5 tips for more accurate taxes and better returns

There's plenty of things to keep in mind when it comes to taxes. When tax season rolls around, keep these tips in mind to ensure you're doing it properly.

5 tips for more accurate taxes and better returns

1. Keep a log

  • You're most likely to be questioned about vehicle expenses and entertainment expenses.
  • Even if you're an insurance salesman. If you're writing off 90 percent or more of your car expenses for business purposes, you're likely to get attention.
  • If you're an accountant, you might grab someone's attention by writing off 50 percent or more, simply because of your occupation.
  • Your best defense: keep a diary where you jot down the number of kilometres driven for business. For entertainment expenses, keep receipts and a record of who you met and why.
  • Keep in mind that the Canada Revenue Agency (CRA) will actually call the people you name. If none of the 20 people you named recall going out to lunch with you, you're in trouble.

2. Eat, drink...and deduct?

  • Say you're on a deadline at work and can't get out for lunch. If you order in and eat that meal at your desk while you're working, this "meal on premises" is deductible.
  • The key to taking these deductions is to document carefully, and save your receipts.

3. Put the kids to work

  • Pay family members for everything from running errands to answering the phone.
  • You might get a second look from the tax man if you put your eight-year-old on the payroll, but teens and tweens are perfectly capable of helping out.
  • Pay them a reasonable hourly wage and deduct the expense.

4. Keep it neat

  • It's worth pointing out that just having a neat return, with numbers that add up and no receipts missing, is going to stand you in good stead.
  • All it takes is one illegible number for your return to get kicked out of the system and onto a real person's desk.
  • Include all necessary documentation. Make sure you don't leave out even a tiny bit of income on your return.
  • The CRA will match your statement of income earned with the copies of T-4s and T-5s in their possession. Woe betide you if they find a discrepancy.

5. If you do get audited, seek professional help

  • Even if you prepare your tax returns yourself, don't face the CRA without a professional in your corner.
  • The CRA "is hoping that you pay just out of fear" of being audited, says Kurt Rosentreter, a senior financial advisor with Berkshire Securities, Inc.
  • Don't just pick a random pro out of the phone book — get a recommendation from someone you know who has had success with that preparer.
  • Look for an accountant or lawyer with experience in CRA negotiations and audits.

Taxes are a headache, but they're even worse when you're disorganized. Stay on top of things and use little tricks to keep your chances of paying more, or getting an audit, much lower.

The material on this website is provided for entertainment, informational and educational purposes only and should never act as a substitute to the advice of an applicable professional. Use of this website is subject to our terms of use and privacy policy.
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