7 tax credits people overlook

Having trouble telling your tax deductions from your credits? Personal income tax software does most of the work for tax-filers these days, but experts say that opportunities for tax-savings still slip by Canadians

The Toronto Star asked chartered accountants Bryan Allendorf, of Meyers Norris Penny, and Paul Woolford, tax partner with KPMG Enterprise, what Canadians overlook:

• Employment tax credit. Employees can claim a 15 per cent tax credit to help cover their work-related expenses. The credit is based on your employment income for the year, to a maximum of $1,051 for 2010. A Working Income Tax Benefit is available for low-income employees.

• Disability tax credit. If you suffer from a severe and prolonged impairment in physical or mental function, you are eligible for an additional federal tax credit of $1,086. Your status must be certified by a medical professional. To qualify, your ability to perform a basic activity of daily living, such as bathing, walking, or eating, must be “markedly restricted,” according to Canada Revenue Agency. The impairment must have lasted, or be expected to last, at least one year. People who undergo dialysis or other therapy at least three times per week for an average of 14 hours or more are also eligible.

• Tuition fees. Fees paid to a Canadian university, college or other post-secondary institution are eligible for a 15 per cent federal credit. Along with admission fees, eligible tuition fees include fees for library and lab use, mandatory computer service fees, and costs for health services and athletics.

Students receive a further federal education tax credit of $60 for each month of full-time attendance at school.

Those who don’t use the tax credit (because they have no tax to pay), can transfer up to $750 in credits to a spouse, parent, or grandparent. However, these credits can also be carried forward by the student to use in any later year.

• Deductions for moving expenses. These may be substantial if you start work at a new location of employment or start a new business and you move to a home that is 40 km closer to your new work location. As long as your employer does not reimburse you, you can deduct reasonable travel costs, including meals and lodging, moving and storage costs; selling costs of your old home, including real estate commissions and legal fees, and land transfer tax.

• Monthly transit passes. To be eligible, passes for local and commuter systems must be valid for at least one month. You can claim weekly transit passes, as long as you’ve bought at least four consecutive passes.

• First time home-buyers may qualify for a non-refundable tax credit of up to $5,000 of the home’s cost, worth up to about $750.

• Children’s fitness tax credit. If you have a child under the age of 16 who is enrolled in an eligible fitness program, you may be able to claim up to $500 of related expenses. Eligible activities are those that contribute significantly to the child’s strength, endurance, flexibility and balance. Swimming, soccer and hockey are among those eligible. Programs must last at least eight weeks and consist of at least one session a week. Children’s camps may qualify if they last at least five consecutive days, and at least half of the time is spent devoted to physical activity.

Remember that even if you don’t owe any tax, it’s important to file an income tax return. That’s because the federal and Ontario government use the tax system as a basis to calculate and provide other support, especially for those who have low incomes.

These credits include the GST and HST tax credits, the HST transition payment — the first two installments came last year as the Ontario government introduced the Harmonized Sales Tax. The final payment comes this year — the Guaranteed Income Supplement, and property tax credits.

“A lot of people miss credits that can be worth a lot just because they don’t file a tax return,” Allendorf said.