Strategies for keeping the taxman at bay

(NC)–This year, Canadians have new options to help them save money and keep a few more dollars out of the tax man?s pocket.

The new Tax-Free Savings Account lets Canadians deposit $5,000 per year and earn tax-free interest. It?s a great new way to save, and works well in combination with some more traditional options, such as RRSPs.

According to Statistics Canada, one-third of eligible Canadians contribute to RRSPs. While many might seek accountant advice on how much to contribute, more and more Canadians are using a RRSP optimizer tool found in tax software, such as QuickTax, to calculate the best contribution amount or to test a few ?what if?? contribution scenarios and pick the one that delivers the maximum return. QuickTax software carries forward data from last tax season and includes any remaining RRSP space when it calculates your optimal contribution.

Given the current economic climate, many Canadians might be considering cutting back on their contributions. But before making a decision that can hurt your overall income tax return, it?s important to know there are other options, such as borrowing to top up your RRSP and paying down the loan with your tax return. Just remember that interest paid on these loans is not tax deductible.

Another option is to transfer ?qualified investments? from an investment to an RRSP account, and receive a tax receipt for the contribution. Keep in mind that if your investment has dropped in value below what you paid for it, you can?t claim the loss once it is transferred into an RRSP.

Does your company match RRSP contributions? If your company offers this perk, don?t miss out on this type of extra saving.

Once all is said and done and you?ve filed your return, you want to be sure you don?t get a knock on the door from the tax man. Winning the tax audit lottery is inconvenient, even when all your decimal places are where they should be, as it means taking the time to collect a year?s worth of tax records to have them scrutinized.

Some tax prep services offer a guarantee on their number crunching, and now QuickTax users can buy an ?Audit Defence? option, which goes beyond the usual software calculation guarantees. It essentially buys peace of mind: should you be audited, you?ll be represented by a tax professional who will handle your dealings with the CRA.

More information on how to get the most from your RRSP contribution is available online at www.quicktax.com.

– News Canada

Seniors can trust NETFILE for secure tax filing

Seniors who may be worried about whether online tax filing is secure can rest assured. NETFILE, the Canada Revenue Agency?s (CRA) online tax filing system, has taken steps to provide several layers of protection that make the process safe and secure.

For example, before you can even begin to file your income tax online, you have to enter your personal four-digit access code. You can find it on the information sheet of your T1 personal income tax return package. Your access code, along with your social insurance number (SIN) and date of birth, become your electronic signature. Remember, though, Internet security is a two-way street. Keep your access code a secret, always close your computer after working on your return, and never send your access code or your SIN by email to anyone.

The CRA ensures that your personal and financial information is transmitted in an encrypted format between your computer and its Web servers. This ensures that computer hackers and other Internet users cannot alter or view data being transmitted. The CRA uses sophisticated security techniques to protect its Web site. State-of-the-art encryption technology and security procedures protect your personal information at all times.

NETFILE could be the way to go for seniors who want to save time and money, and get their refunds faster. You can find all the information you need at www.netfile.gc.ca.

News Canada