Tax FAQ’s

Expert Answers to Your Burning Questions

Clear, reliable answers to common tax questions — tailored for individuals, families, and businesses across Canada. Navigate your tax obligations with confidence and clarity

Claiming Medical Expenses on your taxes?

The claim for medical expenses is limited by an income threshold. In other words, the lower your net income, the more you can claim.

As a result, it’s generally beneficial to claim all family medical expenses in the lower-income spouse’s/partner’s return. Remember, though, this is a non-refundable credit, so the individual who makes the claim should have sufficient income tax payable — both federal and provincial — to absorb the entire credit.

What if I found Old receipts after my taxes are done?

In gathering your information, you may stumble across older receipts or slips that may have value in your taxation year return. Don’t worry, call us, and we will do the adjustment for you. Some examples are below:

Charitable donations:  They can be carried forward and used in any of the five years after the year the gift is made

Medical expenses: They can be claimed during any 12-month period that ends in a taxation year if you haven’t claimed them previously.

In addition, under the taxpayer relief provisions, the CRA has the discretion to make adjustments to previously filed returns (10 years back) in relation to certain errors or omissions, at the taxpayer’s request.

What if Old income slips were missing when taxes were done?

On the other hand, if you stumble across old income slips that you may have missed, or if you receive a slip after filing your return, you may be tempted to leave it for the next year or let the CRA assess you based on its records. This is not a good idea because it would be considered a failure to report income, and if you have also missed any income in any of the three preceding years, you will be subject to a penalty for repeated failure to report income, which could be significant. Report any missed income as soon as you find it.

What are the benefits of filing returns for children/students?

In many cases, there may be benefits to filing tax returns for children even when it’s not required.

If your children had part-time jobs during the year or earned some money for small jobs, such as babysitting, snow removal, or lawn care, by filing a tax return, they report earned income:

  1. Establishes a contribution room for purposes of RRSP
  2. Filing a tax return for teenagers provides the availability of refundable tax credits.
  3. There is also a GST/HST credit available for low- and no-income individuals aged 19 and up.

So anyone who will turn 19 years old before the Tax year should file their tax return.

Finally, University students should always file tax returns and claim the eligible tuition and education amounts. Unused amounts are transferable to a supporting spouse, parent, or grandparent up to a maximum of $5,000 (federal) per person. Once established, credits that cannot be used or transferred in the current year can be carried forward and claimed by the student in a later year.

What is RRSP?

A Registered Retirement Savings Plan, or RRSP, is a special type of investment account designed to help Canadians save for retirement. The main advantage of an RRSP account, as compared to a regular investment account, is the tax benefits it offers.

How much can I contribute and deduct?

Generally, the amount you can contribute to your RRSPs or your spouse’s or common-law partner’s RRSPs, for a given tax year, without tax implications is determined by your RRSP deduction limit. This is often called your “contribution room.” There are limits on how much you can contribute each year to your own RRSPs and your spouse’s RRSPs. Your total contribution room for the year is lower than 18% of your earned income for the previous year.

What is my RRSP deduction limit? You can find your RRSP deduction limit by checking the amount (A) of the RRSP Deduction Limit Statement on your latest CRA Notice of Assessment or notice of reassessment.

What Expenses can I deduct if I am renting out my property?

If you are renting out one or more rooms in your home, or if you own a rental property, many expenses can be deducted in calculating your net rental income.

These expenses include:

  • Mortgage interest
  • Property taxes
  • Utility costs
  • House insurance
  • Maintenance costs,
  • Advertising
  • Property management fees
  • Accounting or Legal Fee
Business Return: Self-Employed Sole Proprietorship
Q: Do I need a T4 if I am a contractor?

A: As an independent contractor, Form T2125 is used to report your income and expenses an independent contractor. If you received other employment income, you may receive a T4 or T4a from those employers to claim as self-employed.

Tax Deductible Expenses

Next, you’ll want to gather all of your receipts, bills, and statements that you’ll be entering, which may be eligible as deductible expenses. Common tax-deductible expenses for Uber Partners include:

  • Fees
  • Gas, oil, windshield washer fluid, brake fluid, antifreeze, and other maintenance expenses
  • Repairs and routine oil changes
  • Tires (including the cost of balancing/installation)
  • Lease payments
  • Car washes/detailing
  • Supplies such as pens/paper and water/snacks are provided to your passengers
  • A portion of cell phone expenses

Mileage

Lastly, you’ll need to know a couple of mileage numbers from this tax year.

  1. The total kilometers you drove. A summary of the distance you drove just for business
  2. The total kilometers you drove overall. Starting odometer readings should be from the day you started the business.
Q: Do I have to register for a GST/HST account?

A: If you live in a province/territory other than Quebec, your requirement to register for a GST/HST account depends on how much you earn from self-employment.

If you earn over $30,000 in gross income in a calendar year through self-employment, then you must register for a GST/HST account with the CRA.

Q: How do I register for a GST/HST account?

A: There are currently three ways to register – you can do it online, by telephone, or via mail/fax. More details from the CRA can be found by visiting  www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/rgstrng/menu-eng.html

Should I “Incorporate or Not” my business?

The decision to incorporate a business is based on an individual client’s circumstances and needs.

Listed under are some reasons why many businesses choose not to incorporate:

  • Losses are trapped in the corporation
  • Increased Tax reporting costs, have to file annual corporate returns to CRA

Listed under are some reasons why businesses choose to incorporate:

  • Separate legal identity
  • Limit liability
  • Reduced Taxes
  • Beneficial for Estate planning

As a general rule, when starting a new business, many owners choose not to incorporate, as the company is more likely to incur losses in the beginning, and small business owners are often unsure of the future viability of the business. This way, they can offset the losses from their business income against other forms of income they may have. But as soon as they see potential growth and profitability, businesses incorporate to take advantage of the benefits mentioned above.