Do you or your family members regularly use public transit? If so, then you might be eligible to claim a special tax credit for transit passes purchased in 2016 on your 2016 personal income tax return.
This tax credit is available for transit passes used in 2016. There is no limit to the amount you may claim. Claims may be made in respect of passes that provide unlimited use of public transit for at least 20 days in any 28-day period.
A claim is also available for short-term passes provided that each pass provides at least 5 consecutive days of unlimited public transit use or at least 20 days in any 28-day period.
Eligible cost-per-trip electronic payment cards may also qualify in 2016 provided they are used for at least 32 one-way trips during an uninterrupted period of no more than 31 days. Check with your public transit authority to ensure the card they issue is eligible.
You may claim the eligible cost for yourself, your spouse or common-law partner, and your children under the age of 19 at the end of the year.
Save those old transit passes. They could be worth 15 cents per dollar when you file your tax return.
You can claim a tax credit for medical expenses in certain circumstances. For 2016, the tax credit is available only on the portion of the medical expenses that exceeds the lesser of 3% of your net income and $2,237 for federal tax purposes, and $2,085 for BC tax purposes.
In general, medical expenses include payments to private health insurance plans, fees to optometrists, opticians, dentists, medical doctors and chiropractors, and the cost of prescription eyeglasses, contact lenses, medical lab tests, hospital services and treatments, prescription medicines, and medical devices such as artificial limbs and dentures (this not an exhaustive list of eligible expenses). Medical expenses also include reasonable renovation costs to an existing residence, and incremental construction costs to make a new principal residence, to accommodate a disabled person, provided such costs would not normally be incurred by persons who are not disabled, and would not be expected to increase the value of the property. Eligible medical expenses may include reasonable travel costs to obtain medical services not available where you live. You may not claim the specific portion of any medical expenses that have been reimbursed by a medical plan.
Cosmetic procedures which are purely aimed at enhancing one’s appearance, including related expenses such as travel, which were incurred after March 4, 2010, are not eligible medical expenses.
You can claim a tax credit for medical expenses for any 12-month period ending in 2016. Just look for the consecutive 12-month period for which the sum of your medical expenses is the highest. Keep in mind, however, that you cannot claim medical expenses already claimed in the previous year.
You can add the medical expenses of your spouse and minor children to your own medical expenses. In addition, you can also add the medical expenses of certain other dependents subject to certain restrictions. In particular, caregivers are able to claim eligible medical expenses incurred in respect of a “dependent” relative if the caregiver pays medical or disability-related expenses of the dependent relative. For this purpose, a “dependent” relative is defined as a child who is 18 years of age or older, or a grandchild, parent, grandparent, brother, sister, uncle, aunt, niece or nephew, who is dependent on the taxpayer for support.
As either spouse can claim the medical expense credit, it would generally be more beneficial for the lower income spouse to claim the medical expense and maximize the tax credit.
If you would like more information about claiming medical expenses, seek the advice of a Chartered Professional Accountant.
Where your net family income is less than $49,379 and you have claimed medical expenses on your tax return, you might be entitled to a refundable medical expense supplement of up to $1,187. You must be a resident of Canada throughout the year, and 18 years of age or older at the end of the year, to qualify.
The supplement is calculated as 25% of your net medical expenses eligible for a non-refundable tax credit on Schedule 1 of your return. The amount of the supplement is reduced by 5% of net family income in excess of $26,277 and is eliminated when family income exceeds $50,017.
No supplement is available where your income from employment and/or self-employment is less than $3,465.
The supplement is considered an amount paid on account of your taxes payable for the year. To the extent the deemed payment is not needed to reduce your taxes otherwise payable for the year to zero, it will be refunded to you.
Consult a Chartered Professional Accountant for more information.
You can transfer some income tax credits to your spouse or common-law partner.
The transferable credits are the age credit, disability credit, pension income credit, your own education and tuition fee credits, and the textbook tax credit.
Note that for 2017 and subsequent tax years, the education and textbook tax credits have been eliminated.
If you are able to reduce your taxes payable to zero without using all of your available credits, you might consider transferring some of these unused credits to your spouse’s return.
Don’t let your credits go to waste. Consult the advice of a Chartered Professional Accountant for more information.
Complex attribution rules prevent spouses from simply splitting joint investment income between them to equalize their tax brackets. Joint investment income includes interest on joint bank accounts, investment income from joint brokerage accounts, rental income from jointly owned real estate, and capital gains from the disposition of jointly owned investments.
