Common tax mistakes in Canada often involve failing to report all income sources (like side gigs or foreign investments), improper tracking of records, and missing deadlines, which can lead to penalties. Key errors also include claiming ineligible personal expenses as deductions, neglecting to update personal information like marital status, and forgetting to report digital platform income.
Canada's 90% rule helps non-residents and recent immigrants claim full federal tax credits (like the Basic Personal Amount) if 90% or more of their net worldwide income for the relevant tax year is from Canadian sources; otherwise, credits are prorated (reduced) based on their Canadian residency period, ensuring fairness for those who weren't residents all year.
Commonly overlooked tax credits include the Child Care Expense Deduction, Canada Caregiver Credit and Medical Expense Tax Credit. The Child Care Expense Deduction allows Canadians to deduct up to $8,000 per child under the age of seven, $5,000 per child aged seven to 16 and $11,000 for a disabled child.
Avoid These Common Tax Mistakes
For a $70,000 income in Canada (using 2025 rates), you'll pay roughly $13,000 to $20,000 in total taxes (federal, provincial, CPP, EI), depending on your province, resulting in a take-home pay around $50,000-$59,000, with federal tax around 14.5% or 20.5% depending on the portion, plus provincial tax and deductions like CPP and EI.
According to a new study published by the Fraser Institute, in 2024 the average Canadian family (including single people) paid $48,306 in total taxes. Given the average family's total cash income was $114,289 in 2024, this means families paid 42.3 per cent of their incomes in taxes levied by all levels of government.
The average salary in Toronto is $62,050, which is 14% higher than the Canadian average salary of $54,450. A person making $75,000 a year in Toronto makes 20.9% more than the average working person in Toronto and will take home about $56,504.
Top IRS audit triggers
In this article
One often overlooked tax loophole is the advantage of hiring family members. It does not matter if you are a one-person business or have several employees; hiring your spouse or child can bring you considerable tax savings. You might be familiar with the “basic personal amount” of your spouse or child that is tax-free.
Situations where you can claim on tax without receipts
The five key mistakes to avoid in a TFSA are over-contributing (and re-depositing withdrawals in the same year), treating it like a basic savings account (missing out on investment growth), failing to track your room (relying solely on CRA data), improperly moving funds (withdrawing and redepositing instead of transferring), and investing in non-qualified assets or high-risk trades (like day trading or certain foreign stocks that incur withholding tax).
The 30% rule restricts Canadian pension funds from investing in securities of a corporation that carry more than 30% of the votes that may be cast to elect directors of the corporation (subject to certain limited exceptions).
The IRS does not actively monitor every Venmo account 1-(855)(518)(9622). However, Venmo may report certain transactions to the IRS if they meet federal reporting requirements 1-(855)(518)(9622). This typically applies to income-related payments, not casual personal transfers 1-(855)(518)(9622).
The "20k rule" refers to the traditional IRS threshold for reporting income from payment apps and online marketplaces on Form 1099-K: over $20,000 in gross payments AND more than 200 transactions in a calendar year. While a law (the American Rescue Plan) temporarily lowered the threshold to $600, recent legislation, the One Big Beautiful Bill Act (OBBBA) (OBBBA), has reinstated the $20,000/200-transaction rule for tax years starting in 2025, providing relief for casual sellers and gig workers.
Reporting cash payments
A person must file Form 8300 if they receive cash of more than $10,000 from the same payer or agent: In one lump sum. In two or more related payments within 24 hours. For example, a 24-hour period is 11 a.m. Tuesday to 11 a.m. Wednesday.
Which Taxpayers the IRS Audits Most Often. Oddly, people who make less than $25,000 have a relatively high audit rate. This higher rate is because many of these taxpayers claim the earned income tax credit, and the IRS conducts many audits to ensure that the credit isn't being claimed fraudulently.
What Not to Say During an Audit?
If you're considered to be part of Canada's middle class, then you have an annual income between $57,375 and $114,750. Those with this income are seen to make enough money to life a comfortable life. That said, there isn't much economic co-operation between this income range and the idea of middle-class life.
80k salary jobs