Did you know?
Even if you have little or no income, you should still file your income tax and benefit return as you may be eligible for credits and benefits. Filing a return is the key to getting your goods and services tax/harmonized sales tax (GST/HST) credit and the Canada child tax benefit (CCTB), among others.
Did you know?
The Canada Revenue Agency (CRA) has tax credits, deductions, and benefits to help students. Make sure you claim those you are eligible for when you file your income tax and benefit return. Even if you have little or no income, you need to still file your income tax return to claim eligible credits and benefits.
Did you know?
There are many benefits, credits, and deductions to help your family with expenses throughout the year and reduce the amount you owe at tax time.
Want to learn more about the benefits of filing a tax return? Check out CRA’s video designed to help you put cash back in your pocket this filing season: Filing your Tax Return.
The following tips may help you or your family:
Child and family benefits:
Canada child tax benefit (CCTB) – You may be entitled to a tax-free monthly payment that helps eligible families with the cost of raising children under the age of 18. You need to apply to determine if you are eligible for the CCTB. In addition you (and your spouse or common-law partner, if applicable) must file an income tax and benefit return every year, even if you did not receive income in the year.
Goods and services tax/Harmonized sales tax (GST/HST) credit – The GST/HST credit is a tax-free quarterly payment that helps individuals and families with low and modest incomes offset all or part of the GST or HST that they pay. To receive this credit, you must file an income tax and benefit return every year, even if you did not receive income in the year. If you have a spouse or common-law partner, only one of you can receive the credit. The credit will be paid to the person whose return is assessed first. The amount will be the same, regardless of who (in the couple) receives it.
Universal child care benefit (UCCB) – If you have children under the age of 18, you may be entitled to this taxable benefit, which supports child care choices for families. For the 2015 tax year, under the UCCB, families will receive $160 per month for each child under 6 and $60 per month for each child aged 6 through 17. Payments are issued monthly.
Working income tax benefit (WITB) – Working individuals and families with low income may be able to claim this refundable tax credit. The WITB includes a supplement for individuals who are eligible for the disability tax credit. Eligible individuals and families may be able to apply for the 2016 advance payments.
MyCRA mobile app – Get your tax information on-the-go! Use this mobile application to securely access some of your tax and benefit information, anywhere, anytime. Go to www.cra.gc.ca/mobileapps and select “MyCRA”.
The federal government is ending four child tax credits this year: arts, fitness, education and textbooks in 2017. Parents of children under the age of 16 can pre-pay 2017 arts and fitness programs to claim them on 2016 tax returns as long as total spending for 2016 does not exceed $250 and $500 limits, respectively.
It is also cancelling income splitting for families, a tax reduction measure that allowed someone to transfer up to $50,000 of income to a spouse with lower income if they had a child under 18 years of age. The tax credit for income splitting was capped at $2,000.
Offsetting those changes are the Canada Child Benefit and changes to Employment Insurance benefits introduced in 2016.
“High income earners in most provinces will pay more but for the majority of Canadians, these two changes will mean more money in their pockets,” Canadian Taxpayers Federation federal director Aaron Wudrick said Wednesday in a news release.
Several other changes at the federal level will affect life insurance, business owners selling their companies and some mutual funds.
Under changes enacted by the previous government, the tax treatment of universal life insurance policies will be less favourable starting Jan. 1. New policy holders will see a decrease in their ability to build up investment gains above death benefit premiums on a tax-free basis.
The new formula for calculating insurance will make policies a little more expensive or reduce death benefits, says Jason Safar, a PricewaterhouseCoopers partner specializing in personal taxes.
Business owners, large and small, will gain less from the sale of their operations as assets such as goodwill and trademarks will become fully taxable as investment income. Currently, half of the proceeds can be distributed tax-free as a dividend.
Investors will also no longer be able to rebalance their non-registered mutual fund investments in corporations structured as “switch funds” on a tax-deferred basis. As of the new year, capital gains from such moves will be taxed in the same way as equities.
