Offering tax tips is a bit of a growth industry these days, and we here at CBCNews.ca aren't about to fight the trend. So, we've gathered a few general tax-wise suggestions and sprinkled in some specific tips to produce the following list of actionable ideas that could pay big dividends.
1. Consider making a $2,000 over-contribution to your RRSP.
Tax rules allow you to contribute up to $2,000 more than what you're eligible to contribute to your RRSP without attracting the usual excess contribution penalty, which is one per cent of the excess amount for every month of the contribution year that it stays in the RRSP .
Why might you want to do this?
Even though you can't deduct the $2,000 over-contribution, it could be residing inside your RRSP for many years, continuing to grow on a tax-deferred basis as long as it's in the plan. That $2,000 excess contribution can be deducted in a future year when your actual RRSP contribution is less than the maximum you're allowed to put in.
"Consider using your $2,000 over-contribution when you quit working," accounting firm Grant Thornton suggests in its tax planning guide. "The earned income you have in your final year of employment will entitle you to an RRSP deduction in the following year."
2. Proceed cautiously if a CRA auditor asks you to sign a waiver.
Under normal circumstances — in other words, no suggestion of outright fraud — the tax department has three years to carry out a reassessment of your tax return.
Sometimes, if the clock is ticking down on that 36-month deadline, a CRA auditor will ask you to sign a waiver to allow the agency to conduct its reassessment after the three years are up.
KPMG advises you to consider the request "carefully" and get professional advice. "You are under no obligation to file a waiver simply to make the auditor's life easier," it points out in its 2014 tax planning guide. "If the three-year reassessment period is about to expire, and the auditor does not have enough information to justify a reassessment, it may be to your advantage not to sign a waiver."
And if a waiver is signed? KPMG says a revocation (which would cancel the waiver in six months' time) should be filed at the same time the waiver is signed.
