Tax professional Jamie Golombek gives tips about CRA deadlines and modifications
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Tax season is quick approaching, however there are some things you ought to be doing proper now to get a head begin.
An important factor, tax professional Jamie Golombek stated, is to know your Registered Retirement Savings Plan (RRSP) contribution restrict.
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The managing director of tax and property planning at CIBC Non-public Wealth Administration stated being conscious of your restrict is vital for the reason that deadline to say an RRSP deduction in your 2023 tax return is Feb. 29. Canadians can nonetheless contribute to their RRSPs after that deadline, however they received’t be capable of declare the deduction till their 2024 tax return.
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The simplest strategy to discover out your contribution restrict is to have a look at the discover of evaluation on your 2022 tax return. For those who don’t have that, you may log into your account on the Canada Revenue Agency’s website.
“I’m a giant fan of RRSPs,” Golombek stated in a recent interview with the Monetary Publish’s Larysa Harapyn. “An RRSP remains to be the best strategy to save for retirement.”
He stated most Canadians ought to maximize their RRSP contributions, however that doesn’t imply they need to take out a mortgage to take action. A mortgage on this case solely is sensible in “very restricted and uncommon conditions” the place you may repay most, if not all, of it inside a couple of months, similar to when you already know you’ll quickly be getting a bonus, further money or huge tax refund.
“The issue is when you can’t afford to pay it again, and this drags on for months, it turns into a really, very costly strategy to make an RRSP contribution,” Golombek stated.
Canadians who’ve been working from house on a full-time or hybrid foundation also needs to get a head begin on determining their home-office bills earlier than the April 30 tax submitting deadline. That’s as a result of the CRA’s simplified technique of claiming work-from-home bills is no longer available for the 2023 tax year.
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Between 2020 to 2022, workers have been allowed to say $2 per day for on daily basis they labored from house, as much as a most of $500. Now, workers can be required to tally up and prorate their bills earlier than claiming the ensuing quantity as a deduction. Staff can even want a replica of kind T2200 from their employer.
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For those who owe the CRA money, it’s extra important “now than ever earlier than within the final twenty years” to pay the excellent steadiness by April 30, Golombek stated. That’s as a result of the CRA’s prescribed rate of interest for overdue or late taxes has hit 10 per cent for the primary time since mid-2001.
“For somebody in a prime tax bracket of fifty per cent or extra, you’d must earn a fee of return of over 20 per cent on an equal funding to be higher off than not paying your tax debt,” he stated.
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