It is common that a lot of taxpayers make mistakes on their income tax returns. The Canada Revenue Agency (” CRA”) conducts its audit program periodically to determine base levels of compliance through the tax return database and has identified common mistakes made by taxpayers.
Here are 5 tax tips offered by the CRA:
Justify moving expenses and have proper invoices to support the claim
Some taxpayers claim home staging, house hunting as well as mail-forwarding charges. Those are not eligible moving expenses allowed by the CRA. Incidental costs related to your move like changing address on legal documents as well as utility hook-ups and disconnections are allowed. In addition,the date of receipts provided for the costs incurred should be consistent with the move. As a result, the claim is denied.
Not all student loans’ interest can be claimed
Students borrow money from financial institutions through various vehicles like personal loans and student lines of credit. Those so-called “student loans “are not eligible from the CRA perspective. In some cases, when submitted to the CRA, the student loan interest receipts are not official.
Follow the guides on claiming Tuition, education, and textbook amounts
Some cases indicate part-time months are claimed as full-time. Part-time/full-time credits claimed are not consistent with the number showed in Form T2202A. Eligible tuition are tuition paid to the educational institutions recognise by the CRA. Here is the detail.
Not all Medical expenses incurred can be claimed
Ineligible medical expenses can include the payment made to medical practitioners (massage, kinesiology, cosmetic) not recognised by the applicable provincial authority; Obviously vitamins, natural supplements, or over-the-counter medications are not eligible medical expenses. You like to see the full list of eligible medical expenses. Here is the list of common medical expenses.
Provide proper Public transit receipts
It is understandable that those public transit passes are often misplaced and cannot be found when you start compiling all the receipts one year later. The CRA suggests keep your supporting documents for six years. Even if you do not have to attach certain supporting documents to your return, or if you are filing your return electronically, keep them in case we select your return for review.
The CRA has noticed the following ineligible Public transit receipts:
- the passenger does not qualify because of their age;
- there were not enough trips in a month;
- there were interruptions in use; or
- travel for the period was limited.
- no receipts, not all receipts were provided, or the receipts are not valid.
What information is required on the transit pass then? They should contain then:
- the date or period for which the pass is valid;
- the name of the transit authority/organisation issuing the pass or card;
- the cost of each trip or pass; and
- the rider’s name or unique identifier (the unique identifier has to be linked to the rider).
Those are all common mistakes that can be easily avoided. If proper documentation/supports are prepared while the tax return is prepared , it will save you a lot of time when the CRA requests for a review.
FranklyCA is an online accounting firm helping small businesses to minimise the tax obligation. If you have any accounting/tax questions, drop us a line or give us a call. We surely can help!
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