With December right around the corner, the time is ripe to start thinking about your 2024 tax return. While taxes aren’t due until April 2025, Canadians should begin to keep track of the expenses and benefits that can help lower their tax liability for 2024.
In this article, I’ll look at three tax breaks offered by the Canada Revenue Agency (CRA) that you could claim while filing your taxes for 2024.
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Canadians can save on home renovations
The MHRTC (Multigenerational Home Renovation Tax Credit) is a new refundable tax credit introduced by the CRA. Eligible individuals can claim renovation costs to build a secondary unit within the dwelling, provided a senior or an individual eligible for the disability tax credit is residing in the unit.
The tax credit can be claimed for up to $50,000 in qualifying expenditures, and the maximum credit is $7,500.
Canada Child Benefit
The Canada Child Benefit (CCB) program provides Canadian parents with a certain amount per child annually. For example, the CCB for a child who is less than six years old is $7,437, while for children between six and 17, the benefit is lower at $6,275.
Medical expense tax credit
Another CRA benefit you can claim in 2024 is the Medical Expense Tax Credit, a non-refundable tax credit. The medical expense is a tax credit you can claim annually, equal to 15% of the costs incurred in paying for Medicare.
These costs include hearing aids, ambulance services, medical cannabis, pacemakers, and more. The maximum amount you can claim under the tax credit is 3% of your net income or up to $2,759, whichever is lower. So, the medical expense tax credit can potentially increase your savings significantly.
Utilize the tax credits to invest in quality stocks
While lowering the tax bill is the first step, deploying these proceeds to buy and hold undervalued TSX stocks such as Magellan Aerospace (TSX:MAL) is essential. Valued at a market cap of $620 million, Magellan Aerospace designs, manufactures, and sells aero engine and structure components for the aerospace markets in Canada, the U.S., Europe, and Asia.
It offers products such as engine frames, shafts, compressor and turbine components, landing gear, exhaust systems, and more. Moreover, Magellan offers maintenance, repair, and overhaul for various engines and components, as well as lifecycle management services for logistics, fleet management, and engineering services.
In the last 12 months, Magellan has increased its sales by 9% year over year to $925.2 million. Analysts tracking the company expect revenue to grow to $936 million in 2024, $1.01 billion in 2025 and $1.12 billion in 2026. Comparatively, adjusted earnings are forecast to expand from $0.17 per share in 2023 to $0.79 per share in 2025. So, priced at 13.5 times forward earnings, the TSX stock is cheap, given its robust earnings forecast.
Moreover, Magellan pays shareholders an annual dividend of $0.1 per share, indicating a forward yield of 1%. Given a payout ratio of less than 30%, Bay Street expects these payouts to grow steadily over the next 12 months. Analysts remain bullish and expect the dividend stock to gain over 45% by the end of 2025, given consensus price target estimates.
