled individuals and family members reduce the amount of income tax they pay. To qualify for the DTC, a medical practitioner must certify you’re living with a severe mental or physical disability. Payment amounts vary by province, but if you qualify for this tax credit, it could open the door to other benefits.
18. Home office expenses
Did you work at home during the pandemic? If so, the CRA has implemented a new temporary flat rate method that makes it easier to claim deductions for home office expenses. You can claim $2 for each day you work from home, up to a maximum of $500 (250 working days). There is also no need to calculate the size of your workspace, keep supporting documents, or submit Form T2200. Unfortunately, 2023 was the last year you could use the temporary flat rate.
19. Canada Workers Benefit
If you’re a low-income worker, you can claim the Canada Workers Benefit (CWB) when you file your taxes. The refundable tax credit provides up to $1,428 for single individuals and $2,461 for families. It also includes a disability supplement if you have an approved Disability Tax Credit Certificate (Form T2201) on file with the CRA. If you qualify, you can request an advance payment, which allows you to receive half of your benefit in four separate payments.
Read more: Canada Workers Benefit (CWB): How It Works, Eligibility & Advance Payments
20. Canada Training Credit
The Canada Training Credit supports workers over age 26 by reducing barriers to professional development. It offers $250 every year ($5,000 lifetime limit) for eligible tuition and other course fees.
How to do your taxes online
You can file your taxes using free tax software or upgraded tax software if you need additional support. Make sure whichever option you choose is compatible with NETFILE, Canada’s online tax filing system that sends tax returns directly to the CRA.
What if I notice an error in my tax return?
If you receive your notice of assessment and notice an error, you can file an objection to get it corrected. This quick guide will show you how.
