A tax return for a financial business is a tax filed by businesses to report their income and expenses to the government. The tax return calculates the tax liability of the business and determines if the business owes any taxes. And by knowing how to maximize the tax return, a financial business can keep more of its hard-earned money.
It is pertinent to mention here that a financial business in Canada can calculate its tax liability by applying the tax rate to its taxable income. If the tax liability of the business is greater than the taxes owed by a business, it owes taxes. And If the tax liability of a business is less than the taxes owed, it does not owe taxes.
If you are looking for the best ways how to maximize tax returns for your financial business in Canada or how to get more money back on taxes in Canada, you have stumbled upon the right page.
In this blog post, we are going to enlighten you with the top tax ideas to maximize tax returns for your financial business in Canada.
You can learn how to maximize your tax return by fixating on the following top tax tips and ideas. So, let’s get started!
The Best 25 Ways to Maximize Tax Returns
The following are our top tax ideas on how to maximize tax returns for your financial businesses in Canada:
1- Calculate your Taxable Income
The first and foremost tax idea of how to maximize your tax return for your financial business in Canada is that you must first calculate your taxable income. Then reduce it using as many tax deductions and credits as possible.
A deduction reduces your taxable income, whereas a credit reduces your tax liability. Claiming more deductions answers the question of how to get more money back on taxes in Canada.
2- Assess Your Childcare Expenses
You may be able to claim a deduction if your child is under the age of 16.
Daycare centers, summer camps, overnight boarding schools, and caregivers such as nannies are all examples of childcare expenses.
Generally, the spouse with a lower income must deduct childcare expenses.
3- Determine Child and Spousal Support Payments
Support payments made to a former spouse and/or children in Canada can have a significant impact on your tax bill. The tax rules will differ depending on whether the support is spousal or child support.
If you or your child is enrolled in a post-secondary institution, you can deduct the interest paid on a student loan if it was obtained through the Canada Student Loans Act, the Canada Student Financial Assistance Act, the Apprentice Loans Act, or similar laws in your province or territory.
This deduction does not apply to a personal loan or a line of credit. Use this deduction if you owe taxes on your financial business. Alternatively, it is preferable to proceed. This interest can be carried forward and applied to any tax return for the next five years.
Hence, you can get more money back on taxes in Canada by claiming more and more deductions.
4- Enhance Your RRSP Contributions
The contribution limit for Registered Retirement Savings Plan (RRSPs) is 18% of your earned income from the previous tax year. It also includes any unused amounts from previous years. To find out what your RRSP contribution limit is, consult your most recent notice of assessment or log into your CRA My Account.
Therefore, make the most of your RRSP contribution in any way you can and maximize your tax return. You can even transfer tax free TFSA interest gains to ramp up your RRSP contribution.
5- Deduct Tuition Expenses
Another top tax idea on how to maximize tax return for your financial business in Canada in 2022 is by deducting tuition expenses.
Tuition for post-secondary education can be deducted. Qualifying students can check their educational institution’s tax form to see how much tuition was paid this year.
6- Association and Union dues are Tax-deductible
The majority of dues paid to professional associations and unions are tax deductible. It reduces your taxable income. The lower your taxable income, the lower your financial business’s liability.
As a result, you owe less tax to the government.
7- Owners’ Property Taxes and Tenants’ Rental Payments
Landlords can use Form T776 to reclaim property taxes for the time a rental property was available for rent. Employed and self-employed tenants can deduct a portion of their rent as a home office expense if they use their home for work or business purposes.
8- Subtract/Deduct Employment Expenses
Work expenses such as cell phone bills and office supplies can be deducted if your employer requires you to purchase them. In addition, educators can claim up to $1,000 in eligible teaching supplies.
9- Medical and Charitable Charges
You may be eligible for a tax credit for charitable contributions and certain medical expenses, including medical cannabis products purchased as a patient. For maximum benefit, spouses should consider pooling contributions on one spouse’s tax return.
It is yet another top tax idea on how to maximize tax return for your financial business in Canada in 2022.
10- Expenses Associated with Relocation
You can deduct relocation costs if you moved at least 40 kilometers closer to your workplace, a new business, or for post-secondary education.
For this purpose, storage costs, travel expenses, temporary living expenses, the cost of canceling a lease, and other expenses qualify.
11- Credit for Training in Canada
The Canada Training Credit assists workers over the age of 26 by overcoming barriers to professional development. It provides $250 per year (up to a lifetime limit of $5,000) for eligible tuition and other course fees.
12- Canada Workers Benefit
One of our top tax ideas in 2022 as how to maximize your tax return for your financial business in Canada includes claiming the Canada Workers Benefit (CWB) if you are a low-income worker while filing your tax return. The refundable tax credit can be worth up to $1,381 for singles and $2,379 for families. If you have an approved Disability Tax Credit Certificate (Form T2201) on file with the CRA, it also includes a disability supplement.
Hence, if you meet the requirements, you can request an advance payment, which allows you to receive half of your benefit in four installments.
