Credit-Saving Tips for Canadian Employees
Looking for ways to hold onto as many of your hard-earned dollars as possible? The following information outlines some basic steps you can take to minimize your tax outlay.
Get a refund when you overpay CPP (Canada Pension Plan) premiums
As you may know, your employer has to take CPP premiums off your pay. However, it’s possible that you paid too much! This most commonly happens when you held more than one job during the year — because each employer is obligated to withhold CPP without regard to your other employers, you may have maxed out your annual payments. See the Canada Revenue Agency website for the current year’s maximum contribution.
If you were not a resident of Quebec and you contributed more than you were required to, enter the difference on line 448 of your tax return. The CRA will refund the excess contributions to you, or will apply them to reduce your balance owing. If you were a resident of Quebec, this line does not apply to you; claim the excess amount on your Quebec provincial tax return.
Don’t worry if you don’t realize you made a CPP overpayment. The CRA will catch it when assessing your return.
Get a refund when you overpay EI (Employment Insurance) premiums
As with the CPP overpayment, you may have had too much EI deducted from your pay in the year. If you contributed more than you had to, enter the difference on line 450. The CRA will refund the excess amount to you or use it to reduce your balance owing. See the CRA website for the current year’s maximum contribution.
If you repaid some of the EI benefits you received, don’t claim the repayment on this line. If the repayment was in connection with EI received in 2008 or later years, you need to include the amount on line 235.
Claim the Canada Employment Amount
This credit is designed to help offset some of the work-related expenses incurred by employees. For 2012 the credit amount is calculated as the lesser of $1,095 and the individual’s employment income for the year.
You don’t have to actually incur expenses in order to claim this credit. And no receipts are required. This is a gimme, so be sure to claim it — and save $164.25 in federal tax ($1,095 x 15 percent)!
Deduct your union or professional dues
Because you’re taxed on pretty much all your income, it’s logical that costs incurred to earn the income are deductible. It is logical — but no one ever said the Income Tax Act was logical. One of the deductions permitted is the cost of belonging to a union or to a professional body, or the cost of carrying professional or malpractice insurance. Union dues paid are noted in box 44 of your T4. Fees paid to professional organizations are usually receipted. If your employer pays the fees for your professional memberships or insurance, the employer gets the tax deduction — you don’t, even if the receipt is in your name.
If you paid GST (goods and services tax) or HST (harmonized sales tax) on your union or professional dues, you may be able to have the GST or HST refunded to you.