Tax Q & A - 2021 Tax Year (Saskatchewan)
The furnace qualifies, but the filter doesn’t. Most material improvements to your home qualify, but not maintenance items which would typically be an annual expense. Dates extend back to October 2020. If you renovate your deck, you can claim the screws, but not the impact wrench you bought. Click here for more info. The credit will also apply to the 2022 year.
If you just travel to your usual place of work and back, none of those expenses are claimable, even if you’re on contract income.
So when can you claim costs for running your own vehicle? If you’re an employee, your employer has to fill out form T2200, which declares you had to use your vehicle for work purposes, and you didn’t get reimbursed. Then, you have to keep track of your total kilometers for the year, and the amount you used for work purposes, as well as your fuel, lease, interest, insurance, maintenance, and perhaps depreciation expenses.
The same kind of record keeping has to go into using your vehicle for business purposes, but you don’t need form T2200. You can’t just claim a rate per km as CRA may deny the vehicle claim without the detailed record keeping.
The simplified method tracks of the number of days you worked from home which you submit to your accountant. You get a $2 a day credit.The alternate way, is to get your employer to fill out form T2200, stating you had to work at home. Then you calculate your workspace vs your home area, and track amounts spent on your utilities and internet. Usually the final result is not much different from the simplified method.
Talk to your accountant first. You will typically pay anywhere from 24% to 30% of any potential refund back to these service providers, which could be thousands of dollars. People who qualify for the DTC typically have difficulty in the functions of life, and ought not to be handing over that kind of money. We think it’s opportunistic. CRA has designed the forms to be quite simple to fill out, and we have enabled many of our clients in this regard as part of our usual tax services. Talk to us first.
In most cases, medical expenses must reach a threshold of 3% of net income, or, if you’re married, 3% of the spouse with the lower net income. If your net income is $40,000, you would have to spend more than $1200 on medical bills to begin to see the credit apply. Sometimes it makes sense to use a 12 month rolling period including the year prior to reach the threshold.
It’s true that higher income gets taxed at a higher rate. However, it’s not true that if you make more that you will take home even less because you are in a new bracket (or marginal tax rate). Think of it like steps. Stand on the first step where your taxable income is under about $13,800 (all figures are rounded) and you will pay no taxes, the next step goes up to about $47,000 where a 25% tax is levied. Over $47,000 it’s 33%, over $100,000 it’s 38.5%, over 133,000 it’s 40.5%, over $155,000 it’s $44%, and over $221,000 it’s 47.5%. So, even if I make $80,000, I still get the first $13,800 without taxes. From there, each step is taxed at a higher rate. I just get taxed more per each new step – that rate doesn’t apply to the steps below. So the principle is always, if you make more, you keep more. Other factors apply to government programs and different kinds of income, but that is the general principle.