With the tax filing deadline just around the corner, here are some tips to help you lower your personal tax bill—as well as some recent changes to be aware of.
What’s new this tax season?
New and updated credits
- Canada caregiver credit – This non-refundable tax credit replaces the family caregiver credit, the credit for infirm dependants age 18 or older, and the caregiver credit. It gives tax relief to eligible individuals who have a spouse, common-law partner or dependant with a physical or mental impairment.
- Medical expense tax credit – If you need medical intervention to conceive a child, you may now be eligible to claim certain expenses even if you do not have a medical condition. If you had such expenses for any of the 10 previous calendar years and you have not claimed them, you can request a change to your income tax and benefit returns to include these eligible expenses.
- Disability tax credit certification – The application form for the disability tax credit can now be certified by a nurse practitioner.
- Tuition, education, and textbook credits – As of January 1, 2017, the federal education and textbook credits were eliminated. However, you can still carry forward unused amounts from previous years. Also, you may now be able to claim the tuition amount for fees you paid to a post-secondary institution for occupational skills courses, even if they are not at a post-secondary level.
- Children’s credits – As of January 1, 2017, the children’s arts tax credit and children’s fitness tax credit were eliminated.
- Public transit tax credit – As of July 1, 2017, this credit was eliminated. For this tax year, you can claim the cost of eligible public transit expenses only for travel taken from January 1 to June 30, 2017.
Tax-saving tips for families
There are a number of ways for families to save money at tax time. Here are some common credits and deductions.
1. Child care expense deduction
If you pay for child care so that you can go to work or school, you may be able to claim those expenses on your tax return. Each child for whom you claim expenses must meet the Canada Revenue Agency’s eligibility requirements.
- You can claim the following child care expenses incurred in 2017:
- Caregivers such as nannies and babysitters
- Day nursery schools and daycare centres
- Educational institutions that provide childcare services
- Day camps and day sports schools with a primary goal of child care
- Boarding schools, overnight sports schools, or camps where lodging is involved
- Advertising or placement agency costs incurred to locate a child care specialist
You can claim (up to) the following amounts per child:
- $8,000 for a child under 7
- $5,000 for a child between 7 and 16
- $11,000 for a disabled, dependent child who qualifies for the disability tax credit
- $5,000 for a disabled child over 16 who does not qualify for the disability tax credit but is still dependent on you
For a boarding school or overnight camp that provides child care, you may only claim (up to) $200 per week for a child under 7, $125 per week for a child between 7 and 16, and $275 per week for an eligible disabled child.
If you paid an individual for child care, such as a nanny or babysitter, you will need to provide their social insurance number and proof of expenses in the form of receipts.
2. Transferred and pooled credits
Certain credits can be transferred to another family member to reduce their tax owing. For example:
- The now-eliminated transit pass tax credit can be claimed individually or for any dependent children under 19 years old (for travel between January 1 and June 30, 2017).
- The tuition tax credit can be claimed or carried forward by the student or may be transferred to the student’s parent, grandparent or spouse, or student’s spouse’s parent or grandparent.
- Medical expenses can be declared on family totals. To qualify, expenses must exceed the current level set by the CRA or 3 percent of net income, whichever amount is lower.
Tax-saving tips for retirees
There are a number of ways to lower your tax obligations in retirement. Here are a few things to keep in mind if you are approaching your golden years.
1. Splitting your pension
If you are being assessed the Old Age Security recovery tax because your income is over the threshold, and your spouse earns less than the threshold amount ($74,788 for 2017), considering splitting some of your pension income with them so that both of your incomes are below the threshold.
2. Sharing your pension
If you and your spouse or common-law partner do not receive equal Canada Pension Payments, consider sharing your CPPs. The CRA bases the amount shared on how long you were together during your working years. Sharing pensions can increase the income of one partner while decreasing the income of the other partner and offers similar tax benefits as splitting your pension.
3. Claiming the age amount credit
Tax filers 65 years and over can claim the age amount tax credit. This credit starts at $7,225 for those earning up to $36,430 and decreases as income increases. Seniors earning more than $84,597 per year do not qualify.
4.Transferring unused age amount credits
The age amount credit reduces the taxes you owe, but it cannot create a refund. However, unused age amount credits can be transferred to your partner to lower their tax burden.
5. Claiming medical expenses
Medical expenses can be claimed on your tax return if they exceed $2,237 or 3 percent of your net income (whichever amount is lower). Keep your receipts for every medical-related purchase, as you can claim a range of expenses—for example, people diagnosed with celiac disease can claim the difference between gluten-free and regular food. If you have a disability, you may be able to claim the disability tax credit, and if you take care of a disabled or ill partner, you may qualify for the family caregiver amount.
As always, if you would like to discuss your tax situation, please give us a call at 604-534-7701 or email us at firstname.lastname@example.org.