Posted by Greater Sudbury Northern Life 
(NC)-This year, Canadians have new options to help them save
money and keep a few more dollars out of the tax man's pocket.
The new Tax-Free Savings Account lets Canadians deposit $5,000
per year and earn tax-free interest. It's a great new way to
save, and works well in combination with some more traditional
options, such as RRSPs.
According to Statistics Canada, one-third of eligible Canadians
contribute to RRSPs. While many might seek accountant advice on
how much to contribute, more and more Canadians are using a
RRSP optimizer tool found in tax software, such as QuickTax, to
calculate the best contribution amount or to test a few "what
if?" contribution scenarios and pick the one that delivers the
maximum return. QuickTax software carries forward data from
last tax season and includes any remaining RRSP space when it
calculates your optimal contribution.
Given the current economic climate, many Canadians might be
considering cutting back on their contributions. But before
making a decision that can hurt your overall income tax return,
it's important to know there are other options, such as
borrowing to top up your RRSP and paying down the loan with
your tax return. Just remember that interest paid on these
loans is not tax deductible.
Another option is to transfer "qualified investments" from an
investment to an RRSP account, and receive a tax receipt for
the contribution. Keep in mind that if your investment has
dropped in value below what you paid for it, you can't claim
the loss once it is transferred into an RRSP.
Does your company match RRSP contributions? If your company
offers this perk, don't miss out on this type of extra saving.
Once all is said and done and you've filed your return, you
want to be sure you don't get a knock on the door from the tax
man. Winning the tax audit lottery is inconvenient, even when
all your decimal places are where they should be, as it means
taking the time to collect a year's worth of tax records to
have them scrutinized.
Some tax prep services offer a guarantee on their number
crunching, and now QuickTax users can buy an "Audit Defence"
option, which goes beyond the usual software calculation
guarantees. It essentially buys peace of mind: should you be
audited, you'll be represented by a tax professional who will
handle your dealings with the CRA.
More information on how to get the most from your RRSP
contribution is available online at
www.quicktax.com
.
