Taxes can seem intimidating and scary! Documentation relating to taxes can seem dryer than the Nevada desert. It is important though to start getting a better understanding of your tax situation, or what I call becoming “tax aware”.
Tax awareness is the principle of being aware of what tax laws and principles are, or can be applicable to you. For example, is the expense you just had at the optometrist eligible as a medical expense? Is the amount you gave to your local church eligible as a donation?
These questions are very important to your personal finances. Unfortunately, many Canadians do not ask themselves these pertinent questions, and are, quite frankly, leaving money on the table.
How do you begin to become tax aware? As a first step, simply asking a question to yourself, like the ones above. If you have a “gut feeling” that the transaction you just did might be relevant to your tax return, chances are it is. Once you have your question, it’s now time to start your search for the answer.
Where would you start searching for your answer? One good place is the Canada Revenue Agency (CRA) website. The CRA site is a full of useful information relevant to your tax return. The site itself is also very user-friendly. Most importantly, you can find the answer to the questions you might be asking yourself. For example for the optometrist question above, simply type in “eligible medical expenses” in the search box, and the site will take you to the list of eligible medical expenses.
On the CRA site, you can also click on the “Individuals and families” tab, and the CRA will list a few interesting tax topics you can read. Each link provides you with a wealth of information on various tax topics that might be relevant to you.
However, the most important document in your quest for “tax awareness” is the General income tax guide. This guide is published every year by the CRA, and is a line by line guide of the tax return itself. Although the line-by-line structure of the document sounds intimidating, it is written in very easy to understand language. I highly recommend going through the guide to make sure that you haven’t missed anything on your tax return, especially the non-refundable tax credit section. You can easily find the guide by typing “general guide” in the CRA web site search box.