A lot of tax changes being implemented by the new federal government will have an impact on Canadian families.
“While the former Conservative government put in a lot of credits and benefits to reduce taxes for people in communities the new government is targeting those benefits and credits and focusing taxes more on a basis of people’s needs,” says Myron Knodel, director of tax and estate planning with Investors Group.
Both the children’s art and tax credits have been eliminated for 2017. For 2016 the maximum eligible fees in the year for the fitness credit have been reduced to $500 from $1,000 in 2015 and the maximum eligible fees for the in the year for the arts credit was reduced to $250 from $500 in 2015.
Also gone in 2017 are the education and text book credits but remaining is the tuition fee credit.
The education and textbook tax credits are non-refundable credits that generally allow a student to claim an amount for each month in the year that they are enrolled in a qualifying educational program. Unused education and textbook credit amounts carried forward from years prior to 2017 will remain available to be claimed in 2017 and subsequent years.
Eliminated in 2016 was income splitting that allowed a person with a child under 18 to transfer up to $50,000 of income to their lower-income spouse or partner. Income splitting for seniors, which allows them to split eligible pension income with a spouse or common-law partner, is not affected.
Changes have been made to reporting the sale of your principal residence and claiming the principal residence exemption (PRE).
Before the changes the CRA did not require taxpayers to file forms claiming the exemption if the property was eligible for the full PRE. Now, however, all taxpayers claiming the exemption will have to file form T209 and will have to include certain information such as the address of the property, the date of acquisition, proceeds from the disposition and what years they’re claiming the PRE. This information will help the CRA keep better track of activity and potential abuses.
Some new measures also have been introduced in 2016 such as the Canada Child Benefit (CCB) which replaces the Canada child tax benefit, national child benefit supplement and the universal child care benefit. CCB is a tax-fee monthly payment to eligible families with children under 18.
Teachers who spend their own money on school supplies for the classroom now can claim a 15 per cent refundable tax credit for up to $1,000 in qualifying expenses a year.
Also, under the Home Accessibility Tax Credit in 2016 seniors and those who are eligible for the disability tax credit can get a credit for 15 per cent on up to $10,000 of expenses per year toward renovations that help them gain access to or increase their mobility and functioning in their homes. This would include such things as the installation of stair lifts, ramps, walk-in bathtubs and showers and grab bars.
Some changes to federal income tax rates also will impact Canadian families.
The federal tax rate on earnings between $45,282 and $90,563 will drop to 20.5 per cent from 22 per cent, putting a maximum of $679.22 more a year in the pockets of many Canadians, while the federal tax rate on earnings over $200,000 increases to 33 per cent.
“If you have an income of more than $200,000 and have a wife or spouse with a lower income and have a child under 18 you will pay more, but if your income is under $90,000 you probably will be better off,” says Knodel. “A lot of the net effect of the changes will depend on your income.”
Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.