Common mistakes made in the personal income tax returns

 

1. Small income amounts not included in the income

Some financial institutions will not issue T3 or T5 slips, if the income amount is small but you still have to include it in your income tax return. Example: BMO will not issue T3 if your income from the fund is less than $50.00 and the income is other income. Some times you will not get T5 slips for interest earned in your savings accounts but those need to be added to under interest income in your tax return.

2. Joint account income not allocated according to contribution

Usually joint account incomes are allocated equally but it should be allocated according to the contribution made by each person. For example David and his dad opened a GIC and dad contributed $8K and David contributed 2K and they earned $200 income for 2010. David’s portion of the income is $40 (20% of the income) and dad’s portion of income is $160.00 ( 80% of the income). David should only include $40.00 in his income.

3. Allowable deductions or tax credits not claimed 

There are some expenses that can be claimed as deduction from your income.

Here are some examples (I have provided summary description but there are detailed rules regarding deductions.):

Childcare expenses - Incurred due to parents working or going to school. Spouse with lower income must claim the amount unless it meets the exception rules.

Moving expenses – You moved more than 40 Km to be closer to your new work. Business. You can deduct certain expenses related to moving against the income earned in the new location. The amount that can’t be deducted can be carry forward to the next year.

Carrying charges and interest expenses – Fees paid to management of investment, interest paid on investment loan (provided investment income is not 100% capital gains) and safety deposit box charges.

There are some tax credits that can be claimed. Here are some examples:

Public transit amount – You can claim the amount if you have purchased monthly pass, weekly pass or electronic payment cards that meets the CRA requirement.

Children’s fitness amount  - Amount paid for eligible fitness programs can be claimed up to maximum amount $500/ child.

4. Any info received after filing the income tax return not adjusted

If you receive any tax slips for income that you did not include in the income tax return the return  can be adjusted by filing T1 Adjustment Request.