The attribution rules require that joint investment income be allocated between spouses based on each individual's contribution of funds to acquire the investment. Spouses with joint investments should be prepared to support their allocation of investment income by keeping track of the source of the funds used to acquire the joint investments.
There are opportunities to split investment income between spouses while not being subject to the attribution rules discussed above. Contact a Chartered Professional Accountant to help you review your tax planning strategies to potentially take advantage of income splitting with your spouse.
The adoption expense credit is a non-refundable credit in respect of an eligible adoption expense incurred in the adoption of a child under the age of 18 years. The maximum claim for each child is $15,453 for 2016, resulting in a maximum credit of $2,318. The claimable amount is reduced to the extent that the adoptive parent has been otherwise reimbursed, or is entitled to reimbursement, in respect of eligible adoption expenses.
Individuals may include eligible adoption expenses incurred during the adoption period, generally defined as the period that begins at the earlier of the time the child's adoption file is opened with the provincial or territorial ministry responsible for adoption or a licensed adoption agency, and the time, if any, that an application related to an adoption is made to a Canadian court, and that ends at the later of the time the adoption is finalized and the time the adopted child begins to live with the adoptive parent.
To be eligible for the credit, a parent must have proof of an adoption in the form of a Canadian or foreign adoption order, or otherwise demonstrate that all of the legal requirements of the jurisdiction in which the parent resides have been met in completing the adoption. Individuals must claim the credit in the taxation year in which the adoption period ends.
Eligible adoption expenses include fees paid to licensed adoption agencies, court and legal expenses, reasonable and necessary travel and living expenses, document translation expenses, and mandatory fees paid to a foreign institution. Costs related to unsuccessful attempts to adopt are not eligible.
You might be able to deduct your child care expenses if they were incurred to enable you or a supporting person to earn employment or business income, attend a designated educational institution or a secondary school, or engage in grant research. Attendance at a designated educational institution or secondary school means attendance of at least one course that is at least three weeks long, for at least 10 hours per week (full time program) or 12 hours per month (part time program).
A “supporting person” includes your spouse, the parent of the child, or the person who claimed the child as a dependent. The supporting person must have lived with you at any time in the taxation year as well as at any time in the first 60 days of the following taxation year. An “eligible child” is a child of the taxpayer or the taxpayer’s spouse, or a child dependent on the taxpayer or the taxpayer’s spouse and whose income for the year does not exceed the basic personal amount for the year. The child has to be under 16 years of age at some time in the year. However, the age limit does not apply if, during the year, the child is dependent on the taxpayer or the taxpayer’s spouse and has a mental or physical infirmity.
The maximum deduction is $11,000 for each child qualifying for the disability tax credit, $8,000 for each other child age six or under at the end of the year, and $5,000 for each other child age seven to fifteen at any time in the year and for a child with a mental or physical impairment born in 1998 or earlier for whom the disability amount cannot be claimed. The maximum total deduction may not exceed two-thirds of your earned income and the actual amount paid in the year for child care. The deduction can be claimed only by the lower income person unless the lower income spouse attends secondary or post-secondary school, is mentally or physically infirm, or for a period of at least two weeks was in a prison, hospital, asylum or other similar institution.
Child care expenses can include day care, nursery school, day sports camp, lodging at a boarding school or camp, and certain payments to babysitters.
Complete Form T778 and file it with your income tax return.
If you would like more information about claiming child care expenses, seek the advice of a Chartered Professional Accountant.
As of July 1, 2016 the Canada child benefit (CCB) replaced the Canada child tax benefit (CCTB), the national child benefit supplement (NCBS) and the universal child care benefit (UCCB). The CCB is a non-taxable amount paid monthly to help eligible families with the cost of raising children under 18 years of age. The CCB may also include the Child Disability Benefit (CDB) and other provincial programs.
To qualify for the CCB, you must meet all of the following conditions:
In addition, you might be eligible even if your child lives with you on a shared basis. Shared eligibility exists where a child lives more or less equally with two separate individuals and each individual is primarily responsible for the child’s care and upbringing when the child resides with them
For each eligible child under the age of six, the CCB benefit amounts to $6,400 per year (or $533.33 per month). For each eligible child age 6 to 17, the CCB benefit amounts to $5,400 per year (or $450.00 per month). The tax credit begins to reduce once adjusted family net income is over $30,000 and is eliminated for one-child families earning more than $188,438 per year.
