With December right around the corner, it’s the perfect time to start preparing for your 2024 tax return. While taxes aren’t due until April 2025, Canadians should begin tracking eligible expenses and benefits that can help lower their tax liability for 2024. Below, we’ll highlight three tax breaks offered by the Canada Revenue Agency (CRA) that you may want to claim when filing your taxes next year.
1. Save on Home Renovations with the MHRTC
The Canada Revenue Agency (CRA) has introduced a new refundable tax credit to help Canadians save on home renovations. The Multigenerational Home Renovation Tax Credit (MHRTC) allows eligible individuals to claim renovation costs to build a secondary unit within their home, provided a senior or a person eligible for the disability tax credit resides in the unit.
You can claim up to $50,000 in qualifying renovation expenses, with a maximum tax credit of $7,500. This new credit is a great way to offset the costs of making your home more accessible and family-friendly.
2. Claim the Canada Child Benefit (CCB)
The Canada Child Benefit (CCB) is another valuable tax break for Canadian parents. This benefit provides annual payments to parents with children under 18, helping reduce the overall tax burden. For example:
- For children under 6 years old, the CCB amount is $7,437 per year.
- For children aged 6 to 17, the benefit is $6,275 annually.
These payments can add up to significant savings, so ensure you’re receiving the full amount you’re entitled to.
3. Utilize the Medical Expense Tax Credit
The Medical Expense Tax Credit is a non-refundable credit that Canadians can claim annually. This credit allows you to claim 15% of your medical expenses, which can include items like hearing aids, ambulance services, medical cannabis, and pacemakers. The maximum amount you can claim is 3% of your net income or up to $2,759, whichever is lower.
This tax break can potentially reduce your overall tax burden, especially if you’ve incurred high medical costs during the year.
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Invest in Quality Stocks to Grow Your Savings
While these tax breaks can help reduce your tax bill, another effective strategy is to invest the savings in undervalued stocks. For example, Magellan Aerospace (TSX: MAL) is a promising stock to consider. With a market cap of $620 million, Magellan Aerospace designs and manufactures components for the aerospace industry, offering everything from engine frames to landing gear.
Over the last year, the company increased its sales by 9%, and analysts expect strong growth, with revenue projected to reach $936 million in 2024. The company’s stock is undervalued, priced at just 13.5 times forward earnings, and analysts predict the stock could grow by 45% by the end of 2025. Additionally, Magellan pays a 1% dividend, which is expected to grow over the next year.
As you prepare for your 2024 tax return, don’t miss out on these valuable tax credits and opportunities for savings. By claiming the MHRTC, Canada Child Benefit, and Medical Expense Tax Credit, you can reduce your tax liability and increase your savings. Once you’ve saved, consider using those funds to invest in promising stocks like Magellan Aerospace, which offers potential growth and income opportunities.
By being proactive and planning ahead, you can maximize your savings in 2024.
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