Important 2016 Tax Changes

Principle Residence

The Canada Revenue Agency has made a significant change to its policy regarding principal residency. Prior to 2016, there was a requirement to fill out form T2091 to designate your home as a principal residence. The form required you to designate the years in which the home was your principal residence. Although this form was required to be filed in the year of disposition, most individuals never filed the form because the resulting capital gain was often fully eliminated by claiming the principal residence exemption. Administratively, the CRA had waived this requirement to file if the exemption eliminated the gain.

Rule Changes

For the taxation years that end on or after October 3, 2016 (e.g., the 2016 calendar year), if you sell your principal residence, you are required to report the sale and the resulting capital gain or loss on Schedule 3 of your T1. You are also required to file the form T2091 if you are claiming the principal residence exemption. These requirements are imposed regardless of whether or not the gain is fully exempt as a result of the designation.

A failure to file and disclose the information will have serious implications. Firstly, there is no limitation period (i.e., after which your returns are considered “statute-barred”) on the CRA’s ability to reassess in the future. Therefore, the deadline which would otherwise restrict the CRA’s ability to re-open the tax return would not start unless the information had been fully disclosed in the year of disposition.

Secondly, the principal residence exemption itself will only be allowed if the sale and the designation of principal residence are reported on your income tax return. Should you realize subsequent to the year of sale and filing of your income tax return that you did not file the sale of your principal residence, the CRA is not obligated to accept a late filing that designates the sale as a principal residence sale. Even if the CRA accepts the late filing, the taxpayer will be liable for penalties that are the lesser of $8,000 or $100 for each complete month from the original filing due date to the date the required information was received by the CRA in an acceptable format.

Since these rules will be effective for the 2016 calendar year, you should remember to report the sale of your principal residence if you had a disposition during the year. If you have any questions, please contact AMR Services.

February 27, 2017 admin 0 Comments Tax Returns, Taxes

The Enhanced Universal Child Care Benefit (UCCB)

What is it?

The UCCB is a benefit paid to eligible families for children under the age of 6 years. An amount of $100 is paid per month for each eligible child.

What is the enhancement?

The October 30, 2014 announcement included a proposal to increase the monthly UCCB benefit by $60, from $100 to $160 for each eligible child under the age of 6 years effective January 2015. The October 30 announcement also included a proposal for a monthly UCCB benefit of $60 for an eligible child who is at least the age of 6 until the child reaches the age of 18 effective January 2015.

When will this start?

Now that Royal Assent has been received, the CRA will be in a position to make the first increased payment in July 2015. This payment will include any increased benefit applicable from January to June of 2015.

Source: Canada Revenue Agency

June 22, 2016 admin 0 Comments Tax Credit, Taxes

Caregiver Amount & Family Caregiver Tax Credit

Our government is committed to recognizing the sacrifices that many Canadians make to care for their loved ones with medical conditions. The Family Caregiver Tax Credit is a non-refundable credit, which is 15% credit on an amount of $2058, meaning you could qualify for up to $220.83 per month, per dependent. This credit was created by the Federal Government to help Canadians who take care of family members. It allows caregivers to claim an additional amount for dependents who have impairments in physical or mental functions. Those dependents can be your spouse, common-law, partner, child, or another relative.

If at anytime during 2014, you maintained a residence where you, and the person you supported lived (excluding spouse or partner), you may be eligible to claim a maximum amount of $4530 under the Caregiver Amount, for each eligible dependent.

Need more information? Contact Us!

April 17, 2015 admin 0 Comments Tax Credit, Taxes

Children’s Fitness Tax Credit & Children’s Arts Tax Credit

Children need to be active in order to not only promote their healthy growth, but it is also a way of making exercise enjoyable and a social activity. Art allows children to have creative experiences that are fundamental to the building blocks of children development and encourages children to express themselves. That is why our government has the Children’s Fitness Tax Credit & Children’s Arts Tax Credit to allow parents to claim up to $500 per child under the age of 16 against the fees of sports and programs. For more info, contact us!

