Listed below are 5 suggestions for minimizing your Canadian income tax bill.

Discover five practical suggestions that you should start using right away by reading on. 1. Increase RRSPs. Contribute as much as is permitted to your RRSP (Registered Retirement Savings Plan) each year (i e RRSP cap) for the calendar year Your 2017 Notice of Assessment includes

Discover five practical suggestions that you should start using right away by reading on.

1. Increase RRSPs.

Contribute as much as is permitted to your RRSP (Registered Retirement Savings Plan) each year (i e RRSP cap) for the calendar year Your 2017 Notice of Assessment includes information about your RRSP cap for the current tax year (2018).

Contributions to RRSPs are tax deductible, and earnings made inside of them are tax-free. This enables tax savings when you file your personal tax return and tax-free retirement savings growth. Follow this plan, and you'll see your RRSP portfolio increase over time.

Tip: 

Do not make excessive RRSP contributions. In other words, you shouldn't contribute more than your RRSP Limit. Every month that an excess contribution is held in an RRSP is subject to a 1% monthly penalty. Read " for more information on RRSP contributions. What Happens if I Make Too Many RRSP Contributions?

2. Write off business expenses on your individual taxes.

Employees are permitted to make specific   Your RRSP limit for the current year (2018) is shown on your 2017 Notice of Assessment on their personal tax return as tax deductions These include, to name a few, vehicle expenses, supplies, and home office expenses. You must obtain a completed form T2200 (Declaration of Conditions of Employment) from your employer in order to claim your employment expenses. Although the CRA does not need to receive this form, you must have it on hand in case they audit you. Additionally, you may deduct your business expenses only if you are required to pay them as a condition of your employment and your employer does not reimburse you for them.

3. Take out a loan to invest.

Take out a loan to invest in the stock market. Your stock portfolio should increase over time if you make wise investments and follow sound financial advice. Consider borrowing money to make investments as a much-needed energy bar for your stock portfolio. You can increase your purchasing power and stock portfolio size by taking out a loan to invest.

Tax-wise, interest on borrowed funds used to buy stocks, bonds, and mutual funds is deductible. Your tax savings will increase as a result.

Are you a small business owner? Utilize a Health Spending Account to pay for medical expenses before taxes.

4. Use the Home Buyers Plan to purchase a home tax-free.

The majority of first-time buyers are not aware that they can withdraw money from their RRSPs to pay for a down payment on a home in part without having to pay taxes on the withdrawal. The "Home Buyers Plan" is the name of this tactic. The most money a person can take out of their RRSP to buy their first house is $25,000. Take note of the word "borrow," which means that the amount taken from your RRSP must be paid back over a 15-year period in equal annual installments. The second year following the year you buy your home is when the required yearly repayment is due.

Assume, for instance, that you and your spouse each take out a loan from your RRSPs of $25,000 to buy your first house under the home buyers plan. You will all have access to ,000 tax-free to use as a down payment. In this instance, the minimum payment will be $1,667 per year for 15 years, or until the remaining balance of $25,000 has been paid in full.

Read "Tax Advice for First-Time Home Buyers" for more information. Money-Saving Techniques for First-Time Homeowners

5. Submit your medical costs.

When you file your taxes, you can claim a tax credit for medical expenses you paid during the year. Payments made to a physician, prescription drugs, specific medical devices, and medical premiums made to an insurance provider for medical benefits are examples of qualifying medical expenses. Keep all of your medical receipts because the CRA might require them during an audit.

Note:

Over a certain amount, medical expenses can be claimed as a deduction. The lower of the following amounts is used to determine this minimal sum, or "threshold":

  • 3 percent of your income, OR
  • $2,268

Consider, for illustration, that you earned ,000 in net income last year and spent $2,000 on medical expenses. So, for the purpose of the medical expense tax credit, you could only deduct 0 in medical costs:

  • Two thousand dollars was spent on medical expenses.
  • Lower Limit ($1,500)*
  • 0 is the maximum allowed.
  • 20% times the tax rate
  • Tax credit of $100

* 3% x ,000

Based on $2,000 in medical expenses paid during the 2017 tax year, you are eligible for a $100 tax credit that you can apply to your unpaid taxes.

Try our FREE Calculator to determine your medical expense tax credit!

Tip:

Combine your medical expenses with those of your spouse and dependents on one family member's tax return to increase the amount you can deduct.

Are you a small business owner?   Utilize a Health Spending Account to pay for medical expenses before taxes.

You can save money by using these five tax tips to your advantage by basically following them. See the resources and additional free tax advice listed below for more information on how to reduce your income tax:

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