Employed people have less scope for tax savings as compared
to self-employed people.
If you are currently employed, the income and benefits from
and related to your employment are taxed and you cannot claim any deductions
against employment income except that are specifically allowed by the system.
Here are
some taxes planning techniques which can lead to save taxes:
• Arrange to get nontaxable benefits: There are
some employment benefits which are not taxable like contributions to a
registered pension plan, contributions to a group sickness or accident
insurance plan, contributions to a private health services plan, all or portion
of the cost of free or subsidized school services for your children.
• Ask to have your source withholdings reduced wherever
possible: In any situation where you expect to receive a refund after
filing your return, you should review the form which you file with your
employer and seek to have source with holdings reduced. If you get a refund,
that means the has been holding your money and not paying you interest on it
for many months. It is better you can send a cheque to at filing time so that
you can use that funds in the meantime.
• Pay interest owing on loan from employer by January 30
of the following year:
If you receive a low interest -free loan from your employer,
you are considered to have received a benefit from employment. The benefit is
set at the CRA's current prescribed rate of interest minus any interest you
actually pay during the year or within 30 days after the end of the year. This
will provide you with a cash flow advantage.
• Consider employee's profit sharing plans for cash flow
purposes: there is no source withholding on the amounts paid by the
plan to you. Careful timing of the employers' contributions and the Tax Saving Plans disbursements
can give you better cash flow than would a straight bonus payment.
• Transfer retiring allowances to an RRSP: If you
transfer the entire retiring allowance into an RRSP, the legal fees will never
become deductible. When you take payments out of the RRSP, they are no longer
considered a retiring allowance.
• Claim the employment tax credit to help cover your
work related expenses: Employees can claim a 15% tax credit to help cover
their work related expenses.
• Employed trades people can claim the deduction for the
cost of new tools: If you are an employed trade person and you must use
your own tools on the job, you can deduct the portion of the cost of new tools.
• You can claim rebate for GST/HST paid on expenses
deductible from your employment income.
Source: http://blogs.rediff.com/taxsavingplans/2016/07/14/ritikashah11998-19/
No comments:
Post a Comment