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Five Important Updates To Know Before You File Your 2016 Tax Return The start of a new year for most Canadians signals a feeling of optimism, a time of reflecti...on, and a renewed sense of setting goals. After the 2015 election, the management of Canada shifted from one political body to another, which means Canadians will see and feel noticeable changes in the years to follow. Recent government changes may be causing more worries than usual for Canadians. The reality is that these changes are most directly felt by the tax system, because public programs and initiatives receive funding from the public purse. As contributors of this pool of government money, the key is to understand what the changes are, how it impacts us directly, and how we can plan ahead. Here are five important updates to know before you file this year: Reduced: Children’s Fitness and Arts Credits The maximum fees allowable per child for these two credits have been reduced in the following way: For the arts amount, maximum fees allowable to claim per child have gone from $500 to $250. This amount is non-refundable, which means that if you have more credits than income tax, you will not be refunded the difference. For the fitness amount, the maximum allowable fees to claim per child have gone from $1,000 to $500. This amount is refundable, which means if you have more credits than income tax, the CRA will refund you the difference. The credit rate for both of these credits is 15%, which means you can receive a maximum of 15% of your total expenses related to arts and fitness. For more information on allowable fees expenses that are eligible for a tax credit visit this page of the CRA website. Note: Tax Year 2016, what we file this year, will be the last year these credits are applicable. The children fitness & arts credits have been eliminated for Tax Year 2017, what we file in 2018. New: Home Accessibility Expenses Credit The non-refundable tax credit allows Canadians eligible for the disability tax credit or over 65 years of age to claim renovation expenses that allow the eligible person to safely access and move around their home. The credit extends to the eligible person’s caregivers, such as their spouse or children, who can also claim the credit. Any home renovated must be owned by the eligible person or caregiver, and the maximum amount of allowable renovation expenses is $10,000. The credit rate is 15%, which means the maximum credit you can receive is $1,500. For more information, visit this page of the CRA website. New: Eligible Educator School Supply Credit If you were an educator in an elementary, secondary or a regulated childcare facility in 2016 and hold a teaching certificate, you can claim the expenses incurred for eligible teaching supplies. A refundable credit, this means if you have more credits than income tax, the CRA will refund you the difference. The maximum amount of allowable expenses is $1,000. This credit rate is 15%, which means the maximum credit you can receive back is $150. For more information on which supplies are eligible, visit this page of the CRA’s website. Eliminated: Family Tax Cut Credit Introduced in 2014 for families with children under 18 years old, the credit allowed couples with young children to lower the tax bracket for the spouse or common-law partner with a higher taxable income. This was a tax-planning technique, known as income splitting, to ease the tax burden on young families. The family tax cut credit has been eliminated as part of the government’s shift to focus on larger benefits programs. New: Income Tax Rate Changes The second personal income tax rate (applicable to folks in the second tax bracket, colloquially referred to as the middle class) has been reduced from 22 percent to 20.5 percent. This means that any income gained between $45,282 and $90,563 will be charged 1.5% less income tax than in 2015. Single individuals in this bracket will see an average tax reduction of $330 per year, and couples will see an average tax reduction of $540 per year. A top personal income tax rate (applicable to high-income earners in the top income tax bracket) has been introduced at 33 percent. This means for every dollar you gained above $200,000, you will be asked to pay 33% in income tax. If you are a regular contributor to a Tax-Free Savings Account, pay close attention to your 2016 contributions, because the annual limit was reduced from $10,000 to $5,500.

Most Canadian income tax and benefit returns for 2016 are due on April 30, 2017. However, as this date falls on Sunday this year, the CRA will consider your return filed on time and your payment made on time if they receive it by midnight on May 1, 2017, or if it is postmarked May 1, 2017.

