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Canada

Can you save money on your tax return?

It’s never too early to start planning for tax season, especially if you want to make the most of your returns.

Saving money is possible if you take advantage of tax-saving opportunities available to you, like using an RRSP account or remembering to deduct childcare credits, said Preet Banerjee, a Toronto-based personal finance expert. 

READ MORE: Many Canadians see tax refund as ‘windfall’ but money was theirs all along: CIBC poll

“These are things that a lot of regular people would do and were showing you how much of tax savings that could amount to,” he told hosts on Global News’ The Morning Show

“It’s a little bit of thought and planning, and make sure you maximize those deductions and credits that are available,” he said. 

The median amount of taxes Canadians pay within a household is about $12,000 to 18,000 depending on province, he explained. Those costs can be cut if you’re savvy, he said.

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Using an RRSP account 

If you contribute about 10 per cent of your household income to an RRSP, that could lead to thousands in savings, said Banerjee. 

READ MORE: Here’s what Canadians should do with a tax refund (spoiler: not splurge)

“It’s an income deduction… but down the road when you take it out of your RRSP, it’s added back to your income. So if your tax rate is lower in your retirement, this is a good thing,” he said. 

Childcare expenses and student loans

“You can deduct childcare expenses, and some provinces also have tax credits,” he said.

This could also lead to thousands off your taxes at the end of the year as well, he explained.

For students in the family, if they paid some money in interest that could result in some savings on a tax return as well, he said. 

Buying your first home

There’s a home buyers credit that’s available that you can make a claim for if it’s your first home, said Banerjee. 

Launched in 2019, the credit allows buyers to receive up to 10 per cent of the house price back, which would lower the amount of a mortgage, according to a previous Global News report

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READ MORE: Volunteer program helps low-income earners file their taxes free of charge

“It’s a little bit of a help, it’s a big purchase, but every little bit counts,” he said. 

For more information on how to save money on your taxes, watch Preet Banerjee in the video above.

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