Sitting in my living room today is the grand piano that my grandmother had purchased and used for her piano teaching for many years. Our family is pretty musical and we’ve already had a couple of gatherings around the piano where we’ve spent time singing traditional songs of the season. So, I thought I’d share some tax and financial thoughts that tie into lyrics you might recognize. Go ahead, sing along if you want.
I’ll Be Home for Christmas. In this classic, you’ll hear “I’ll be home for Christmas, you can plan on me, please have snow and mistletoe, and presents on the tree … " Are you travelling home for the holidays? You might be able to deduct part of your travel costs. Claiming part of your travel costs as a deduction, if you have self-employment income, can be easy if you’re also combining the visit home with some business meetings. As an employee, your employer might be willing to reimburse you for part of your travel costs if you have to make the trip for work anyway. And if you’re moving home, you may be able to claim moving expenses if you meet the usual conditions.
Silent Night. One of the most famous carols is Silent Night, where we sing “Silent night, holy night, all is calm, all is bright, round yon virgin, mother and child … ” Do you happen to be a new mother this year? Don’t forget to apply for the Canada Child Benefit using the Automated Benefits Application, which you can do when registering the birth of your newborn. Otherwise, you can apply for the CCB using Form RC66 available on the Canada Revenue Agency’s website (cra.gc.ca). Also, you may be able to claim child-care or medical expenses incurred for your child. Finally, consider setting up a registered education savings plan (RESP) as soon as possible to start saving for your child’s education – which won’t be cheap.
Grandma Got Run Over by a Reindeer. “Grandma got run over by a reindeer, walking home from our house Christmas Eve; you can say there’s no such thing as Santa, but as for me and Grandpa, we believe.” I bet the bills for the ambulance service, medication (including medical marijuana), crutches, oxygen tent, physiotherapy, nursing care and the scooter Grandma bought for use after the accident were all very expensive. Fortunately, these can all be claimed as medical expenses. If you’ve suffered an injury or are ill, make sure you claim every expense you can (check out the CRA’s website and type “medical expenses” into the search field for a long list).
Away in a Manger. “Away in a manger, no crib for a bed, the little Lord Jesus laid down his sweet head.” If you don’t have a crib at home – or an extra bed – consider buying one. You never know when you might need it. And if you’re going to do this, consider setting up a room in your home as a short-term rental, renting it out for anywhere from one night to a month at a time. Not only will this allow you to earn some extra money, but it will open the door to deducting costs you’re paying for anyway: a portion of mortgage interest, property taxes, insurance, utilities, repairs and maintenance, landscaping and snow removal.
It’s Beginning to Look a Lot Like Christmas. “It’s beginning to look a lot like Christmas, everywhere you go, there’s a tree in the Grand Hotel, one in the park as well, the sturdy kind that doesn’t mind the snow … ” Looking for gift ideas? Consider planting a tree, or many, for your loved one. You don’t have to personally pick up a shovel (although you can if you’d like), but check out a few organizations that make it easy for you to plant trees, including: treecanada.ca, createyourforest.ca and alivingtribute.ca. You may receive a donation tax credit for money donated if the organization is a registered charity.
Angels We Have Heard On High. As the carol goes: “Angels we have heard on high, sweetly singing o’er the plains, and the mountains in reply, echoing their joyous strains … ” Clearly these angels were living in Alberta, where the plains meet the mountains. As it turns out, Canadians in the highest tax bracket (earning more than about $210,000) will keep more after taxes living in Alberta than any other province (the three territories do offer lower taxes than Alberta). Saskatchewan deserves an honourable mention as well here. So, if you’re thinking of a place to move to reduce taxes, consider the West. You’ll face tax in the province where you’re resident on Dec. 31 each year.
Tim Cestnick, FCPA, FCA, CPA(IL), CFP, TEP, is an author, and co-founder and CEO of Our Family Office Inc. He can be reached at email@example.com.