Tax year 2018 and RRSPs It’s that time of year again! No, not the holiday season in late December but the equivalent for taxes: RRSP season! Let’s have a look at the basics of this wonderful tax holiday. What are RRSPs?...Continue reading

What tax changes mean for you Over the last few months, the Federal government announced changes to the tax system that have significant impact on what you can ...on your tax return. Whether you’re a parent, student, or small business owner, staying in the know is the best way to avoid surprises and keep more money in your pocket. The good news: 1.5% increase to the Canada Child Benefit. For 2018, the Canada Child Benefit will increase 1.5% for July 2018 June 2019 benefits. This means more than $80 annually per child with those who qualify for Canada Child Benefits, and $41 more annually for those who qualify for the Child Disability Benefit. These changes had been scheduled for 2020, but were moved ahead two years. And don’t forget the Canada Child Care Benefits are not included in income on your tax return. More people now qualify for the Canadian Forces and Police personnel deduction. The Canadian Forces and Police personnel deduction applies now to all members on an overseas mission, regardless of the assessed risk factor. Before, only those classified as being on a high-risk mission were eligible. The legislation is retroactive to January 1, 2017 and if you qualify, any income earned during an international operation will be tax exempt. Drop in Federal tax rates for Small Business. Canadian entrepreneurs spoke out about the proposed Federal tax changes and the impacts on small business. It seems they’ve been heard. The first change to the plan will start on January 1, 2018 when the small business corporate tax rate will be reduced 0.5% from 10.5% to 10%. The government also promises a further reduction to 9% by January 1, 2019. The not-so-good news: Mark your calendars! The CRA starts accepting 2017 tax returns on February 26th. Six days later than last year, the CRA has moved the tax filing date to February 26. A later start date means that refunds will not be sent until March, which can hurt those who rely on their refunds in February. Federal children’s fitness tax credit and arts amount is no more. For 2017, the children’s fitness tax credit and arts amount are now fully eliminated. The impact of this change amounts to $75 worth of tax savings for anyone who maxed out the fitness credit, and $37.50 tax savings for those who maxed out the art amounts, per child. Although the Federal children’s fitness tax credit and arts amounts are gone, British Columbia, Manitoba, the Yukon and Quebec offer credits for children’s activities in fitness and art. Public Transit amount takes a back seat. The public transit amount was removed and riders can only claim public transit passes purchased in the first six months of 2017. This change will affect you differently, depending on how much you spend on transit passes and which city you live. For example, in Toronto, a monthly pass costs $146.25 per month. In this case, the reduced tax savings for six fewer passes would be $131.63, calculated as $877.50 x 15% tax credit. Students, take note. For 2017, full- and part-time students will no longer be able to claim their education/textbook amounts, federally. A typical full-time student who claimed these amounts for 9 months would have reduced their personal claim amount by $4,185 for 2017. Some provinces are also following suit, including Ontario, Saskatchewan, and New Brunswick, which are also eliminating the credit for tuition fees. Fortunately, the federal credit for tuition fees continues and you’ll still be able to carry forward unused education/textbook amounts from previous years. Incorporated? Hold the sprinkles. Until recently, income sharing or sprinkling allowed owners to split income earnings between adult family members, even if they didn’t work for the corporation. This allowed the family to take advantage of allocating income to lower earners and reduce the family’s overall tax bill. Under the new rules, family members will need to prove that they made a reasonable contribution to the business before they’re able to claim any income. These contributions include labour, investment or other financing to the business, or financial risks such as a co-signing a loan. With all the recent discussion in the media, please note that these changes do not apply to your 2017 tax year. Pending changes to passive income. Since corporations are taxed less than an individual tax payer, they have more after-tax income with which to make investments.. The government feels this gives corporations an unfair advantage and proposes to level the playing field by increasing the tax rate on investment income earned by corporations. These changes are still pending, but will apply only to corporations with more than $50,000 of investment income). Similar to the income sharing changes these changes will not take effect for the 2017 tax year.

Self-Employed Taxes for Residents of Québec At every step in your business's life cycle, you have obligations concerning taxes, source deductions and contributions. You must also file an income tax return. Finally, depending on your activities, you may be subject to the obligations concerning the Attestation de Revenu Québec. Revenu Québec treats self-employed individuals as small businesses, and as a result, you have special obligations when filing your taxes. To ensure you ...Continue reading