Did you know that having a safety deposit box can earn you an income tax deduction? Evelyn Jacks, author of 50 books and the blog ‘Your Money. Your Life.’ is one of Canada’s most respected tax experts. She told me in an interview last week that the safety deposit box deduction is often overlooked. “It’s a small thing, but it’s amazing how many people miss it on their tax return,” she said. “You can go back and request an adjustment to your tax return to include it 10 years back. So there’s a quick $1,000 for people if they have missed it in the past.”
That’s just the kind of deduction that Canadians forgo when they don’t fully research their filing, or choose not to work with a tax accountant. “It’s a question of trigger points,” Jacks told me. “Anytime you have a life event or a financial event. This year we can postpone Old Age Security for up to five years starting in July 2013. Most people don’t know about that. But it could be an important turning point. What’s changing in your life? Are you having an important birthday?”
Did you get married last year? Divorced? Did you start a new business or implement a new investment strategy? Has someone in your family fallen ill? “This year we have a new family caregiver tax credit that adds $2,000,” said Jacks. “It’s worthwhile asking if you qualify for that. Should you be adjusting your TD1 tax credit form at work so that your withholding taxes are reduced?”
The potential impact of these key life or financial events is a good argument in favour of working with a professional tax accountant. “It’s not just on income, it’s also on capital,” Jacks told me. “If you’re real estate-rich and something happens to you, you’re going to want to know what your tax liability is … The one thing we can’t control is death.”
Neither can we control taxes, which many believe will rise in the short- to mid-term. The aging baby boom generation will lean heavily on provincial governments for healthcare funding. Already we’re seeing high-income surtaxes introduced in Ontario, Quebec, Nova Scotia and British Columbia. Other provinces could follow that lead. “We will see this year as various provincial budgets come down,” said Jacks. “Another thing to watch is indexation of personal amounts and tax brackets. Many of the provinces have not kept up with indexation to changes in the Consumer Price Index.”
NOTE: The safety-deposit box deduction was removed in the budget of March 21, 2013, affecting the 2013 tax year.
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