Tax Tips

1. Don’t assume that you don’t need to bother filing a tax return because you have no income.

Some low- or zero-income earners still think there’s no need to file a return. This misunderstanding can cost thousands of dollars in lost benefits and credits like the GST/HST credit and the Canada Child Tax Benefit. More and more benefits are being distributed through the tax system these days. So, if no return is filed, no benefits get sent.

For some benefits, like the Guaranteed Income Supplement and the Working Income Tax Benefit, recipients need to apply every year.

Provinces also offer sales tax credits and property tax credits for low income earners. But again — no tax return, no credit.

Teenagers who earn a few thousand dollars should also consider filing. That creates RRSP room that can be carried forward indefinitely to use at a time when they will owe tax.

2. Be sure to transfer any unused credits.

A variety of tax credits can be transferred between spouses.

Drug and other medical expenses are some of the most common items overlooked when tallying possible tax credits.

Several credits for students — such as the tuition, education and textbook credits — can be transferred to a spouse, a parent, or even a grandparent once the credits are first used to reduce the student’s tax payable to zero.

The credits can also be carried forward indefinitely so the student can use them later when he or she starts earning money.