March 07, 2014

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Speak an H&R Block Tax Professional today You want to to claim what? © H&R Block Canada, Inc. See office for details.

It is tax time and it is the time of year when people are willing to try just about anything to legally reduce their tax bill.

So before you collect your receipts and start preparing your tax return, here are a few deductions other taxpayers have tried to claim. Some were successful, while others weren’t.

Though pets are considered by many to be members of the family, they are not dependants. Even if you give them people names, your dog or cat cannot be a tax deduction. The only exception is if they work for you. A farmer was allowed to claim cat and dog food because the pets were outdoors and kept the wildlife away from the blueberries.

Many people incur expenses directly related to their job but, unfortunately, most of these cannot be claimed against employment income. For the professional football player who threw balls into the stands, the cost was an expense he had to pay himself. For the serviceman required to get a haircut every two weeks, it was still considered a personal expense.

Tax Tip$ If you turn 19 before April 1, 2015, make sure you file a 2013 income tax return and apply for the GST/HST credit. You will then receive at least one GST/HST Credit cheque for the payment dates following your birthday. For example, if you turn 19 in March 2015, you will receive the last quarterly payment for the July 14 to June 2015 benefit period, which is paid in April 2015.

The tax courts do not always side with taxpayers on medical expenses. You cannot claim the cost of trips to Las Vegas and Arizona even if your dermatologist recommended trips to warmer climates to help treat Block your psoriasis.

Over-Inc. The good news is the $1,117 Canada © H&R Canada, the-counter medications or health Employment Amount can be claimed supplements are another claim that will by anyone with earned income. If you be denied. The Canada Revenue Agency earned $1,117 or more, you can claim does not consider these eligible medical the full amount. Otherwise, it is linked to expenses even if a doctor recommends how much you earned. The credit helps the medication. to offset some of the expenses involved with having a job.

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For many claims, the decision can involve the expectation of profit. If you find a us today. that may affect you. small treasure while snorkeling,Visit youor call deductions probably don’t need to worry about This article provides only an overview of the regulations H&R Block H&R Block H&R Block reporting it. However, sunken treasure810 in force St at the date of publication, andColumbia no action should be 1740 1455 Bay Ave Vernon takenBC without consulting the detailed legislation is not considered a BC non-taxable receipt Nelson, Castlegar, BC or seeking Trail, professional advice. Therefore, no responsibility for loss Phone: 250-365-5244 Phone: 250-364-1617 Phone: 250-354-4210 when the venture is clearly a business. occasioned by any person acting or refraining from action If you experience gambling losses while as a result of the material contained in this bulletin can be in Las Vegas, you cannot claim them on accepted by H&R Block Canada, Inc. your tax return if you are pathological gambler with no reasonable expectation of profit.

And if you are thinking of arguing that the tax act is simply too difficult to understand, it has already been tried. One taxpayer argued that the Income Tax Act is “not susceptible of discernment by the average occupant of this land” – basically the average Canadian couldn’t expect to understand the document. The tax court ruled this is not a valid defense against the charge of failing to file income tax returns.

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But it never hurts to ask – the tax court may rule in favour of that interesting claim. Just don’t be surprised if the answer is no.

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A tax professional at H&R Block can talk about other credits and © H&R Block Canada, Inc.

What medical expenses are tax-deductible?

Medical expenses are among the most commonly missed deductions on tax returns. Often, taxpayers neglect to keep receipts throughout the year, or can’t find them at tax time. More significantly, there’s a lot of confusion over what items are considered a medical expense for tax purposes and what are not.

of healthcare practitioners may be recognized in some provinces but not in others. For that reason, treatment by a practitioner of traditional Chinese medicine is an eligible medical expense if performed in British Columbia, but not in any other provinces.

Some of the expenses are obvious. Prescriptions or dentist fees are straightforward. But people often miss healthcare premiums paid to their group plan at work, travel medical insurance and hearing-aid batteries.

Medical alert devices, such as Lifeline, allow people to call for help if they are having difficulties or become immobile. Once the service has been activated, emergency responders are called to the home. Although the systems are very useful, the fees associated with them are not a tax deduction.

Meals on Wheels provides meals to elderly and infirm people who live alone and who cannot cook

But there are areas where the question of whether a medical expense qualifies for deduction is less clear. For example, treatments by certain types

their own food. As a non-profit organization, Meals on Wheels charges based on a person’s net income.

Unfortunately, this is not considered attendant care for anyone claiming the disability tax credit, since a specific service is provided. And it cannot be claimed as a medical expense either.

