Beat The Tax Man

17 September 2010 163 views No Comment

Why reach for your chequebook when you can save money with our playbook! Sway goes through the X’s and O’s for a plan that will allow you to save your money.

BY: MARK MARJI

Who wins: Canadian residents aged 18 and over.
The Plan: Tax-free savings account (TFSA).
The Deal: Beginning in 2009, you can contribute up to $5,000 per year. One of the advantages of the TFSA is that it will not be considered taxable income. Rather than invest in an RRSP, it may be better to contribute the maximum to a TFSA while saving for a house, education or retirement. If funds are withdrawn, this will not affect the Guaranteed Income Supplement or other income-tested benefits, and would not cause a claw back of Old Age Security, or a reduction of the age exemption.

Who wins: The environment.
The Plan: Tax credit for public transit.
The Deal: If you regularly take the bus, subway, commuter rail or ferry, you can get a tax break equal to 15.25 per cent of the cost of a monthly transit pass just by saving your expired passes. The credit will also apply to certain weekly passes and electronic fare-card purchases. For more information, visit www.ecoaction.gc.ca.

Who wins: Seniors.
The Plan: The Guaranteed Income Supplement.
The Deal: The Guaranteed Income Supplement (GIS) is an income-tested benefit, and is reduced by 50 per cent of other income received, except for employment earnings. The exemption for employment earnings is 20 per cent of earned income up to $2,500, providing a maximum exemption of $500. The budget proposes to increase this exemption, and fully exempt all employment earnings up to $3,500 per year.

Who wins: Students.
The Plan: Canada Student Grant Program.
The Deal: The program will assist low- to middle-income earning students, providing monthly grants of $250 for low-income students and $100 per month for middle-income students. The grant will be paid throughout all years of an undergraduate or college program.

The best game plan for any tax season is to be prepared. Consult an accountant well in advance in order to discuss the ways in which you can maximize your tax refund and keep your cash.