The 7 Best Ways to get a Bigger Tax Return in Canada

Filing your income tax return is a chore that most of us don’t want to think about, but it doesn’t have to be that way! It can be an excellent opportunity to save or get reimbursed for cash you didn’t know you were entitled to.

Word to the wise: Don’t wait until tax time to educate yourself.

Knowing what you’re entitled to early on will make it easier to remember what receipts and documentation you need to claim expenses later.

We’ve compiled a list of deductions, credits, and other helpful tips to help minimize taxes owed and maximize your refund.

1. Childcare expenses and family benefits

Did you know you can use childcare expenses to lower your taxable income? Examples of childcare expenses include daycares, summer camps, overnight boarding schools, and in-home providers like nannies. 

You need to file your taxes every year to continue receiving family benefits like the GST/HST Credit and the Canada Child Benefit (CCB). If you’re a family with a low to a modest income, the GST/HST credit can offset a portion or all the sales tax you pay, including the tax paid on a new or used car.

The CCB is a tax-free monthly payment that helps cover the costs of raising children under the age of 18. It currently offers up to $569 per month for each child under age 6 and up to $480 per month for each child between the ages of 6 to 17. Payment amounts are based on the number of children you have and your adjusted family net income.

Read more: 11 Family Benefits & Tax Tips That Every Parent Should Know

2. Vehicle expenses

If you use your vehicle for work, you may be able to claim certain vehicle expenses.

If you’re self-employed, you may be able to claim vehicle-related expenses like gas, insurance, licensing and registration fees, maintenance and repairs, leasing costs, and interest on money borrowed to purchase a car. 

There are different deductions depending on whether you lease or buy your car. If you buy, you can claim the capital cost allowance (CCA), a deduction used over many years based on the depreciation percentage (until the car gets old and has no more value). There are maximum vehicle costs that limit the amount you can claim for CCA for business purposes. The limit is $30,000 for passenger vehicles and $55,000 for zero-emission passenger vehicles.

If the car is also your personal vehicle, you may only write off the portion used for business purposes. To calculate this, you must keep a logbook detailing all your business trips, including the mileage, date, and purpose of the trip. Make sure to document all other expenses and keep receipts organized in one place so you’re prepared if you get audited. 

Salaried employees may also qualify for vehicle expense deductions under certain circumstances. You can view full eligibility guidelines here. Keep in mind commuting between your home and workplace does not count for write-off purposes.

3. Union/professional dues and other employment expenses 

Most professional association fees and union fees can reduce your taxable income. Examples of eligible expenses include trade union membership fees, professional board dues required under provincial or territorial law, and insurance premiums related to your profession.

You can also deduct certain expenses you paid to earn employment income. It’s possible to deduct things like cell phone bills and office supplies as long as your employment contract required you to purchase these items and you didn’t receive an allowance for them. Unfortunately, most employees cannot claim employment expenses like tools, clothing, and travel costs to and from work.

4. Registered Retirement Savings Plan (RRSP) contributions

Contributing to your RRSP is an excellent way to lower your tax bill and get a larger tax return.

Your contribution limit is 18% of your earned income from the last tax year, plus any unused amounts from previous years. You can find your RRSP contribution limit in your CRA My Account or on your last notice of assessment. 

A good rule of thumb is to maximize your RRSP if you make over $50,000, so you can benefit from the highest amount of tax savings. If you make below $50,000, it makes more sense to contribute to a Tax-Free Savings Account (TFSA) since you probably won’t owe much income tax.

Use Wealthsimple’s RRSP and TFSA calculators to see how you can maximize your savings.

Read more: TFSA vs. RRSP in 2022: Comparing What’s Best for You

5. Medical expenses

From dental checkups and laser eye surgery to orthopedic shoes and private insurance premiums, the CRA allows you to claim a variety of medical expenses as non-refundable tax credits. Make sure to keep all your receipts, prescriptions, and other supporting documentation in case the CRA requests to see them later. 

6. Simplified home office deduction

Millions of Canadians had to work from home in the past year because of the pandemic. If you were one of them, you could use the CRA’s new temporary flat rate method, which lets you claim $2 for each day you worked from home, up to a maximum of $400 (200 working days). 

To take advantage of this simplified home office deduction, you must meet all of the following criteria:

• You worked from home in 2021 for reasons related to COVID-19 or your employer required you to work from home
• You worked from home for more than 50% of the time for at least four consecutive weeks in 2021
• Expenses claimed were used for work-related reasons during this period

With the simplified method, you don’t need to calculate the size of your workspace, keep supporting documents, or submit Form T2200. If you decide to use the detailed method, a completed and signed Form T2200S or Form T2200 from your employer is still required.

7. Interest paid on student loans

The CRA lets you claim interest paid on student loans, however, there are a few restrictions.

You can only claim interest payments on loans received under the Canada Student Financial Assistance Act, the Canada Student Loans Act, and equivalent provincial or territorial programs.

You cannot claim interest on personal loans, lines of credit, or student loans from foreign banks. A home equity line of credit also does not qualify.

Your student loan interest claim is a non-refundable tax credit. It can only be used to lower your tax bill and cannot be used to receive a tax refund. Since you can carry forward student loan interest for up to five years, it might be wise to save your claim for a year when you owe a lot of tax.

When you're ready to roll up your sleeves and get it done, don't forget there's free tax filing software that makes filing your tax return a piece of cake.

Read more: 5 Reasons Why Tax Season is a Good Time to Buy a Car