The BC early childhood tax benefit (BCECTB) was introduced as of April 1, 2015. The BCECTB is a monthly tax free payment to assist eligible families with costs to raise children under 6. The payment is combined into one payment with the CCB and the B.C. family bonus program (BCFB). Your child is automatically registered for the BCECTB when they are registered for the CCB. Therefore you must apply for the CCB to determine if eligible for the BCECTB.
The BCECTB provides a benefit of up to $55 per month per child under age 6. Benefits are based on the number of children in the family and the family's net income. The BCECTB is reduced if the family's net income exceeds $100,000 and is zero once the family's net income exceeds $150,000.
To be eliminated after 2016 tax year.
The children’s arts credit allows parents with children under 16 years of age who participate in artistic, cultural, recreational and developmental programs to claim a non-refundable tax credit based on eligible expenses of up to $250 per eligible child in 2016.
Some examples of eligible programs or activities include those in the fields that contribute to the development of creative skills or expertise in an artistic or cultural activity, or where a child acquires and applies knowledge in the pursuit of artistic and cultural activities. Artistic and cultural activities include the literary arts, visual arts, performing arts, music, media, languages, customs, and heritage.
An eligible program must be either a weekly program that is a minimum of eight consecutive weeks or a children's specialty camp that lasts a minimum of five consecutive days. The full cost of a child's membership in an organization will be eligible for this credit if more than 50% of the activities offered by the organization include a significant amount of eligible activities.
An additional $500 disability supplement amount may be claimed for a child who is under 18 years at the beginning of the year and is eligible for the Disability Tax Credit if a minimum of at least $100 is paid for registration or membership fees for a prescribed artistic program.
Either parent may claim the credit or the credit can be shared. To prevent duplication, expenses already claimed under other credits (e.g. the Medical Expense Tax Credit) will not qualify.
To substantiate your claim come tax time, obtain a receipt from the organization that provides the arts program. As with many other credits, you are not required to actually submit the receipts with your return but you should retain any supporting documentation in case the CRA asks for copies at a later date to verify your claim.
If you have a child who was under 16 years of age, or under 18 years of age if eligible for the disability tax credit, you may be eligible to claim the refundable Children’s Fitness Tax Credit for 2016.
For 2016, this credit allows parents to claim up to $500 of eligible fitness expenses paid per year for each qualifying child. To qualify for the tax credit, the activities must not be part of a school's curriculum and must be either a minimum of eight consecutive weeks long, or in the case of camps, five consecutive days in duration. In addition, the activity must be supervised, suitable for children and require a significant amount of physical activity. Find out eligible activities at the Canada Revenue Agency (CRA) website.
If a child qualifies for the disability tax credit and at least $100 in “eligible fitness expenses” have been paid for the child, an additional amount of $500 is available for eligible fitness expenses incurred.
To claim the Children’s Fitness Tax Credit, you should request a receipt when registering your children for qualifying activities. The receipts do not need to be submitted with your tax return but should be retained for six years in case the CRA asks to see them. The tax credit is claimed in the year the qualifying expenses are incurred, regardless of when the activity takes place.
If your child has attended an activity that qualifies as both a childcare expense and a fitness activity you must first claim the amount as a child care expense. Any portion that cannot be used as a childcare expense can be then claimed as a children’s fitness amount.
Consult a Chartered Professional Accountant to see how the Child Fitness Tax Credit rules may apply to you.
The BC Child Fitness Equipment Tax Credit provides a non-refundable BC provincial tax credit equal to 50% of the federal Children’s Fitness Tax Credit. This credit is available if you claimed the federal Children’s Fitness Tax Credit. You are not required to retain or file any additional receipts for the Child Fitness Equipment Tax Credit, beyond what is required to be retained for the Children’s Fitness Tax Credit.
Consult a Chartered Professional Accountant to see how the BC Child Fitness Equipment Tax Credit rules may apply to you.
The government of Canada adds to your savings in a Registered Education Savings Plan (RESP) with the Canadian Education Savings Grant (CESG). The CESG is a financial incentive for parents, family, and friends to save for a child’s education after high school. The grant is paid directly into the child’s RESP and will not be included in the annual and lifetime contribution limits for the beneficiary. The CESG lifetime limit for any one beneficiary is $7,200.
Lifetime RESP contributions are limited to $50,000 per beneficiary. When more than the $50,000 RESP lifetime limit is contributed with respect to a beneficiary, a 1% per month penalty tax is payable on the excess contribution that is not withdrawn by the end of the month.
