Don't be penny-wise and pound-foolish
Many of us balance our chequebooks to the penny each month and lament the loss of a $20 bill from our wallets. If procrastination or apathy is causing you to overlook your tax situation, you may be losing hundreds or even thousands of dollars each year, without even knowing it.
Taking time to address potential tax saving opportunities can result in extra cash in your pocket. Follow these tips throughout the year to start saving money in taxes right away:
Take all tax breaks.
Don't avoid taking legitimate deductions out of fear of "raising red flags" that may cause your return to be audited. Filing a complete and accurate return is required and is your best defense against an audit.
Don't make decisions solely on potential "tax breaks".
All good investment or business decisions should be able to stand on their own before tax breaks are considered. A change in the tax law can be disastrous (and costly) when you are stuck in an affected investment (can you say "abusive tax shelter"?).
Check your tax slips for accuracy.
Many tax slips you receive are prepared by data processing companies that merely process your tax information as raw data. Mistakes have been known to occur. Although your employer or financial institution should be checking these forms for accuracy, it's a good idea to double-check these forms against payroll stubs and monthly statements from the payer.
Consult with a tax professional before responding to CRA notices.
If you receive a notice from CanadaRevenue Agency ("CRAĒ) do not automatically assume that it is accurate and mail them a check. Many notices are inaccurate or merely require additional explanation. Tax professionals have the knowledge and experience to recognize areas where additional explanation or documentation may reduce or eliminate the assessment stated on the notice.
If audited, consider your appeal rights.
Although CRA auditor may not bring it to your attention, the end of an audit is be no means the end of the road for your tax case. Appealing an audit decision can many times put your case in front of a more experienced agent who may better understand the issues and your position on them.
Seek planning advice from a tax professional.
Probably the best investment decision you can make is to seek out the services of your tax professional. In most cases, the amount you are charged for good tax advice is a fraction of the resulting tax savings.
The information presented in this document is of a general nature only and should not be relied upon to replace professional advice. Before acting on this information, talk with a professional advisor as laws and regulations are constantly changing. Readers accept full responsibility; no document found here is a substitute for a consultation.