Tax professional Jamie Golombek affords tips about CRA deadlines and modifications
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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 Non-public 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 gained’t be capable of declare the deduction till their 2024 tax return.
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The simplest strategy to discover out your contribution restrict is to take a look at the discover of evaluation to your 2022 tax return. When you don’t have that, you may 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 Put up’s Larysa Harapyn. “An RRSP remains to be the best strategy 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 may repay most, if not all, of it inside just a few months, akin to when you understand you’ll quickly be getting a bonus, additional 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 strategy 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 not out there for the 2023 tax yr.
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Between 2020 to 2022, workers had been allowed to say $2 per day for day by day they labored from residence, 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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When you owe the CRA cash, it’s extra important “now than ever earlier than within the final 20 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 should earn a fee 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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