Tax professional Jamie Golombek provides recommendations on CRA deadlines and adjustments
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Tax season is quick approaching, however there are some things you need to be doing proper now to get a head begin.
An important factor, tax professional Jamie Golombek mentioned, is to know your Registered Retirement Financial savings Plan (RRSP) contribution restrict.
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The managing director of tax and property planning at CIBC Non-public Wealth Administration mentioned being conscious of your restrict is vital because the 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 gained’t be capable of declare the deduction till their 2024 tax return.
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The simplest method to discover out your contribution restrict is to take a look at the discover of evaluation in your 2022 tax return. For those who don’t have that, you may log into your account on the Canada Income Company’s web site.
“I’m a giant fan of RRSPs,” Golombek mentioned in a current interview with the Monetary Submit’s Larysa Harapyn. “An RRSP continues to be the best method to save for retirement.”
He mentioned 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 just a few months, comparable to when 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 method to make an RRSP contribution,” Golombek mentioned.
Canadians who’ve been working from residence 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 now not accessible for the 2023 tax 12 months.
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Between 2020 to 2022, staff had been allowed to say $2 per day for on daily basis they labored from residence, as much as a most of $500. Now, staff will likely be required to tally up and prorate their bills earlier than claiming the ensuing quantity as a deduction. Staff will even want a duplicate of kind T2200 from their employer.
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For those who owe the CRA cash, it’s extra important “now than ever earlier than within the final twenty years” to pay the excellent stability by April 30, Golombek mentioned. 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 high tax bracket of fifty per cent or extra, you’d need to earn a charge of return of over 20 per cent on an equal funding to be higher off than not paying your tax debt,” he mentioned.
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