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Tax knowledgeable Jamie Golombek gives recommendations on 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.
Crucial factor, tax knowledgeable 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 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 have the ability to declare the deduction till their 2024 tax return.
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The simplest approach to discover out your contribution restrict is to have a look at the discover of evaluation in your 2022 tax return. In case you don’t have that, you’ll be able to log into your account on the Canada Income Company’s web site.
“I’m an enormous fan of RRSPs,” Golombek mentioned in a current interview with the Monetary Publish’s Larysa Harapyn. “An RRSP continues 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 smart in “very restricted and uncommon conditions” the place you’ll be able to repay most, if not all, of it inside just a few months, akin to when you realize you’ll quickly be getting a bonus, further money or large tax refund.
“The issue is for those who 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 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 methodology of claiming work-from-home bills is not out there for the 2023 tax 12 months.
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Between 2020 to 2022, staff have been allowed to say $2 per day for every single day they labored from residence, as much as a most of $500. Now, staff can be required to tally up and prorate their bills earlier than claiming the ensuing quantity as a deduction. Staff may also want a duplicate of kind T2200 from their employer.
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In case you 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 prime 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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