H&R Block Insight

As summer draws near, Canadians are planning to take vacations, send their kids to summer camp and possibly move. But all of these activities could have tax implications. Even though you may only think about your taxes in April, there are tax advantages that mean you should think about taxes 12 months a year.

Family vacations always seem to require a lot of planning from making sure everything is packed to coordinating a pet sitter. You have a checklist of all the things you have to do, but did you remember to include extra travel insurance? If you are travelling outside of Canada, you may want to make sure you have enough coverage just in case there is an unexpected emergency. If you do purchase additional insurance remember to keep the receipt so you can include it as a medical expense on your 2009 tax return.

The school year is also drawing to a close, but unfortunately, you still have to work. Summer usually has more options with summer camps, workshops and sporting activities. Even if you only use a baby-sitter or day homecare during the summer months, you are able to claim the receipt as a childcare deduction on your tax return. Or maybe your child will take up swimming lessons or go to camp. These expenses may qualify for childcare deductions or the Children Fitness Credit. Keep you receipts so you can use them at tax time.

With kids out of school, spring and summer months are also popular for moving. If your move takes you to another city or perhaps a different province, you may be able to claim some of your moving expenses on your tax return. There are specific rules about when you can claim moving expense so make sure you understand if you move qualifies. Saving your receipts could translate into a significant tax savings especially when you consider the cost of movers or realtors' commissions.

When the sun is shining, you may not want to think about your taxes but you could be saving on taxes without even knowing it. Make sure you understand what summer credits and deductions you can claim on your tax return next year.

Spring is traditionally a busy time for the Canadian real estate market. Owning a home can be a good investment and with interest rates at historically low rates, Canadians are taking the opportunity to buy a house. This year, buyers can take advantage of a number of new tax credits that could help with some of the expenses that go along with owning a home.

First Time Homebuyers

New homeowners who closed after January 27, 2009 can claim a non-refundable credit of $5,000. This is a non-refundable tax credit so once all the calculations are completed, it is worth up to $750.
First time homebuyers are allowed to borrow money for their down payment from their RRSPs without penalty under the Home Buyers Plan (HBP). Using the HBP options, homebuyers pay themselves back over 15 years. The Federal government increased the maximum HBP withdrawal from $20,000 to $25,000.
For disabled taxpayers, they can claim a personal amount of $5,000 if they are moving into a more accessible dwelling or an environment better suited to their personal needs.

Existing Homeowners

The Home Renovation Tax Credit (HRTC) is available to all homeowners who spend more than $1,000 on renovations to their home. The non-refundable credit will allow homeowners to claim up to $10,000 for work completed between January 27, 2009 to February 1, 2010.
If you claim the maximum amount, the credit will be $1,350.
The work needs to be of an enduring nature - more replace than repair.
You cannot claim maintenance work such as carpet cleaning or furniture.
Even if you do the work yourself, you can claim the cost of your materials.
You need to keep your receipts in order to make a claim.

Condominium Owners

Renovations in condominiums also qualify for the Home Renovation Tax Credit.
If you own a condo, you can claim your share of expenses incurred on renovations to common elements and areas.
If you are buying a condo and you are a first time homebuyer, you can claim a non-refundable credit of $5,000 and borrow money from your RRSP through the HBP.

Cottages

If you own and use your home and cottage personally, you can claim eligible expenses from both properties as part of the HRTC.
The HRTC is limited to one $10,000 claim per family - even if you are claiming expenses for both your house and cottage. Having two eligible properties does not change the maximum amount of the credit.

Rental Properties

You cannot claim the HRTC you incur as a tenant in a rented accommodation.
Renovations on rental properties are not eligible for the Home Renovation Tax Credit.

Dear Cleo,

I transferred $11,000 from my RRSP to my QTrade account for possible trading in the currency market. I did not execute any transaction and my funds are still in the trading account as an RRSP. How do I have to treat this for tax purposes?

Thank you for your question Ed.

Withdrawals from an RRSP account are usually subject to withholding tax and then the withdrawal is reported as income on your tax return. However, there are few exceptions to the rules. They are:

Home Buyers Plan
Life Long Learning Plan
Direct transfer of funds from one RRSP account to another

Even if you had executed some trades with your RRSP money, as long as you keep it within a registered account, you do not have to report the income. So you can leave the funds in your QTrade account indefinitely. And the money can earn income tax free until you are ready to withdraw it when you retire.