11 Purchases You Didn’t Know Were Tax Deductible in Canada

Tax season can be stressful and many Canadians seem to get caught off-guard by the deadlines. Understandably so, in the hurry to file, many tax payers forget valuable deductions and credits hence shrinking their tax refund cheques.

 Work-Related Clothing:

Sorry to break it to you babe, your pink Manolo-Blahnik and pinstriped power suit don’t qualify here. Certain work-related clothing expenses however, can be claimed as tax deductions. This includes uniforms, safety gear, and specialized clothing required for the job. If your employer does not reimburse these expenses, you may be eligible for a tax deduction.

 Home Office Expenses:

If you work from home as a self-employed person, you may be entitled to deduct a portion of your home-related expenses, such as utilities, property taxes, and maintenance costs. The calculation is based on the percentage of your home used for work purposes. CRA allows all office employees who work from home to claim up to $500 in employment expenses as a flat rate for tax year 2021, up from $400 last year. You may be able to claim more than the flat rate only if form T-2200-s has been signed by your employer.

Student Loan Interest

The CRA lets you claim a tax credit for the interest you paid on your student loan, both federal and provincial portions. Note this is not applicable if you got the loan from a private lender e.g. if you borrowed from a line of credit to finance your education. Unused amount can be carried forward for up to 5 years.

Professional Development Courses:

Expenses related to courses, workshops, or seminars that enhance your professional skills and are directly related to your current employment can be tax-deductible. This includes registration fees, textbooks, and travel costs.

 Union Dues:

If you belong to a union or professional organization, the dues you pay are generally tax-deductible. Be sure to keep records of your payments, as they can contribute to lowering your taxable income.

 Public Transit Passes:

Commuters who use public transit may be eligible for a tax credit. The cost of monthly or annual transit passes for buses, trains, subways, and even commuter buses can be claimed as a tax deduction.

 Child Care Expenses:

While not a direct purchase for yourself, child care expenses can be deductible if they allow you to work or attend school. This includes costs for daycare services, after-school programs, and summer camps.

 Tools for Employment:

If your job requires you to purchase tools or equipment, you may be able to claim these expenses on your taxes. This is especially relevant for tradespeople and individuals in professions where specific tools are necessary.

Moving Expenses:

If you relocate for work purposes and meet certain criteria, you can claim eligible moving expenses as tax deductions. This includes costs such as transportation, storage, and temporary lodging. For example, if you moved for a new job or to attend a post-secondary institution as a full-time student, you might be allowed to claim your moving costs.

 Health-related Expenses:

There are many medical related expenses claimable as long as your doctor has signed off for them. Some medical expenses that are not covered by insurance may be eligible for tax deductions. This includes prescription glasses, certain medical treatments, and travel expenses for medical purposes, electrolysis, gluten-free products, air conditioners, air filters etc.

Tip: Your private health insurance premium is a claimable expense.

Charitable Donations:

While not a direct purchase, charitable donations can result in tax deductions. Keep records of your contributions, whether in cash or goods, and claim them when filing your taxes. Did you know if you baked cookies for a charity funds drive that is considered a charitable contribution and you can claim the cost? 15% of the first $200 then 29% of the remainder up to a maximum of 75% of your income is claimable.

Tip: You may not know that CRA will let you hold on to your donation for up to 5 years and claim all of them in a single return so that you can consolidate small amounts and maximize on your tax credit (Line 34900 – Donations and gifts).

Always consult with a tax professional or refer to the Canada Revenue Agency (CRA) guidelines to ensure that you meet the specific eligibility criteria for each deduction. Tax laws can be complex, and staying informed will help you maximize your potential deductions and reduce your taxable income.