Here at the Alberta Storage Group we work with our bookkeeper Whitney Hall every day to make sure things are in order and she has been a lifesaver to us. We call her Wonderful Whitney. Whitney has done work in the field of accounting, banking and bookkeeping for many years and she has seen people struggle with finances and taxes. It doesn’t have to be that hard! Here are her pointers on how everyone can save time and money when it comes to taxes.
1. Did you know that Canada Revenue Agency (CRA) requires you to retain documents related to your taxes for 7 years? (The year you are in plus 6). Keep all those tax files in a file box and if you don’t have room for all those boxes think about using a self-storage facility to hold those boxes for you.
2. A person who works for a company in Canada is issued a T4 and has limited deductions they can claim. But there are some deductions and these deductions can significantly decrease your tax bill. As an employee these deductions will require that you keep a record. The best way is to have 1 file or 1 envelope that you keep your paperwork in through the year. Start this file or envelope in January and leave it in the same place and just keep adding to it throughout the year and then it’s already to hand to your accountant or tax preparer at tax time. What type of things should your save? Things like…
- Medical Expenses Credit– if you travel more than 40 kms one way to see a medical practitioner, mileage and meals are allowed as a deduction. No receipts necessary on this one, but you have to be able to prove you were there. Whitney suggests marking appointments on the same calendar throughout the year then you have that on hand to accompany your tax file or envelope. She also says you should keep your prescription, dental, chiropractor, massage etc. receipts if you have to pay those out of pocket yourself.
- RRSP’s – did you contribute in the last year? Your tax preparer needs the receipt! Where is it? When you receive these put them in your file or envelope as well.
- Children’s Fitness, Recreation and Arts Credits – where is that hockey registration receipt? Dance lessons? After school art class? Keep those papers in your file or envelope as well. We pay a lot to give our children these options and the government is willing to give a lot of it back, but only if you have proof your child participated.
3. For the person who has his/her own company, there’s more paperwork. Whitney suggests a file or an envelope for each month. In these files put your invoices, receipts, bills, CRA paperwork. Then once a month or once a quarter you can deliver it to your bookkeeper/accountant. You can save money by having your accountant or bookkeeper look after these through the year instead of you holding this information for a whole year. Why? Because it cost more in labour if your bookkeeper or accountant has to sort and organize a whole year’s worth of information at once. Also, if they see something earlier in the year there may be a chance for them to help you tax plan better and save you from writing a cheque to the tax man!