Some deductions have been around for decades, while others were added recently to support certain interest groups or initiatives.Sadi Maria/iStockPhoto / Getty Images
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The deadline for filing taxes in Canada for 2024 is April 30. As the big day approaches, Globe Advisor and Globe Investor have teamed up to offer advice on how to maximize returns, find credits and avoid an audit. The full series can be found here.
Canadians doing their taxes are likely aware of common deductions such as credits for charitable donations or medical expenses.
But many may not be aware of more obscure – and potentially lucrative – deductions. Some of these have been around for decades, while others were added more recently to support certain interest groups or initiatives.
Sean Hsu, senior tax specialist, tax and estate planning and private family office with Richardson Wealth Ltd. in Toronto, says a lot of these deductions “are driven by government policy,” whether to boost philanthropy or push a certain agenda.
But finding these deductions can be a challenge. Mr. Hsu suggests reading through the jacket of the income tax package carefully, which is where many deductions are listed; going to the Canada Revenue Agency’s (CRA) tax tips webpage; or using a tax software program with embedded prompts for deductions. Consulting with a tax advisor or accountant is another great option to ensure no deductions are missed.
“Always check to see if there is anything else you can be claiming,” he says.
Although the last big tax reforms were in 1971, several credits and deductions have been added since, says Evelyn Jacks, president and chief executive officer of the Knowledge Bureau Inc. in Winnipeg.
Here are some that aren’t as well-known:
Moving expenses: Established in 1971, this tax credit was claimed by 85,000 Canadians in 2023, Ms. Jacks says, “although it’s one that many people tend to miss.” She says that with so many Canadians moving to British Columbia and Alberta during the past few years, this credit can be very helpful.
The moving expenses deduction applies to those who moved to a new home to work or run a business out of a new location, or to study full-time. The new home must be at least 40 kilometres closer to the new work location or school.
Claimed using the T1-M form, this credit includes the costs of a moving company and storage facility, real estate costs, vehicle expenses and meals associated with moving, as well as the costs of a rental if there’s a lag between vacating the home and moving into the new home.
Psychiatric service dogs: This medical expense tax credit – introduced in the 2018 federal budget – recognizes costs for psychiatric service dogs aiding people with severe emotional impairment. It was added to compensate military veterans suffering from post-traumatic stress disorder (PTSD) and applies to all Canadians who use dogs that are specially trained to assist people suffering from psychiatric conditions that include PTSD, severe anxiety and early dementia.
The expenses include the cost of the animal, food and veterinarian bills, as well as boarding, lodging and travel costs for a patient to attend training. Filed returns dating back to 2018 can be adjusted if the expenses weren’t claimed, Ms. Jacks says.
Northern residents’ deductions: “The cost of living in the North is high,” says David Rotfleisch, a partner with Rotfleisch and Samulovitch Barristers & Solicitors in Toronto. “Everything comes up by air or by boat in the summer and it all costs a fortune.”
These deductions, intended to alleviate the costs of food, housing and travel in the North, can be claimed in full for those who lived in a prescribed northern zone permanently for at least six months, or at 50 per cent for those who lived in a prescribed intermediate zone. A person may be able to claim $11 a day for Zone A and $5.50 a day for Zone B for the basic residency amount.
Home accessibility tax credit: This credit reflects the needs of aging Canadians who want to stay in their home, Mr. Hsu says. “And it can be a great way to look for relief that can be immediate.”
Claimants can file up to $20,000 in expenses associated with renovating a home to make it more accessible, which would provide a tax credit of up to $3,000. The credit is intended to assist Canadians who are disabled or older than 65 years of age, as well as those caring for them.
Clergy residence deduction: Dating back to 1949, this deduction ensures members of the clergy don’t pay taxes for their living situations. “From a tax perspective, living rent-free would be a taxable benefit,” Mr. Hsu says. “So, the government created this clever way of offsetting that taxable benefit so no additional tax would be paid.”
Full-time members of the clergy, such as ministers or members of a religious order, can claim this deduction using Form T1223, Clergy Residence Deduction.
Adoption expenses: Introduced in the 2005 budget, this credit can be sizeable, Ms. Jacks says. Canadians who adopt stand to claim up to $18,210 in expenses, including adoption agency fees, translation costs, travel and living expenses, and fees paid to the foreign institution arranging the adoption.
Volunteer firefighters’ and search-and-rescue volunteers’ amounts: With all of the firefighting required in Canada in recent years, this 2011 credit “recognizes the important role firefighters and search-and-rescue teams play,” Mr. Hsu says. Volunteers can claim $3,000 if they completed at least 200 hours of eligible volunteer firefighting or search-and-rescue services during the year.
Digital news subscription tax credit. This temporary credit was introduced in 2021 to help support journalism. Tax filers can claim up to $500 for qualifying subscription expenses after 2019 and before 2025 for a $75 credit.
While many of these credits are niche, Mr. Hsu advises his clients to ensure they don’t miss any that may pertain to their unique situations. “These can all make a huge difference,” he says.
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Editor’s note: A previous version of this article included incorrect information about claiming the medical expense tax credit for psychiatric service dogs on previous returns.