General Tax Tips and Advice

· Deduct all direct expenses from self-employed business and professional income including: home office; car operating costs (gasoline, repair, depreciation, etc.); and salaries to spouse and children;

· Obtain form T2200 from your employer if you are required to use your own car for business purposes. All car operating costs (as above) can be deducted pro-rated to the business mileage (excluding trip from home to office or vice versa, but including home to work site or vice versa);

· When you have investment income, you can deduct interest expenses, investment counsel fee, bookkeeping cost for investments;

· Childcare expenses include summer camp and hockey school fees; childcare payments to children over 18 are also deductible;

· You can claim an equivalent-to-married exemption for your dependent (such as child, parent or grandparent) if you are single, separated or divorced;

· Consider transferring donations, medical expenses or dividend income to your spouse to maximize the tax benefit;

· Make your maximum annual RRSP contribution each year if you can. Consider making a spousal RRSP contribution if your spouse has little or no income;

· If you must borrow, borrow for investments rather than consumer products or cars to maximize the deductibility of interest expenses;

· When paying down debt, reduce any debt from non-deductible interest costs first, such as residential home mortgage and credit cards.

Common Mistakes

· Investments in US or foreign stocks with Canadian brokerage firms belong to Foreign Properties. Must report T1135 if the cost is over $100,000. Penalty: $25 per day. Maximum $2,500;

· Starting Oct. 2016, sales of Principal Residence must be reported though no tax on its capital gain. Penalty: $100 per month. Maximum $8,000;

· Repeated failure to report income over $500 (such as missing T3 or T5) within 4-year period, penalty will be lesser of 10% on amount omitted or 50% of the tax difference.