2016 Tax Returns – Updates

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Please read this information prior to submitting your 2016 tax return:

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.

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Monday February 9th – 1st Day of Tax Filing Season

Monday February 9th – 1st Day of Tax Filing Season

As you may or may not know, Monday February 9th, 2015 is the 1st Day of Tax Filing Season 2014.

Canada Revenue Agency

Here are some other important dates to remember:

1) April 30, 2015: deadline to filing your income tax return

– failing to file your income tax return before/on April 30 could result in GST/HST, Child Tax Benefit payments, and Old Age Security benefits payments being delayed

2) June 15, 2015: deadline for filing your income tax return if you are self-employed 

– however if you have a balance owing you must pay before/on April 30, 2015

Canada Revenue Agency Phasing Out Paper Cheques

Canada Revenue Agency Phasing Out Paper Cheques

Canada Revenue AgencyCanada Revenue Agency (CRA) is beginning the process of phasing out paper cheques, and is encouraging all Canadians to register for Direct Deposit before 2016.

If you are not already enrolled in Direct Deposit, click HERE to download the form  or visit CRA’s website at this address http://www.directdeposit.gc.ca

You may also make the change on you income tax and benefit return. Complete the “Direct Deposit – Start or change” section on page 4 of your return.

Canadian Government Announces Tax Cuts

Comprehensive tax cut and benefit package for Canadian families:

1) The Canadian Fitness Tax Credit (CFTC):

– parents can claim expenses from placing their children into sports or after-school activities on their income tax return

– The CFTC is being doubled from $500 to $1,000  refundable, so families who don’t earn enough income to pay income taxes will still receive the money

2) Income Splitting:

The larger tax cuts announced will allow couples with children under 18-years-old to transfer up to $50,000 of taxable income to a spouse in a lower tax bracket to reduce their tax burden. Families will be allowed to save up to a maximum of $2,000 under this new rule.

3) The Universal Child Care Benefit (UCCB) :

Every child under 6-years-old families will receive an additional $60 as well as the $100 they were already getting each month. The new higher UCCB will begin with the July, 2015 payment, which if filed for would also include up to six months to cover the January to June, 2015 period.

4) Child Care Expense Deduction (CCED) :

The CCED is increasing  to $8,000 from $7,000 for children under 7, to $5,000 from $4,000 for children aged 7-16-years-old, and to $11,000 from $10,000 for children eligible for the Disability Tax Credit.

CRA update regarding the Heartbleed Bug – Online services restored

Click HERE heartbleedto read full story.

Note: filing of 2013 tax returns has been extended to May 5.