WELCOME TO D. CASTRO GROUP COR.
  • Home
  • Solutions
  • About Us
  • Blog

4 tips to reduce the tax taken on each paycheque

1/25/2019

0 Comments

 
Picture

Big and sad news for you: getting a big refund when filing your taxes is not always a good thing for you. Sometimes is due to lack of planning. Imagine if with each paycheque you could pay less taxes and get more money! It's a possibility.

Canadian Tax Law based its rule on fairness, you pay what is fair for your personal and family situation. There credits and benefits you can apply to depending on your amount of income. Then, let's do that, pay only what's fair, no more, no less. 

When getting your paycheque you have some deductions applied, that is way your earned amount is not the same as your collected amount (net pay). The basic ones are: Canada Pension Plan (CPP), Employment Insurance (EI) and Income Tax (IT). There are additional benefits depending on your job: Pension Plan, Group insurance plan, RRSP savings Plan, etc. 

EI and CPP contributions are calculated on earned income and usually you can't change them due to tax rules. But you can calculate the exact amount of Income Tax you would pay at year end and this is the way to increase your paycheque. How?
  • Via your employer: make sure every year you sign the appropriate forms regarding your personal and family situation
    • There are federal and provincial forms. TD1 Personal Tax Credit Forms: This form will allow you to report your current situation and calculate the right amount of taxes to pay.
    • It’s important to file this form if you change your marital status, have a new child, you have more than one job, or you are a student
    • This form will recalculate the tax to pay and help you get ore money now instead of waiting to get a big refund
  • Via CRA: there are situation when you can directly request CRA to reduce your tax bill:
    • If you are excepting significant deductions as: Huge RRSP investments, rental losses, child care expenses, employment and medical expenses. Use this form only for situations not contained on the TD1
    • You can file then the form T1213 Request to Reduce Tax Deductions at source and if approved CRA can give authorization to reduce your paycheque tax bill.
You always need to update your current situation with your employer and CRA to get a fair deal. If you get marry, or divorced, or got sick or have a child. Don’t wait until the tax season time to declare your changes and receive a refund. On the other side of the spectrum, you can also fill out the TD1 and provincial forms if you always have a bill to pay at the end, you can increase the amounts by each paycheque and the you won’t have a debt to CRA.

As you see, having a great refund is not always good news, you can plan and have more money on your side during the whole year, then you can use it to save on RRSP, TFSA, pay old debts or going on holidays with your family. 

Here are the 4 tips to avoid paying more taxes during the year and save/gain money:
  1. Always update your personal/family situation with CRA
  2. Ask your employer to calculate your tax expenses using the TD1 Personal Tax Credit Forms 
  3. If your situation is changing dramatically ask CRA for an adjust with the T1213 Request to Reduce Tax Deductions
  4. The extra money you get on each paycheque save it for the future using RRSP, TFSA or buying the insurance you need to protect you and your family
​
Hope this can help you plan better for the next tax season. Contact us today for an appointment and we can help you plan for your tax bill. 
​
Photo by rawpixel on Unsplash

Contact us
0 Comments



Leave a Reply.

    Author

    Dayani Castro, was born in Cuba, and is a proud Canadian citizen who pay her fare share on taxes and likes to contribute to the economy.

    In her own words: "I am from Cuba, moved to Canada 10 years ago with my daughter and we love it here. Won't go into politics but I took the decision to up-root my family to find better opportunities for my daughter to become a powerful and an independent woman. I open my bookkeeping and tax business 5 years ago, and love helping immigrants - specially women - navigate the process of creating and growing their business. As a single mom, immigrant an entrepreneur I recognize the importance of a supporting and loyal community when you need to start from Zero and build your dreams in your new country."

    Dayani's vision is to help as many immigrants as possible to create thriving business, giving them the opportunity to be independent, give back to the society and create new jobs.

    Archives

    November 2022
    March 2022
    February 2022
    January 2022
    February 2021
    July 2020
    May 2020
    April 2020
    March 2020
    January 2020
    December 2019
    January 2019
    November 2018
    October 2018
    September 2018
    August 2018
    August 2017
    February 2016

    Categories

    All
    Improving Business

Location
​
111 Catherine St, Ottawa,
​ON K2P0P4

Picture

Contact Us

    Get the Latest News:

Subscribe