Tax professional Jamie Golombek presents recommendations on CRA deadlines and adjustments
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Tax season is quick approaching, however there are some things try 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 Personal 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 to declare the deduction till their 2024 tax return.
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The simplest approach to discover out your contribution restrict is to take a look at the discover of evaluation to your 2022 tax return. In the event you don’t have that, you possibly can log into your account on the Canada Income Company’s web site.
“I’m an enormous fan of RRSPs,” Golombek mentioned in a latest interview with the Monetary Submit’s Larysa Harapyn. “An RRSP remains to be the best approach 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 possibly can repay most, if not all, of it inside just a few months, equivalent to when you’ll quickly be getting a bonus, further money or massive tax refund.
“The issue is if you happen to can’t afford to pay it again, and this drags on for months, it turns into a really, very costly approach to make an RRSP contribution,” Golombek mentioned.
Canadians who’ve been working from house on a full-time or hybrid foundation must also 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 methodology of claiming work-from-home bills is not obtainable for the 2023 tax yr.
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Between 2020 to 2022, workers have been allowed to say $2 per day for daily they labored from house, as much as a most of $500. Now, workers shall be required to tally up and prorate their bills earlier than claiming the ensuing quantity as a deduction. Workers may also want a duplicate of kind T2200 from their employer.
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In the event you owe the CRA cash, it’s extra important “now than ever earlier than within the final twenty years” to pay the excellent steadiness 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 must earn a price 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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