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Now that we’ve completed the first month of 2019, it means that tax season is just around the corner. And although you have until April 30 to file your personal income tax return for 2018, the sooner you start to organize yourself, the earlier you can put tax season behind you. One way to get started is to be familiar with the tax changes that may affect the deductions you can claim on your 2018 tax return.
Know where you fall in the income tax bracket
Every year, the federal and provincial governments update the income tax brackets. For 2018, the tax rates are as follows:
Working while on EI
Working during an Employer Insurance (EI) claim now applies to both sickness and parental benefits. Let’s say you’re on parental leave and are earning money from your lifestyle blog. Will you still receive your parental leave benefits on top of your part-time earnings? The answer is yes – but there will be some deductions taken off your parental benefits.
Similar to what happens when you work part-time while receiving EI benefits, some adjustments will be made. For every dollar you earn from work, 50 cents will be subtracted from your benefits.
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Can’t take credit for taking transit
The federal public transit tax credit was eliminated in June 2017, which meant that when you filed your 2017 tax return last year, you could still claim credit for the first half of 2017. In other words, there’s no need to keep transit receipts from 2018.
However, youth under the age of 18 may soon be able to ride public transit for free within Metro Vancouver, since the Vancouver City Council recently voted in support of the policy.
Reap the benefits of the Canada Child Benefit
The Canada Child Benefit (CCB), provides parents with a tax-free monthly payment to help with the cost of raising children. The CCB is indexed to keep pace with the cost of living and is expected to increase by 2.0% this year (increased 1.5% in 2018).
Benefits are paid over a 12-month period from July to June of the following year. The payments are calculated based on your previous year’s income tax return (i.e. CCB payments starting July 2019 are based on your 2018 income tax return). Households with total annual incomes of $30,000 and under in 2017 will have received the full basic amount, while households with higher incomes received reduced benefits. For 2019, the threshold for households receiving the full CCB amount will be raised to $30,450 in annual income from 2018.
The maximum benefit for 2019 is $6,639 (previously $6,496) for children under the age of six, and $5,602 (previously $5,481) for children aged 6 to 17).
Claim the costs of your service animal
A taxpayer who suffers from severe mental impairment and has a service animal can claim the costs of caring for the animal as a medical expense. However, if you have a dog that provides comfort or emotional support, and your dog hasn’t been specially trained, the costs of this care are not eligible.
Making sense of tax changes can be complicated. For more information on your income tax return, check out CPABC’s RRSP and Tax Tips or consult a Chartered Professional Accountant. Canada Revenue Agency also provides free tax clinic services for those eligible, based on income.
Bilal Kathrada, CPA, CA, is a partner at Clearline Chartered Professional Accountants specializing in income tax and succession planning for Canadian owner-managed businesses in various industries. Bilal is a member of the CPABC Taxation Forum and is CPABC’s media expert on RRSPs and income tax filings. Visit rrspandtaxtips.com for more tax-related tips.