Understanding Deductions vs. Credits

Before diving into specific deductions, it's important to understand the difference between tax deductions and tax credits, as outlined by the Canada Revenue Agency.

RRSP Contributions

One of the most powerful deductions available to Canadians is the Registered Retirement Savings Plan (RRSP) contribution. According to the CRA's RRSP information page, you can deduct RRSP contributions made in the tax year or within the first 60 days of the following year.

Key Points:

• Contribution Limit (2024): 18% of previous year's earned income, up to $31,560 maximum
• Unused Room: Carries forward indefinitely if not used
• Deadline: First 60 days of the following year (typically end of February/early March)
• Benefit: Reduces taxable income dollar-for-dollar; tax-deferred growth

Employment Expenses

If you're required to pay for employment-related expenses without reimbursement, you may be eligible to deduct them. Your employer must complete Form T2200 (Declaration of Conditions of Employment) to verify these expenses.

Deductible Employment Expenses:

• Home Office Expenses: If required to work from home (portion of rent, utilities, internet)
• Vehicle Expenses: For work-related travel (excluding commuting)
• Supplies: Required tools and supplies for your job
• Professional Dues: Required memberships and licensing fees
• Office Rent: If you maintain your own office space

For detailed information on employment expenses, visit the CRA's Guide T4044.

Moving Expenses

If you moved at least 40 kilometers closer to work or to attend full-time post-secondary education, you may be able to deduct eligible moving expenses. The CRA's moving expenses page provides detailed eligibility requirements.

Eligible Moving Expenses Include:

• Travel costs (vehicle, meals, accommodation)
• Transportation and storage of household items
• Temporary living expenses (up to 15 days)
• Costs of selling old home (real estate fees, legal fees)
• Costs of buying new home (legal fees, land transfer taxes)
• Lease cancellation costs

Child Care Expenses

Child care expenses can be claimed by the lower-income spouse or common-law partner (with some exceptions). Consult the CRA's child care expenses guide for complete details.

Eligible Expenses:

• Daycare and nursery school fees
• Day camps and day sports schools
• Babysitting expenses (if receipts provided)
• Educational institutions providing child care

Limits (2024):

• Children under 7: $8,000 per child
• Children 7-16: $5,000 per child
• Children with disabilities: $11,000 per child

Other Common Deductions

Union and Professional Dues

Annual union dues and professional membership fees required for employment are fully deductible.

Carrying Charges and Interest

Interest paid on money borrowed to earn investment income is deductible. This includes interest on investment loans and margin accounts. Investment management fees are also deductible.

Support Payments

Spousal support payments made under a court order or written agreement are deductible (child support is not).

Northern Residents Deductions

If you live in a prescribed northern zone, you may claim the northern residents deduction for travel benefits and cost-of-living. Details available on the CRA's northern residents page.

Tax Preparation Resources

For comprehensive guidance on preparing your Canadian tax return, consult:

• CRA General Income Tax Package - Complete instructions and forms
• TaxTips.ca - Reputable Canadian tax resource with detailed guides
• TurboTax Canada Tax Resources - Educational articles and calculators