Smart strategies to maximize your tax return

If you aren’t careful, it’s easy to leave money on the table when filing your taxes. There are scores of deductions and credits available to taxpayers, so it’s worth looking at the list of tax benefits that may apply to you, both federally and by province or territory. Experts also say paying attention to government policies could make that job easier—and help lower your tax bill.

“A lot of times when the government makes announcements, they’re usually retroactive,” said Gerry Vittoratos, national tax specialist at UFile. He said people should parse through federal budget headlines and see if there are any  “goodies” announced for taxpayers, which is especially true during election years. Vittoratos said most people don’t need to be a “tax bug” or have special expertise, but it’s smart to watch for such announcements and see how they might apply.

For example, the federal government announced it would reduce the tax rate for the lowest tax bracket from 15% to 14% last May. Since the changes were announced mid-year, Canadians will be taxed at 14.5% on that portion of taxable income, with the rate dropping to 14% this year. For 2025, that means a 14.5% tax rate on any taxable income up to $57,375. Earnings beyond that threshold are taxed at higher rates.

Keep receipts year-round to avoid missing tax credits

It might be helpful to think of tax season as a year-round process, Vittoratos said. “It is not just four months out of the year, because you spend on things that are eligible for your tax return throughout the year,” he said.

Vittoratos recommended people set up a folder—either physical or virtual—and add any receipts or documents that could be applicable when tax season rolls around. Then, filter out whatever you don’t need when filing your taxes.

He said the biggest culprit for missed credits is omissions—not making claims for credits or deductions, even when you qualify because you can’t find the supporting documents. The most common one is missing receipts, such as for medical expenses or charitable donations, that can be used for tax credits, he said. Often, people don’t remember to save proof of payments to a dentist, walk-in clinic or prescription drugs throughout the year, he added.

Couples and first-time buyers can use credits and deductions to boost returns

Couples should also remember they can further lower their tax bills by combining expenses, said Ryan Lee, certified financial planner and founder of Twain Financial in Vancouver. For example, spouses can claim joint expenses, such as medical bills or fertility treatments, under the lower-earning spouse to maximize their return.

Canadians who are working remotely can claim work-from-home expenses, although they will need a tax form from their employer, he said.

For those who bought their first home last year, Lee said they could save up to $1,500 because of the first-time home buyer’s tax credit. 

Carry-forwards can also help maximize your return, experts say. 

Carry forward credits and RRSP deductions to maximize future tax savings

In some cases, taxpayers can bank credits or deductions for use in future years, such as with the registered retirement savings deduction or tuition fee credit. For example, full-time post-secondary students often accumulate huge tax credits on their tuition, but their federal taxes during that time of their life are low.

Vittoratos said most students don’t need the full refund amount from their tuition credit to reduce or mitigate their taxes because they aren’t typically high earners. Instead, they can choose to carry it forward until they land a full-time job within a higher income tax bracket. “If they’ve banked a bunch of tuition tax credit, they can grab that credit lump sum and use it on their return and really reduce their tax significantly,” he said. Students can also choose to transfer their credits to their parents to help them lower their tax bills, Vittoratos said. 

He said there’s a myth that if you’re a student or in a lower income tax bracket, you don’t have to contribute to an RRSP to get tax deductions. “You could bank them and use them in a future year when you get your promotion, when you get a bigger job, when you’ve got more money,” he said. Taxpayers would need to notify the Canada Revenue Agency if they decide to do so.

Read more about taxes:

• Should you claim capital cost allowance on a rental property?
• Tax season can bring some respite to parents with credits, deductions
• Claiming your spouse and dependants on your tax return
• Income tax brackets in Canada (2026)

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