Tax season is in full swing, and you should be preparing for your income tax filing.
For some of you, your 2017 tax return may have a number of significant changes. Here’s what you need to know about filing your personal income tax return.
It’s not all bad news for families
In the federal Budget 2016, the government proposed to phase out the children’s fitness and arts tax credit. As of January 1, 2017, the credits were eliminated. This means families can no longer get tax credit for investing in their children’s fitness and arts programs.
This is expected to be offset by an increase in the Canada Child Benefit (CCB), which provides Canadian families with a tax-free monthly payment to help them with the cost of raising children. The federal government has proposed to strengthen the CCB by increasing the benefits annually, by 1.5% in 2018 and by 2.0% in 2019, to keep pace with rising costs of living.
What does this mean? For a single mother with $35,000 of income, and two children (a five year old and an eight year old), this benefit will contribute an additional $560 towards the increasing costs of raising her children.
It will be less expensive to get an in vitro fertilization (IVF)
If you’ve used an assisted reproductive technology to conceive a child, you may be able to claim certain expenses even if you do not have a medical condition. This is retroactive for those who have had fertility-related expenses for any of the past 10 calendar years and have not claimed them. If that is the case for you, you can request a change to your income tax and benefit return to include these eligible expenses. Remember you must keep those receipts if you’re claiming these expenses.
Now maybe the time to get your skills upgrades
You may now be able to claim the tuition amount for fees you’ve paid to a post-secondary institution for occupational skills courses, even if they are not at a post-secondary level. If you went back to school to upgrade your occupational skills or to improve your reading, math, or language skills, your fees may be deductible.
However, as of January 1, 2017, the tax credit for education and textbooks for both full-time and part-time students has been eliminated. If you still have unused tax credits from 2016 or earlier, you can continue to carry them forward and apply them to future taxes.
This is the final year to get credit for taking public transit
The public transit tax credit has been eliminated as of June 2017. You can still claim a 15 per cent non-refundable tax credit for transit passes purchased between January 1 and June 30, 2017, on your 2017 income tax return. Find those transit passes. They could be worth 15 cents on the dollar when you file your 2017 tax return.
Unbilled income is no longer a work in progress
In the past, most professionals were able to defer unbilled work in progress until that income was billed to clients (commonly referred to as work in progress). This allowed certain designated professionals, such as lawyers, dentists, doctors, and accountants, to delay their income until the year when they invoiced their clients.
As of March 20, 2017, this deferral has been eliminated, and professionals must include their income of work in progress in their tax return. To mitigate the impact of this change, a five-year transitional period will allow professionals to gradually bring the work in progress into their income.
There is a new credit for caregivers
Tax filing should be easier for Canadian caregivers. The new Canada Caregiver Tax Credit replaces the infirm dependant credit, caregiver credit, and family caregiver credit.
This credit may be claimed for an individual’s spouse or common-law partner, minor child, or eligible relative who is dependent on the individual because of a mental or physical infirmity at any time during the year.
The Canada Caregiver Tax Credit is calculated at 15 per cent of the claim amount of up to $6,883, with an additional $2,150 for infirm dependents.
Making sense of tax changes can be complicated. For more information on your income tax return, check out CPABC’s RRSP and Tax Tips at rrspandtaxtips.com or consult a chartered professional accountant. Check back at the end of April for updates on 2018 tax changes.
Bilal Kathrada is a volunteer of the CPABC Taxation Forum and CPABC’s media expert on RRSPs and income tax filings.