April 16, 2015 admin 0 Comments Tax Credit, Taxes

First Time Donor’s Super Credit

This credit is great for first time charity donors! However, this credit also benefits individuals if neither they nor their spouse has claimed the Charitable Donations Tax Credit since 2007. The new first-time donor’s super credit gives you an extra 25% non-refundable federal tax credit when you claim your charitable donation tax credit. This means that you can get a 40% credit for up to $200 in cash donations and a 54% credit for the part of the cash donations that is over $200, but not more than $1,000. This is in addition to the provincial credit. For more info, contact us!

April 15, 2015 admin 0 Comments Tax Credit, Taxes

Home Buyer’s Plan

There’s nothing quite like owning your first home. Buying your first home is exciting and is also an expensive purchase. To help Canadians save for their first big purchase, the government has created a program known as The Home Buyers’ Plan (HBP). The HBP allows you to withdraw funds from your RRSP to buy or build a qualifying home for yourself or for a related person with a disability. You can withdraw up to $25,000 in a calendar year! Generally, you have to repay all your withdrawals to your RRSP within a period of no more than 15 years. Your first home is more attainable than you think. For more info, contact us!

Video via RateHub.com.

April 14, 2015 admin 0 Comments Tax Credit, Taxes

Increasing the Age Limit for Converting RRSPs to RRIFs

RRSP provides Canadians with an opportunity to invest in their futures by saving for their retirement. A RRIF is an extension of the RRSP. While your RRSP is used to save for your retirement, a RRIF is used to systematically draw income during your retirement. However, once an RRSP is converted into a RRIF, you can no longer make contributions and you are required to make a minimum annual withdrawal, as set out by Federal regulations. The funds you withdraw from your RRIF are taxable as this amount is added to your taxable income for that year. Our government has increased the age limit for converting RRSP’s to RRIF’s from 69 to 71. This tax saving is great for Canadian Seniors. For more info, contact us!

Video via BrighterLife.ca.

April 13, 2015 admin 0 Comments Tax Credit, Taxes

Pension Income Splitting

Pension Income Splitting helps ease the tax burden to Canadian Pensioners. Generally, individuals who are 65 or older can allocate for tax purposes up to a maximum of 50% of the annual income received from a lifetime annuity, registered pension plan, RRSP annuity, registered retirement income fund (RRIF), or deferred profit sharing plan annuity to a spouse. In addition, the receiving spouse is not required to be 65 or older to receive an allocation. The amount allocated can be changed each year for the benefit of the couple. This is great news for senior couples! To find out more, contact us!

Video via the Canada Revenue Agency.

April 10, 2015 admin 1 Comment Tax Credit, Taxes

Textbook Amount & Scholarship and Bursary Exemption

Many students know that getting a good education can be quite costly. Various students work hard to excel in their studies and are often rewarded for their efforts with bursaries and scholarships. To help ease the financial burden many students face, our government is exempting scholarships, fellowships, and bursaries from their income. For more info, contact us!

Video via CanLearn.

April 9, 2015 admin 0 Comments Tax Credit, Taxes

Child Care Expense Deductions

This deduction helps families deduct child care expenses from their income earned. Many families incur expenses throughout the year to have someone look after their child in order to earn income from employment, operate a business, attend school, or conduct research. The current maximum amount that can be claimed under the CCED each year is limited to the following:

The total amount spent on child care expenses;
2/3 of the lower-income taxpayer’s earned income; and
The total of the maximum dollar limits for all children, that is $7,000 per child under age 7, $4,000 for each child aged 7-16 (and for infirm dependent children over age 16), and $10,000 for children who are eligible for the Disability Tax Credit, regardless of their age.

The Government proposes to increase the dollar limits of the CCED by $1,000. These changes would apply for the 2015 and subsequent taxation years. For more information, contact us!

Video via the Canada Revenue Agency.

April 8, 2015 admin 0 Comments Tax Credit, Taxes