What I Learned This Tax Season

The personal tax season is all done! Many of us would’ve been crammed up in the last week before the tax deadline, getting all the documents needed and talking with their tax accountants about last-minute requirements. 

I’m Christina, the Administrative Assistant of KATA Accounting. I came to Canada as an International Student to pursue a Business Management Program. It was a two-year Graduate Certificate Program, and the final term included a Co-op Work Term, during which I spent time with KATA.

I had my taxes filed around three weeks back because it was only my second time doing this and I had to make sure that I had enough time in case there were any snags that needed to be addressed. 

After all is done and dusted, let me share my experiences and lessons from my tax filing activity this season.

Understand Tax Deductions and Credits. One of the most crucial lessons I learned this tax season is the importance of understanding tax deductions and credits. Both can lower one’s tax bill. These may be in different ways.

There are a lot of opportunities to reduce taxable income and potentially receive refunds. To maximize those credits, we have to keep good records and be aware of eligibility criteria. Tax deductions reduce your taxable income and tax credits reduce your income tax. Multiply the tax deduction by your tax rate. The tax credit would be calculated based on the dollars you spent but may not be a 1 for 1 tax reduction on the tax bill.

Standard tax deductions (reduce taxable income):

• RRSP contributions;
• FHSA contributions;
• Carrying charges;
• Work-from-home expenses;
• Employment expenses;
• Union Dues and professional memberships;
• Spousal support payments;
• Legal fees (in limited circumstances).

Standard tax credits (decrease the tax payable, but not necessarily on a 1-1 basis)

• Political and charitable donations;
• Moving Expenses – If you’re moving at least 40 kms closer to work or school, you may be able to claim certain moving expenses such as transportation costs and temporary living expenses;
• Digital News subscriptions from qualifying organizations (There’s a list you can look up online);
• Child Care (no activity or arts credits, need to be primarily for child care);
• Medical Expenses (out of pocket);
• Training fees (eligible tuition fees, training fees, or examination fees paid out of pocket) T2202: the previous year 2023, in my first year as an international student, tax receipts from the College I attended were set aside and was advised to be carried forward to the next tax year because there is no income generated. These receipts that can be carried forward are receipts from federal tuition, education, and textbooks. They can also be transferred to a parent, grandparent or guardian;
• Disability Tax Credit;
• Canada Employment Amount and Canada Worker Benefit.

Nonrefundable tax credits

These can eliminate taxes payable, but can’t be refunded if they are greater than taxes owed.  A primary example is the basic personal amount or the spousal amount;

Refundable tax credits

These can result in a tax refund, even if there’s no tax payable.

Some tax benefits

• Canada Child Benefit
• GST/HST: the CRA will automatically calculate goods and services, tax/harmonized sales tax credit, and any related provincial credit based on the family net income, province of residence, marital status, and qualified children. If one qualifies for any credit from July of the present year to June of the following year, this will be advised in July of this year.
• Canada Dental Benefit
• Canada Carbon Rebate
• Caregiver Credit
• Training Credit

To ensure that a taxpayer qualifies, it is important to know the rules. Some deductions and credits have specific eligibility requirements. 

Understand Tax Regulations and Tax obligations. As an individual tax filer, I also have to do due diligence in learning the requirements of tax filing. In my case, these were on Personal Tax filing as a newcomer and international student. One important learning as a newcomer is that even if you do not have any earnings, you must file an income tax.

Working as a liaison between the clients and KATA, I learned some requirements on the following:

• Personal Tax Return – who should file, how to get ready, filing and payment due dates, reporting your income and claiming deductions, and how to make payment or check the status of your refund.
  • Who should file?
    • You live in Canada permanently
      • Canadian residents
      • New immigrants
      • File taxes for someone who died
      • Indigenous peoples
    • You leave Canada temporarily or permanently
      • Factual residents – a resident of Canada who may leave temporarily for work, school, or medical procedure
      • Live part-time in the US – spend part of the year in the US for reasons like health or simply a long vacation, and maintain residential ties in Canada
      • Government Employees – assigned abroad
      • Leave Canada permanently – departure tax
    • You live in Canada temporarily
      • Non-residents of Canada
      • Non-residents of Canada with rental income
      • Deemed residents
      • International students
      • Seasonal workers

Working with clients this tax season for the first time, this experience was memorable because I was able to work with KATA clients who are all very professional, courteous, and respectful. Each individual has a unique tax situation and I am very pleased with the way our communication with the clients and KATA team has gone with finding the best solution for every situation. 

Our data management and organization are continuously improving as we work on our learnings, do industry benchmarks, and have regular improvement huddles. The handling of a substantial amount of files and financial data has enhanced my attentiveness to detail and organization. 

This experience has also ignited my interest to learn more about tax preparation so that I can quickly organize all the resources needed for the tax preparer and accountant to improve our efficiency more so that our clients will have the best experience with us.

Finally, I am also amazed at the level of professionalism our KATA Team Members have exemplified throughout this tax season; their knowledge, process efficiency, and treating the data with utmost confidentiality have also made me emulate these. With this experience, I just know that KATA clients are always in good hands.