The government of Canada will contribute the Basic CESG grant equal to 20% of the first $2,500 of annual contributions to an RESP (up to a maximum of $500 per year per beneficiary) for the benefit of children under 18 years of age. For missed years, there are carry forward provisions that allow you to catch up on missed CESGs by up to $500 per year.
In 2016, the additional CESG rate on the first $500 of annual contributions is 20% for families with income of $45,282 or less (CESG equals $100 on the $500 of contributions), and 10% for families with income between $45,282 and $90,563 (CESG equals $50 on the $500 of contributions).
If the beneficiary does not use the CESG for education, the principal amount of the CESG grants must be repaid to the government. You will not have to repay income earned on the CESG grants but the income will be taxed when the amounts are withdrawn.
The CESG will only be available for a 16 or 17 year old if the RESP contributions (net of any withdrawals) made before the year the child turned 16 either totaled $2,000 or were at least $100 per year in any four previous years.
Subscribers of separate RESP plans for their children are allowed to transfer amounts between individual RESPs for siblings, without incurring penalties and without triggering the repayment of CESGs, provided that the beneficiary of the plan receiving the transfer of assets had not attained 21 years of age when the plan was opened. Set up and make contributions to an RESP for your children to qualify for the CESG.
If you would like more information about the Canada Education Savings Grants, seek the advice of a Chartered Professional Accountant.
In addition to the disability tax credit, parents and others will be able to establish Registered Disability Savings Plans (RDSP) to provide for the long-term security of a child who is eligible for the disability tax credit.
RDSP contributions are not tax deductible, but investment income can be earned within the plan on a tax-free basis. Upon withdrawal only the accumulated investment income will be taxable to the beneficiary. The contributions to the RDSP will be paid to the beneficiary tax-free.
Anyone can contribute to the RDSP established for the qualifying child, and there is no annual limit on the contributions; however, contributions on behalf of any one beneficiary are capped at a lifetime maximum of $200,000. Contributions can continue until the end of the year in which the beneficiary reaches age 59.
The beneficiary must begin receiving “lifetime disability assistance payments” (LDAP) from the plan by the end of the year he or she reaches age 60, subject to maximum annual limits based upon life expectancy and the value of the RDSP’s assets.
A Canada Disability Savings Grant (CDSG) is an amount that is contributed by the federal government to the RDSP. Contributions to the RDSP will earn CDSGs at matching rates of 100%, 200%, and 300% depending on family income and the amount contributed. The annual maximum CDSG is $3,500 where family income is less than $90,563 and $1,000 otherwise. An RDSP beneficiary can accrue up to $70,000 of CDSGs in their RDSP over their lifetime. No CDSGs will be paid to an RDSP after the year in which the beneficiary reaches the age of 49.
Lower income families might also be entitled to receive Canada Disability Savings Bonds (CDSBs) of up to $1,000 per year (to a maximum of $20,000 over the beneficiary’s lifetime). Eligibility for CDSBs will be linked to family net income, rather than amounts contributed.
For 2016 and subsequent tax years the Home Accessibility Tax Credit (HATC) is available to individuals 65 years or older at the end of the tax year, and to individuals who are eligible to claim the disability tax credit, when they incur qualifying renovation expenditures. These qualifying expenditures must relate to gaining access to, improving mobility within, or reducing risk of harm within the eligible dwelling located in the individual’s principal residence in Canada. As well, these expenditures should be related to a renovation or alteration to the eligible dwelling that are of an enduring nature.
Qualified taxpayers may claim up to $10,000 in qualifying expenditures per year, which could result in a maximum non-refundable tax credit of $1,500. As well, if those expenditures happen to also qualify for the medical expense tax credit, both credits can be claimed in respect of the expenditures.
The HATC credit determination can be complex. Consult a Chartered Professional Accountant for more information.
The Home Renovation Tax Credit for Seniors and Persons with Disabilities assists eligible individuals 65 and over and persons with disabilities with the cost of certain permanent home renovations to improve accessibility or be more functional or mobile at home. The permanent home renovations must be to improve home mobility, accessibility, or functionality.
The program for seniors began April 1, 2012. Qualifying renovation costs must occur on or after April 1, 2012, for seniors and family members living with seniors. Starting February 17, 2016, the home renovations program has expanded to include persons with disabilities and family members living with these individuals. Qualifying renovation costs must occur on or after February 17, 2016, for persons with disabilities and family members living with them.
Eligible persons must be:
In order to be eligible you must meet the criteria on the last day of the tax year. Qualified taxpayers may claim up to $10,000 in qualifying renovation expenditures per year, which could result in a maximum refundable tax credit of $1,000.