The Canadian tax system can be really confusing. Here are a few of the most common tax questions relating to what you can claim in order to get a tax deduction. Stay tuned for more common tax questions in the upcoming series.
I borrowed money to make an investment. Can I claim the loan on my taxes?
Interest on money borrowed to earn interest, dividend, and royalty income is deductible as an investment expense for tax purposes. This includes the following:
- Interest paid during the year by an employee who has purchased Canada Savings Bonds through a payroll deduction plan, where the cost of the bonds is borrowed and repaid, with interest, through payroll deductions;
- Interest paid on money borrowed to purchase stocks, bonds and other securities including interest paid to a securities broker unless the purchase is of stock in a corporation that has a stated policy not to pay dividends; and
- Interest paid on money borrowed to earn investment income from foreign sources.
If your borrowing meets one of the criteria, then you will need to report the interest you paid on the Schedule 4 form http://www.cra-arc.gc.ca/E/pbg/tf/5000-s4-5/README.html
I borrowed money to top up my RRSP. Can I claim the interest on my taxes?
If you borrow money to contribute to your Registered Retirement Savings Plan (RRSP), the interest is not deductible. When you contribute to your RRSP, the contribution is a deduction against taxable income and any earnings are tax-free for the time they are in the account.
Can a person claim medical, dental and prescription drug receipts? What other type of expenses can be claimed?
Yes, you can claim medical and dental expenses as well as items like prescriptions, eyeglasses, orthodontic work, etc. For a complete list, please see http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-350/330/llwbl-eng.html. If you are electronically filing your income tax return; you are required to keep the receipts for medical and dental expense to submit to Canada Revenue Agency if they are requested.
How much of a deduction will I get for medical expenses?
For federal tax purposes, your medical expense claim is a non-refundable tax credit calculated as 15% of the qualifying expenses. The qualifying expenses are also reduced by three per cent of your net income. For example, if your net income is $30,000, your qualifying expenses would be reduced by $900.
6 Comments
Last year I received a lot of dental work. I paid $159 and $240 and received financing for almost $2700 worth of work to be paid over three years. Can I claim the $2700 this year, or just the portion paid off so far? Do I need to submit detailed receipts, or will CRA contact me if they require them in the future?
You can claim the amount you paid each year as a medical expense. So, if you haven’t paid for all of it in 2013, just claim the amount you paid.
I received two Canada Savings Bonds official tax receipts. One amount for contributions Jan – Mar 2014 and one amount for Mar – Dec 2013. Where do I put these on my income tax return or do I just wait for a T5 next year?
Yes, just wait for T5s for interest earned on your Canada Savings Bond. You don’t have to record contribution amounts. However, if you have Canada Savings Bonds in your RRSP, then what you received would be an RRSP contribution receipt, and these would be recorded on your tax return under the RRSP section. Based on the contribution time frames that you mentioned, I would guess these are RRSP contribution receipts.
Can I claim the amount I have paid into Canada Savings Bonds for each of my grandchildren? I have it deducted through Payroll Savings Plan. $25 bi-weekly for each of my two grandchildren.
You wouldn’t be able to claim contributions to the Canada Savings Bonds.