13- Claim your Home Office Expenses
Did you work from home during the pandemic? If this is the case, the CRA has implemented a new temporary flat rate method that makes claiming deductions for home office expenses easier. You can claim $2 per day you worked from home, up to a total of $400. (200 working days).
Besides, there’s also no need to figure out the size of your workspace, keep supporting documents, or submit Form T2200.
14- Disability Tax Credit
The disability tax credit (DTC) enables disabled individuals and family members to lower their income tax liability. To be eligible for the DTC, a medical practitioner must certify that you have a severe mental or physical disability.
Payment amounts vary by province, but qualifying for this tax credit may open the door to additional benefits.
15- File Your Taxes Online for Free
Are you looking for an easy tax idea to learn how to maximize tax return for your financial business in Canada in 2022? Consider filing your taxes online for free.
If you don’t have a certified accountant to file your tax return or prefer to save money, you can file your taxes online using the government’s NETFILE service or one of a few certified software products. It can expedite the process and allow you to receive your refund sooner.
Whatever method you choose, make sure you file so that you can employ another top tax idea of how to maximize your tax return in 2022.
16- Business Expenses for Self-Employed Individuals
If you are running a small business in Canada, advertising costs, bank fees, office supplies, and travel expenses are all deductible for small business owners. It surely is an intriguing, top tax idea on how to maximize your tax return in 2022.
Moreover, those who work from home can deduct some of their utility, insurance, and maintenance expenses. Deductible amounts are determined by the percentage/portion of the residence used for business purposes.
17- Benefit from Capital Gains
Utilize your Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP) accounts whenever possible because the interest earned in these accounts is tax-free. While this will not result in a tax deduction, it will facilitate you in growing your savings.
18- Deduct Capital Loses
If one of your investments fails and you sell it at a loss, you may be able to deduct the loss from your taxable capital gains. You can claim the difference as a net capital loss if you don’t have enough capital gains to make up for the loss. You can avail yourself of the chance to maximize your tax return by deducting the loss.
Furthermore, net capital losses can be used to mitigate capital gains in any of the three previous tax years, or they can be carried forward to future tax years. Remember that capital losses cannot be deducted in tax-free accounts such as RRSPs and TFSAs. Visit the CRA website to learn more about capital losses and come to know of another top tax idea of how to maximize tax return for your financial business in Canada in 2022.
19- Provincial and Territorial Credits
In addition to federal and provincial GST/HST credits, many provinces and territories in Canada offer additional credits to specific groups of people. These range from home safety improvements for seniors in New Brunswick to climate action incentives in British Columbia.
So, check your province’s website to see if you are eligible for any credits.
20- New Housing GST/HST Refund
If you made substantial renovations or purchased or built a new home, you may be able to qualify for the GST/HST New Housing Rebate/Refund. Similarly, under certain conditions, a similar provision exists for landlords.
21- Home Purchase Price
If you bought your first home and have not lived in another home owned by you or your partner in the last four years, you can claim a $5,000 tax deduction. It is a worthwhile way to bear in mind how to maximize tax returns for your financial business in Canada.
22- Pay Your Expenses in Advance
If your business in Canada expects to earn more income this year, you should consider prepaying some of your expenses, such as subscriptions, memberships, or insurance.
As a result, in the current tax year of 2022, you can deduct up to a year’s worth of expenses.
23- Make Remarkable/Super Contributions
In Canada, the lowest tax rate is 19%.
However, pre-tax super contributions provide your financial business with a 15% income tax relief. A 27.5 percent company tax is levied/charged. So, you can maximize your tax returns on contributions.
24- Recognize and Reward your Employees
Employees are a valuable asset to a financial business. In a bid to appreciate their efforts, you should offer them rewards or celebrate with your employees. These expenses are approximately 50% deductible.
Each year, you can conduct a maximum of six events. It also includes any event entrance fees or tickets and room rentals. Thus, your business can maximize tax returns by claiming more deductions.
25- Vehicle-Related Problems
You may use Uber or Lyft, which will allow you to claim GST/HST.
However, you should keep all of your parking receipts in a safe place to ensure that you have them securely with you while claiming your GST/HST.
By following the above-mentioned ways how to maximize tax returns, financial businesses can improve their bottom line. They can increase efficiency and reduce expenses.
On the whole, there are many benefits of knowing how to maximize tax returns for a financial business in Canada.
By identifying how to get more money back on taxes in Canada, businesses can save on taxes, which can add up to significant savings over time.
Moreover, when businesses know how to get more money back on taxes in Canada, they can better allocate their resources and make strategic decisions that will help them save money. It can be a big advantage for businesses of all sizes.
Financial businesses in Canada must pay their taxes by the due date. Ordinarily, taxes are due on April 30 each year. Businesses that do not pay their taxes by the due date are subject to interest and penalties.
Since it is difficult to keep track of everything, you can contact a reputable Canadian tax and accounting service provider who will better assist you with how to maximize your tax return.