Provincially
Cash-strapped Newfoundland and Labrador is the only province hiking its income tax rates next year, the second time it’s doing so in six months. Rates in all tax brackets will rise, with those earning between about $35,000 and $70,300 paying 14.5 per cent, up one percentage point from July and two points from 2015. The province is also raising entry fees into provincial parks and campsites.
Quebec is bidding adieu two years early to controversial health premiums introduced in mid 2010.
Ontarians will get an eight-per-cent rebate on rising hydro bills and see the maximum total cost of borrowing for a payday loan lowered to $18 per $100 borrowed from $21 per $100.
The province is also doubling the first-time homebuyers’ maximum land transfer tax refund to $4,000 and is introducing its carbon cap and trade system.
British Columbia is scrapping medical services plan premiums for children and young adults attending school.
Alberta is reducing its small business corporate income tax rate from three per cent to two per cent. It is also introducing a carbon tax on the purchase of fossil fuels, offset with a rebate for low and middle-income earners.
The federal government and provinces have already mostly implemented tax changes announced in their 2016 budgets.
“There are a few changes that are unique for 2017 but the average Canadian is not going to see much difference between 2016 and 2017,” said Jamie Golombek, managing director of tax and estate planning for CIBC Wealth Advisory Services.
Jason Safar, of PricewaterhouseCoopers, said more changes are possible in 2017. He said the federal government could eliminate more tax credits and could feel pressure from possible personal and corporate tax cuts in the United States.
“I do find it interesting to consider that given (Donald) Trump’s election in the U.S. and the promise of lower tax rates in the U.S., what is going to happen with Canadian tax rates?” Safar said.
Finally, various tax amounts — including maximum RRSP contributions, tax brackets and maximum amounts of various credits — will increase in 2017 to reflect inflation but the tax-free savings account limit remains at $5,500.
Persons with disabilities
Child disability benefit (CDB) – You may be eligible for this tax-free benefit if you care for a child under the age of 18 who is eligible for the disability tax credit.
Disability amount – If you or your dependant have a severe and prolonged impairment in physical or mental functions and meet certain conditions, you or your dependant may be eligible for the disability tax credit (DTC). To determine eligibility, you must complete Form T2201, Disability Tax Credit Certificate and have it certified by a medical practitioner. New this year, Canadians claiming the credit will be able to file online regardless of whether or not their Form T2201 has been submitted yet to the CRA for that tax year. Once their return has been filed, they will have 30 days to submit the form.
Family caregiver amount (FCA) – If you are caring for a dependant with impairment in physical or mental functions, you may be able to claim up to an additional $2,093 when calculating certain non-refundable tax credits.
Registered disability savings plan (RDSP) – An RDSP is a savings plan to help families save for the financial security of a person who is eligible for the disability tax credit. RDSP contributions are not tax deductible and can be made until the end of the year in which the beneficiary turns 59.
Savings plans
Tax-free savings account (TFSA) – For the 2015 tax year, the annual TFSA contribution limit rose from $5,500 to $10,000. All Canadian residents, aged 18 or older, can contribute to a TFSA.
Registered retirement savings plan (RRSP) – If you saved for your retirement in 2015 by contributing to an RRSP, you may be able to deduct the amount of your contributions to reduce your income.
Registered education savings plan (RESP) – You can start saving for your child’s future now. An RESP is a contract between you (the subscriber) and another individual or organization (the promoter) that allows you to make contributions toward your child’s future education. Programs such as the Canada education savings grant (CESG) and the Canada learning bond (CLB) are other great incentives to create an RESP for your child.
Other amounts and programs
Public transit amount – Did you, your spouse or common-law partner or your children use public transit in 2015? You may be able to claim the cost of certain public transit passes or electronic payment cards for this 15% non-refundable tax credit.
Home buyers’ amount – Did you buy a home in 2015? You may be able to claim a non-refundable tax credit of up to $750 for the purchase of a qualifying home.
Medical expenses – You may be able to claim a non-refundable tax credit based on the medical expenses paid for you, your spouse or common-law partner, and your or your spouse’s or common-law partner’s children born in 1998 or later for any 12-month period, ending in 2015.