This article was originally written for the Business First publication.

You can’t avoid it any longer.  The year 2012 is drawing to a close.  I was startled to see Christmas decorations on the store shelves in early October, before Thanksgiving had even had a chance to finish making its appearance.  That means that Christmas shopping will need to be done.  This year I plan to avoid repeating the mistake of buying my wife the same gift two years in a row.  Lucky for me, she has a good sense of humour!

As each year draws to a close, people often start to think a bit more about their taxes.  You know, how to avoid paying the government too much more, and how to maximize their tax refunds.  A common question often heard is: “What are some of the best tax deductions?”

Did you know that one of the best tax deductions is charitable donations?  If you live in Nova Scotia, you can recover up to 50% of your donations in tax savings.  Because of the unique way tax credits are calculated for donations, even taxpayers in lower tax brackets can enjoy this level of savings.  On the first $200 of donations, you save 24%.  On anything over $200, your savings goes up to a full 50%.

That’s an impressive reason to donate right there.  If you still aren’t convinced, remember that when we pay taxes, a sizeable chunk of what we pay goes to fund social programs.  Wouldn’t you prefer to choose for yourself which causes you want to support?  And then have the government reimburse you up to one-half of what you donate?

There are a number of schemes that claim to get you back more in tax savings than your donation amount.  Please don’t fall for these schemes.  They are aggressively audited by the Canada Revenue Agency, and you’ll almost certainly end up losing your entire tax savings, as well as your original donation.  Rather, choose a registered charity that you trust and believe in, and support it.  Give from the heart.  You’ll enjoy the satisfaction of helping someone else, and then you’ll enjoy the satisfaction of the tax savings.

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Some people wonder – can you claim your graduate retention rebate first, and hold all or part of your tuition and education tax credits until after the 6 year retention rebate expires?  To which I can only respond:  I wish.

The real answer is no, you can’t.  You are required to use your tuition credits first, which is a bit disappointing, because many graduating students have sizeable carryforwards of tuition costs.  It often takes several years to “sop up” these tuition carryforwards.  By the time they are used up, you’ve already eaten up some or all of the 6 years of the retention rebate.  This means you don’t get the full benefit of the graduate retention rebate.

The best way around this is to transfer the maximum allowable portion of your tuition and eduction tax credits to someone else (and then hope they share the tax savings with you!) …… but you can only do this in the year you receive the credits.  You can’t transfer carryforward amounts.


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August 17th, 2012

One common tax question I get is this: should I put money into a Tax Free Savings Account (TFSA) or a Registered Retirement Savings Plan (RRSP)?  There is of course no easy answer, and I won’t even pretend to answer that question in a blog post.  It’s best answered on an individual basis.

There are some things you just can’t make a TFSA do that an RRSP does quite nicely, and there are some problems that an RRSP can create that a TFSA will never do to you.  So the best place to start is to learn the differences between the two plans.  If you want some basic advice, start off here:

I’m going to say one more thing:  if you think you may someday qualify for what is called the Guaranteed Income Supplement (GIS) from Old Age Security, consider investing through the TFSA.  Why?  Because withdrawals from your TFSA account won’t affect your Supplement.  You have no idea how many seniors say to me:  “I would never have invested any money in an RRSP if I’d known how it would affect my Supplement

Now, the government of Canada really, really doesn’t want you to plan your retirement around the Supplement – after all, the Supplement is there to protect the lower income seniors.  But if you think the Supplement is in your future, consider avoiding the RRSP and go with the TFSA.

Qualifying for even a small Supplement brings with it a whole raft of other goodies (lower cost Senior’s PharmaCare, municipal property tax rebates, provincial heating rebates in Nova Scotia, etc.)  So while the government of Canada doesn’t want you to build your retirement fund around the Supplement, you might be tempted to do so anyway.

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Graduate Retention Rebate

July 6th, 2012

This article was written for the Business First publication, and is part two of a series.  You can read the first one here.


Don’t you love that feeling you get when you finally finish a task you’ve been dreading?  And you find out it wasn’t nearly as bad as you were expecting?  Sort of like cleaning up the garage and rather than taking a whole day it only takes most of the morning.  Or better yet, you clean up the garage and find that tool you’ve been missing for three months.  Which is great unless that tool happens to belong to your father whose been missing it for three months.

In last month’s issue of the Business First magazine, we wrote about Raymond, the apprenticed electrician who was attending trade school.  In that article, Raymond was pleased to learn about how he qualified for apprenticeship grants of up to $4,000.  His employer was also very pleased to receive tax credits of an additional $4,000.

Raymond has now finished trade school and is a licensed electrician.  He graduated from the Nova Scotia Community College, and was hired full time with Coastal Electrical.  His employer has been busy re-wiring several large superstores throughout Nova Scotia, and Raymond has been kept very busy.  In fact, he was worked quite a bit of overtime.  Since this is his first full year out of school, Raymond is getting quite worried about his income taxes.  He doesn’t have any tuition costs left to claim, and because he’s been depositing some substantial paycheques, he’s worried that he will be faced with a balance owing on his tax return.

So, since Raymond is as human as the rest of us, he puts off filing his income tax return until the middle of April.  He finally heads off to a local accountant to get the task done, and to see how much more he owes in taxes.  His accountant learns that he’s a recent graduate from the Nova Scotia Community College, and tells Raymond about the Nova Scotia Graduate Retention Rebate.

The Nova Scotia Graduate Retention Rebate was implemented in 2009.  The purpose of it was to do exactly what the name suggests – to retain college and university graduates.  Nova Scotia is eager to keep its graduates living and working inside of Nova Scotia, and is putting its money where its mouth is.  If you complete a diploma or certificate program from college, you can qualify to receive $1,250 per year for six years in tax savings.  That’s a total of $7,500 over the six year period.  If you complete a diploma or certificate program from university, the amount doubles to $2,500 per year for six years.  That’s a total of $15,000 over the six years.

The key to receiving the credit is that you need to be a Nova Scotia tax resident at the end of the year.  You are allowed to work outside the province, provided that your primary ties remain in Nova Scotia, and you file a Nova Scotia tax return at the end of the year.  It’s become quite common for taxpayers in Nova Scotia to find temporary work in the Western provinces. This Retention Rebate is clearly designed to encourage them to retain their ties to Nova Scotia, and to continue to file Nova Scotia tax returns.

Anyway, Raymond is very relieved to find out that he doesn’t have to pay any more in taxes – and he’s pleased to be actually getting back a refund.  Now he just wishes he’d done his taxes in February instead of waiting until April!

This article was written to introduce the Nova Scotia Graduate Retention Rebate.  For more information on this lucrative rebate, visit the provincial website at

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