The Canada Revenue Agency has already received more than 2.5 million 2023 personal tax returns as of March 4. Of those, over 95 per cent were electronically filed, with only five per cent of Canadians mailing in their returns.

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Approximately 80 per cent of the returns processed to date showed either no tax owing or a refund due, with the average expected refund coming in at $2,279.

When all is said and done, based on last year’s tax return processing statistics, the CRA is expected to receive more than 30 million personal tax returns for 2023, meaning that over 90 per cent of us have yet to file.

That’s not surprising since most Canadians (present company excluded, of course) don’t enjoy the process of filing their taxes. Indeed, 62 per cent experience at least a little anxiety or stress in anticipation of filing their taxes, according to a new survey by TurboTax Canada, with 18 per cent preferring to go to the dentist instead of doing their taxes. That anxiety level rises to 85 per cent for younger Canadians (aged 18 to 27), who may not have had much practice with this annual spring rite.

But fear not, intrepid tax filers, as I’ll be periodically sharing some helpful tax tips to guide you through the filing season leading up to the April 30 general deadline, some of which come directly from readers and clients. Let’s get started.

Reporting RRSP contributions

If you made a registered retirement savings plan (RRSP) contribution in 2023 or in the first 60 days of 2024 (Jan. 1 to Feb. 29), you must report that contribution in your 2023 tax return even if you don’t want to deduct all of it against your 2023 income. This is done on Schedule 7 of the return, where you enter your contributions in Part A of the form, and then you choose the amount you wish to claim (if any) in Part C, line 18.

After doing so, Part D will calculate the unused portion of your RRSP contributions available to carry forward to any future year. You may choose to delay claiming some (or all) of your RRSP contributions if you expect to be in a higher tax bracket in the future when the RRSP deduction may be worth more.

I bring this up because of a situation we recently encountered where a client’s tax preparer neglected to report 2020 RRSP contributions on the taxpayer’s 2020 return as they decided not to claim them in 2020. This led to the taxpayer mistakenly making the same RRSP contribution again in 2021 without having any new contribution room.

Once the CRA figured this out through the electronic matching program, the taxpayer was hit with an RRSP overcontribution penalty tax equal to one per cent per month for the excess contributions (above the $2,000 overage permitted).

Pooling or deferring donations

Among the multitude of personal tax credits, from the basic personal amount (which everyone gets) to some of the more obscure ones (such as the volunteer firefighter amount), only the donation credit is potentially worth more than the standard 15 per cent federal credit rate, which leads to a potential planning opportunity.

If you made a charitable donation in 2023, you get a federal credit of 15 per cent for the first $200 of annual charitable donations, but the federal credit rate jumps to 29 per cent for cumulative donations above $200 (or 33 per cent if you have income subject to the top federal rate of 33 per cent, which is income of more than $235,675 in 2023).

Parallel provincial credits work similarly, providing most Canadians with a minimum combined federal/provincial tax credit worth at least 40 per cent for donations above $200 annually.

Because of the lower threshold on donations below $200, if your donations were below that level last year, you might consider pooling donations with your spouse or partner (if applicable) and putting them on the same return if together they will exceed the $200 limit.

Alternatively, donations can be carried forward for up to five tax years, so you may wish to postpone claiming small amounts of donations until the cumulative amount is more than $200 in a future year.

Medical expenses

The non-refundable medical expense tax credit (METC) can be claimed for medical expenses that were not covered by your provincial, group or private health insurance plan. For your 2023 return, the METC is available provided your family’s total medical expenses exceed a minimum threshold equal to the lesser of three per cent of your net income or $2,635.

You can also claim a provincial/territorial credit, with the minimum income threshold varying by jurisdiction. Qualifying expenses include those you paid for yourself, your spouse or partner, and your kids under the age of 18.

One often-overlooked medical expense that can potentially help put you over the minimum threshold limit is the premiums you may have paid to a private health-services plan (such as medical or dental plan), assuming the cost wasn’t fully paid for by your employer.

If you’re an employee, be sure to check your 2023 T4 slip, specifically box 85, for the amount of premiums you may be able to claim as a medical expense for 2023.

Free tax help

If you or a family member has a simple tax situation and a modest income, you may be eligible for help in filing your tax return from a volunteer at a free tax clinic. Last year, free tax clinics helped more than 758,000 Canadians receive over $2 billion in benefit, credit and refund payments.

These free tax clinics are hosted by local non-profits, charities and community groups across the country in collaboration with the CRA through its Community Volunteer Income Tax Program. Help is available in person, by video conference or phone, and through various drop-off clinics, most of which are only open between March and April, though some are open year-round.

To find out whether you qualify and to locate a clinic near you, check out the CRA’s online directory. New clinics are often added, so be sure to check back regularly if you don’t immediately find one that meets your needs.

Jamie Golombek, FCPA, FCA, CFP, CLU, TEP, is the managing director, Tax & Estate Planning with CIBC Private Wealth in Toronto. Jamie.Golombek@cibc.com.

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