This time of year many of us have taxes on our minds. Keeping up with all the deadlines, trying to get organized and learn about all the new changes made to various tax credits can be overwhelming. Our team at LedgersOnline have summarized some of the changes to federal tax that you should be aware of this tax season.
New 2016 Credits & Mandatory Reporting
Effective July 2016, Canada Child Tax Benefit and the Universal Child Care Benefit were replaced with the Canada Child Benefit (CCB). This Benefit is a tax free monthly payment made to eligible families with children under the age of 18. Your payment will be recalculated in July of 2017 based on your family net income. More information on the CCB as well as applying for and calculating your benefit can be found in the link above.
If you are a teacher at an elementary or secondary school, or an early childhood educator at a regulated child care facility you can claim a refundable tax credit of up to $1,000. An eligible expense are items paid towards teaching supplies, such as stationary items, books, art supplies and puzzles.
If you are a senior, person with disabilities and other eligible individuals you can claim a non-refundable tax credit of up to $10,000 per year of work incurred or goods acquired for an eligible dwelling for 2016 and subsequent tax years.
Sale Of Principal Residence
For the 2016 taxation year, the sale of a principal residence must now be reported, along with any principal residence designation, in the taxation year the property was sold. This includes your primary residence. In order to claim the full principal exemption, you need to report the details on Schedule 3 of your personal tax return. If there was a sale of a property and it was not the tax payer’s primary residence for every year of ownership, Form T2091, Designation of a Property as a Principal Residence by an Individual (Other than a Personal Trust) also needs to be completed.
Changes To Credits & Tax Measures
For 2016 the maximum eligible fees per child has been reduced to $500 (this does not include the supplement for children with disabilities). For 2017 and subsequent years both will be eliminated.
For 2016 the maximum eligible fees for per child has been reduced to $250 (this does not include the supplement for children with disabilities).
Your TFSA contribution amount has been reduced to $5,500 annually, from $10,000 in 2015.
Family Tax Cut
For 2016 and subsequent years the family tax cut has been eliminated.
Tax On Taxable Income
Effective January 2016 tax rates and income levels have changed. The federal marginal tax rate for the middle income bracket (i.e., taxable income between $45,283 and $90,563) was reduced from 22% to 20.5%, while the top earners (income over $200,000) marginal tax rate increased from 29% to 33% (indexed to inflation for taxation years after 2016).
The tax credit for the purchase of shares of provincially or territorially registered labour-sponsored venture capital corporations has been restored to 15% for 2016 and subsequent tax years. The tax credit for the purchase of shares of federally registered labour-sponsored venture capital corporations has decreased to 5% and will be eliminated for 2017 and subsequent tax years.
The basic and additional residency amounts used to calculate the northern residency deduction have both increased from $8.25 to $11 per day.
If you file on time the CRA wants to offer you money back with tax credits, deductions and benefits. You should file regardless of having little to no income as you can claim these tax credits. Some of the credits and benefits that might be available are tuition fees, textbooks, GST, child care expenses, public transit and interest paid on student loans, to name a few. View the link above for a full list of deductions and credits available and to see if you’re eligible for these credits.
Keep in mind that these are federal tax credits, while each province has their own unique credits as well. We suggest that you research provincial credits that may apply to you, or speak with an accountant for more information.