Tax Credits and Deductions

Claiming tax credits and tax deductions is an easy way to lower your amount of tax owing and increase your chances of having a larger refund. While there are hundreds of credits and deductions available, we’ve identified a list of the most common ones below.


Common Tax Deductions

Childcare Expenses

Child care expenses are defined as the amount paid to have your child(ren) taken care of, so that you can do one of the following: earn income from employment, carry on a business, attend school, or carry out research or similar work, for which you received a grant. These expenses can include daycare, summer camp, boarding schools, and caregiver services such as nannies. The annual deduction limit is based on the age and number of children you have in a given year. 

Deduct spousal and child support payments

A spousal support payment is an amount payable as an allowance on a periodic basis to support your ex-spouse. The amount will be determined by the court and any amount paid in a given calendar year is 100% deductible on your tax return. There is no limit to the deduction although they can be reviewed by CRA so it is important to keep a copy of the court order on file while the payments are made.

Maximize your RRSP contribution

Deductible RRSP contributions can be used to reduce your taxable income. The RRSP deduction limit is 18% of your previous year’s pre-tax earnings, plus any unused amounts from previous years, or the amount set by CRA– whichever is less. The CRA keeps track of your contribution limit for you, and can be found on your latest notice of assessment summary. In order for the deduction to be claimed in any tax year the contribution to your RRSP must be made within 60 days of the beginning of the next year. 

Deduct property taxes (owners)

If you are a landlord, you are able to deduct property taxes you incurred for your rental property for the period it was available for rent, using the T776 form.

Deduct rental payments (tenants)

If you are employed or self-employed and are required to work from home, a portion of your monthly rent can be included on your tax return. Your deduction for rent is calculated by the size of your home office in relation to your residence.

Deduct professional and/or union dues

As a general rule, any expense that is required to earn income is deductible for tax purposes. In many occupations, you are mandated to maintain memberships with a number of associations in order to practice. The number of associations will vary depending on your area of practice but all the amounts paid are 100% deductible in the year the membership is paid. 

Deduct home office expenses

If you worked from home for more than 50% of the time for a period of at least four consecutive weeks during the tax year due to COVID-19, You can deduct home office expenses that were related to your work such as cell phone bills and office supplies. However, you cannot deduct home office expenses if all of your expenses were or will be reimbursed by your employer.

Deduct moving expenses

If you moved for the purpose of work or to run a business, or to study as a full-time student at a post-secondary institution, and you moved at least 40km closer to your new work or school location, then you are eligible to claim moving expenses paid in the tax year. These expenses include storage costs, travel expenses, the cost of terminating a lease, and more.

Common Tax Credits

Deduct student loan interest

If you received student loans for attending post-secondary education, you may be eligible to claim an amount for the interest paid on the loan during that year. You can only claim an amount for interest not already claimed. If you have no tax payable for the year the interest is paid, it is advised to carry the interest forward and apply it on your return for any of the next 5 years.

Charitable Donations

You may receive a charitable tax credit for donations made to qualifying organizations that can issue official donation receipts. In any one year, you may claim donations made by December 31 of the applicable tax year, any unclaimed donations made in the previous five years; and any unclaimed donations made by your spouse or common law partner in the year or in the previous five years.

This is not an exhaustive list, as there are many more ways you can use tax credits and deductions to maximize your return. At Imperial Lifestyle Management, our advisors provide comprehensive tax advice for both your Medical Professional Corporation and personal returns. We take a proactive and integrated approach to tax planning to ensure the goals of medical professionals are met while paying the lowest possible in taxes.

Have any questions on what other tax credits and deductions can be considered an expense? Click here and one of our experts will be happy to help.