Whether hospital parking is eligible for deduction depends on the distance traveled. Those who have to travel 80 kilometres or more one way to seek medical treatment not available closer to home can claim parking as a medical expense. Those traveling 40 kilometres or more one way for treatment can claim mileage as a medical expense, but not parking.

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Cosmetic procedures are not eligible medical expenses as of March 4, 2010. Tummy tucks, botox and other cosmetic treatments can no longer be claimed, unless they are deemed medically necessary. Reconstructive surgery after an accident or illness may still be claimed.

A tax professional at H&R Block can talk about other credits and deductions that may affect you.

This article provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore, no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this bulletin can be accepted by H&R Block Canada, Inc.

Tax Tip$ You may claim a non-refundable tax credit for expenses relating to the adoption of a child. For 2013, the maximum amount of expenses on which the credit is based is $11,669. The rules have been modified for 2013 to allow you to claim the cost of registering in provincially required adoption courses and home study programs.

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Can I split my income?

© H&R Block Canada, Inc. At participating offices. Some restrictions may apply. See office for details.*If H&R Block makes an error in the preparation of your tax return, that costs you any interest or penalties on additional taxes due, although we do not assume the liability for the additional taxes, we will reimburse you for the interest and penalties.

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In 2007, senior Canadians took advantage of the The next step is to determine whether your spouse new pension-income splitting provisions to help or common-law partner meets the definition of a more come in to speak reduce their tax payable byFor hundreds or information, thousands pension transferee.

Generally, it is sufficient if the of dollars. According to with the government, income Tax person was your spouse or common-law partner an H&R Block Professional today. splitting provides more than $1 billion in tax relief at any time during 2013. However, he or she will annually for older Canadians. not qualify if you were living apart at the end of 2013 due to a breakdown of your relationship and Income splitting allows taxpayers with eligible pension income to split up to 50 percent with a the period of separation lasts 90 days or more. The person must also have resided in Canada at the end spouse or common-law partner. When there is one spouse with very little income, the tax savings can of 2013 or, if now deceased, immediately before death. be substantial. Higher-income taxpayers could also find it results in a reduced claw back of Old Age Security (OAS) benefits and the age amount.

The first step when looking at income splitting is determining if you are eligible. You need to meet the government’s definition of a pensioner. This means you lived in Canada at the end of 2013 or, in the case of someone who died during the year, was resident in Canada immediately before death. You also need to have received income eligible for the pension income amount during 2013.

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If these requirements are met, you can split eligible pension income. Basically, this is any type of income that qualifies for the pension income amount. Regardless of how old you are, it includes most periodic pensions and superannuation payments, including foreign pensions (with the notable exception of income from a U.S. Individual Retirement Account). If you are 65 or older at the end of the year, it also includes annuities and payments from a Registered Retirement Income Fund (RRIF). If you are under 65, these types of payments will also

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qualify if you are receiving them due to the death of a previous spouse or common-law partner.

The list of eligible pension income does not include OAS payments, Canada Pension Plan (CPP) benefits, retiring allowances, death benefits or lump sum withdrawals from your Registered Retirement Savings Plan (RRSP). However, is important to note that splitting CPP with a spouse or common-law partner may be possible through Human Resources and Social Development Canada.

Seniors without eligible pension income to split have a couple of options to consider. If you are 65 or older at the end of the year, but not yet 72, you may want to convert some of your RRSP funds to a RRIF. Any amounts you withdraw from your RRIF will then qualify as eligible pension income. Another strategy is to convert some of your investment portfolio to an annuity or related instrument to take advantage of income splitting. It is important to consult a financial professional before making any decisions about your retirement income.

Tax Tip$ Seniors who turn 65 after June 2013 can postpone receiving Old Age Security benefits for up to five years and receive higher annual benefits when they do start collecting. This would probably be beneficial to seniors whose net income is more than $70,954 since they will not be subject to the OAS clawback.

If you want to take advantage of the pensionincome-splitting provisions, the Canada Revenue Agency (CRA) will require both you and your spouse or common-law partner to file Form T1032, Joint Election to Split Pension Income with your 2013 income tax return.

It is not always advantageous to split the entire 50% allowed by law. In some cases, the maximum split may cause the recipient to have a higher income than the transferor and it may reduce the allowable medical expense deduction. Check with a professional for the optimum amount to split.

A tax professional at H&R Block can talk about other credits and deductions that may affect you.

This article provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore, no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this bulletin can be accepted by H&R Block Canada, Inc.

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