So, you have become the type of person that can be considered to be really tax savvy. You have studied the tax laws as they apply to you. You have spent countless hours on tax planning and taken every action to make use of every tax incentive possible, and you pride yourself on your accomplishments, only to learn that all of your efforts have not made you tax free.
While there are lots of good tax incentives the government also realizes that these can be taken of advantage of, and of course they don’t want money making Canadians in a position where they aren’t paying any taxes merely because of these incentives. The primary purpose of tax incentives is to ease the tax burden not to totally lift it.
In most cases it is unlikely as an average working tax payer that you would have to even consider your position as a minimal tax payer.
It could occur if…
You have a capital taxable gain which you entered on line 127 of your tax return.
It could also occur if you made any of the following claims on your tax return…
A lost that occurred or was increased when you claimed capital cost allowances on rental properties.
You experienced a loss from a limited partnership.
A loss from resource properties that fit a specific criteria.
Carrying charges as they relate to some types of investment.
As well as many other potential situations that could occur depending on what you enter on specific segments of your tax return.
Our tax system shows no signs of becoming simplified, and it is increasingly becoming more difficult for the average tax payer to complete their tax returns with the assurance that they are getting all of the appropriate tax breaks. It is becoming harder to make financial decisions based on the tax implications simply because the laws are so complex.
All of this really supports the need for using a good financial accountant, and not just assuming that any tax preparer has the skills and expertise to go beyond just filling out your tax return so it is compliant with the law. The money you spend on having your taxes done in the more complete and comprehensive manner can bring you more of a financial return than what it will cost you to have your taxes done effectively.
