Master Your Taxes: Get More Back from the CRA This Year

Mastering your taxes by knowing old and new tax deductions can lighten your tax burden in 2024.

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The tax-filing (and tax-payment) deadline is fast approaching if you still need to file, whether electronically or the usual way. For those who file past April 30, 2024, the Canada Revenue Agency (CRA) will charge late-filing penalties and interest on any balance owed to the tax agency.

Besides early preparation, mastery of taxes in 2024 will help taxpayers get more back from the CRA. The usual tax deductions are available, and there are some new changes depending on individual circumstances.

For RRSP users

Tax planners remind Registered Retirement Savings Plan (RRSP) users to report contributions made in the first 60 days of the year. Only contributions before February 29, 2024, are eligible for an income tax refund for this tax season. If you missed the deadline, the next is March 3, 2025.

RRSP users must report all contributions, whether they want all or only a portion of contributions deducted from the previous year’s income. The RRSP is a tax-sheltered account, so all interest, dividends, or gains from income-producing assets held in the account are tax-exempt. Users are taxed when they withdraw funds.

New deductions

Canadian taxpayers can enter or claim deductions on the First Home Savings Account (FHSA). The federal government introduced the tax-free account for first-time homeowners. Like the RRSP, FHSA contributions are tax-deductible. However, withdrawals intended as a down payment for a first home are tax-free.

Prospective homebuyers can save up to 15 years from the account opening date. The deposit cap is $8.000, while the lifetime contribution limit is $40,000.

Medical expenses

Families can claim the non-refundable medical expense tax credit (METC). To qualify, your family’s total medical expenses should be $2,635 or 3% of your net income in 2023, whichever is lower. Qualifying medical expenses can be for yourself, your spouse or partner, and children under 18.

Home office expenses

Canadians working from home can still claim home office expenses such as rent, electricity, internet, and office supplies but can no longer use the flat-rate method for claiming. For 2023 and succeeding years, employees must use the CRA’s detailed method.  

Offset tax payables

Utilizing the Tax-Free Savings Account (TFSA) can offset tax payable or lessen the tax refund. You can use the $7,000 annual limit in 2024 or available contribution rooms to purchase dividends. All capital gains and dividend earnings inside a TFSA are tax-free, and withdrawals are also tax-exempt.

Surge Energy (TSX:SGY) is a relatively cheap but profitable option today. At $7.61 per share (+18.68% year to date), this small-cap energy stock pays a hefty 6.31% dividend. Your $7,000 can purchase nearly 920 shares and produce $441.70 in tax-free annual income.

The $765.4 million oil and gas company operates in Western Canada. In 2023, Surge produced 24,438 barrels of oil equivalent per day (boe/d), a new annual production record. Notably, free cash flow (FCF) before dividends climbed 35% year over year to $94 million.

Surge will continue to delineate and improve its reserve base through pool extensions. It will establish new development fields and new exploration or appraisal drilling in 2024.

Lighten the load

Taxes burden all taxpayers, although mastery of taxes, including new changes, can lighten the load.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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