Which are the most common tax deductions?
There are several tax deductions available to Canadian taxpayers, but here are five of the most common tax deductions in Canada:
Charitable donations: Canadians who make charitable donations to registered charities can claim a tax credit for their contributions. The federal charitable donation tax credit is calculated as 15% on the first $200 of donations and 29% on donations over $200. Many provinces also offer additional credits that can increase the overall tax savings.
Medical expenses: Taxpayers who incur medical expenses that are not covered by their provincial healthcare plan may be able to claim them as a tax deduction. Eligible medical expenses include prescription drugs, dental services, vision care, and medical devices. The medical expenses must be above a certain threshold before they can be claimed as a deduction, which varies by province.
Employment expenses: Canadian taxpayers who incur employment-related expenses that are not reimbursed by their employer may be able to claim them as a tax deduction. Eligible expenses include home office expenses, work-related travel expenses, and tools and equipment required for the job.
RRSP contributions: Canadians who contribute to a Registered Retirement Savings Plan (RRSP) can claim a tax deduction for their contributions. The amount that can be claimed as a deduction is based on the contribution limit for the year, which is calculated as a percentage of earned income from the previous year.
Education expenses: Taxpayers who incur education-related expenses, such as tuition fees, textbooks, and other supplies, may be able to claim them as a tax deduction. Eligible expenses can be claimed by the student or by a spouse or common-law partner, and there are also tax credits available for post-secondary education expenses.