The 5 Most Wrongly Claimed Tax Deductions

post it with the words tax deduction

It’s the start of the new year and time to start gathering all of your files and receipts for…you guessed it…tax filing!

Jamie Golombek is one of Canada’s top tax experts, and his article The five most wrongly claimed tax deductions provides a succinct review of the five most common errors and misunderstandings related to claiming deductions.

Here are some excerpts from the article to consider as you get prepared:

1. Moving Expenses

Expenses that don’t qualify:

  • Home staging costs
  • The cost of house hunting
  • Job hunting trips
  • Mail-forwarding charges
  • Storage fees near your former residence
  • The cost of repairs to former residence prior to selling

Helpful Tip: If you moved for business-related reasons in 2020, you can write off your moving expenses if the distance between your old residence and new work location is at least 40 kilometres greater than the distance between your new residence and new work location

2. Medical Expenses

What cannot be claimed:

  • Cost of vitamins
  • Natural supplements
  • Over-the-counter medications
  • Medical supplies such as rubbing alcohol, bandages, and shoe inserts

Helpful Tip: Valid medical expenses qualify for a 15% federal credit as well as a provincial credit, provided they exceed a minimum threshold equal to the lesser of 3% of your net income, or $2,397.

3. Public Transit Amount

Transit costs can’t be deducted when:

  • The transit pass is not submitted or does not include a name or unique identifier.
  • There are also frequency and period of use requirements that must be met.

Helpful Tip: Passes must permit unlimited travel for at least 20 days in each 28 day period on either local buses, streetcars, subways, commuter trains, buses, or ferries.

4. Interest on Student Loans

Doesn’t qualify:

  • Interest on a student’s personal loans and foreign student loans.

Helpful Tips: Receipts for valid student loans must show the student’s name. Student loan interest is generally eligible for a tax credit but only for interest paid on a student loan made under the Canada Student Loans Act, the Canada Student Financial Assistance Act, or a similar

provincial or territorial government law.

5. Tuition, Education and Textbooks

What can’t be claimed:

  • The tuition credit where an invoice is submitted rather than an official receipt that includes the student name.

Helpful Tips: The educational institution must be a recognized institution. The education amount is $400 for each month of full-time attendance and $120 for each month of part-time attendance. The textbook amount is $65 per month of full-time attendance and $20 per month for part-time attendance.

For more deductions, credits, and expenses guidance, refer to the Government of Canada’s website here.

Happy tax prep!