Category Archives: Personal Tax
What do I need when I file my taxes? What can I deduct?
On February 19, 2019, the BC Ministry of Finance released the 2019 Provincial Budget. The following is a summary of many of the highlights affecting businesses and individuals:
- Enhanced capital cost allowance rates that parallel the federal enhancements announced on November 21, 2018.
- Extending the BC Training tax credit for employers to December 31, 2019.
- Effective for 2018 and subsequent personal tax returns the disability tax credit can be applied against tax on split income (TOSI) and split income is included in the income threshold for calculating the medical expense tax credit.
- No modification to the Fair Pharmacare program which introduced lower deductibles available to families earning up to $45,000 per year effective January 1, 2019.
- Increasing benefits to low-income working families by an average of $800 per year under the Rental Assistance Program.
- CleanBC initiatives including $2,000 to replace a fossil fuel heating system, $1,000 to upgrade to better insulated windows and doors and $700 to upgrade to a higher efficiency natural gas furnace.
- Effective February 19, 2019 elimination of interest on new and existing loans obtained through the BC Student Loan Program.
- Effective April 1, 2019 eligible individuals will receive an additional $50 per month in income and disability assistance.
- Effective July 1, 2019 the BC climate action tax credit is enhanced. The BC climate action tax credit is a tax-free amount paid quarterly with the GST tax credit to eligible individuals.
- Extending the BC training tax credit for apprentices to December 31, 2019.
- No modification to the elimination of MSP premiums paid by individuals effective January 1, 2020.
- Effective October 1, 2020 a new BC Child Opportunity Benefit will be introduced. This new benefit will be added to the current BC Early Childhood Tax Benefit which is a tax-free monthly payment to eligible families.
Enhancements to the Small Business Venture Capital Tax Credit Program:
- Effective for 2019 and subsequent tax years, for investments made after February 19, 2019, the maximum amount of annual tax credit that an individual can claim is increased to $120,000 from $60,000.
- Effective February 20, 2019, the maximum equity capital that eligible business corporations can raise under the program is increased to $10 million from $5 million.
- Effective February 20, 2019, share transfers to a Tax-Free Savings Account are permitted and equity purchases within a Tax-Free Savings Account may qualify for tax credit.
- Effective February 20, 2019, certain advanced commercialization and scaling up activities are eligible for the tax credit program.
- Effective March 2, 2019, investments in convertible equity issued by an eligible business corporation may be eligible for tax credits.
As the Income Tax Act is ever evolving here are the top five changes you should be aware of:
- Sale of Principle Residence – new – Individuals who have sold their home on or after January 1, 2016 and claim the principle residence exemption because it was their primary residence for all of the years the home was owned now need to report this transaction on schedule 3. For more information on this new reporting requirement please visit CRA’s website on this topic.
- Teachers and Early Childhood Educator School Supply Tax Credit – new –This new tax credit allows teachers and early childhood educators to claim a 15% tax credit on up to $1,000 of eligible teaching supplies. For more information on this new reporting requirement please visit CRA’s website on this topic.
- Back-to-School Amount – new – Residents of British Columbia may claim a $250 tax credit for each child, who is at least 4 years of age and under 17 years of age, attending school. No receipts are required to claim this tax credit.
- Children Fitness and Art Tax Credit – change – The maximum amounts that can be claimed for the Children’s Fitness and Art Tax Credit has been reduced to $500 and $250 respectively.
- Family Tax Cut Credit – eliminated – This non-refundable tax credit that was available in the 2014 and 2015 taxation years has now been eliminated.
If you had modest income in 2016 and a simple tax situation then you may be able to have your 2016 personal tax return prepared for free at a Community Volunteer Income Tax Clinic. For information on the definition of modest income and simple tax situation please visit this Canada Revenue Agency webpage. This webpage also includes a link to assist in finding a tax clinic near you.
We are beginning our 2016 personal tax return preparation season tomorrow. Although we very much enjoy assisting our clients with the preparation of their personal tax returns, we work long hours at this time of year to do our best to sure everyone’s personal tax return is accurate and filed on time. If we were super heroes we would be “super-organized” – not as exciting as being invisible, but it enables us to get the job done.
- “When are my taxes due?”
Although most Canadians have been required to file their personal tax return on April 30th each year (or the next business day if April 30th falls on a weekend) since as long as I can remember, we understand the confusion here as our neighbours to the south have a April 15th personal tax return filing deadline.
The filing due date for 2016 personal tax returns is May 1, 2017 (since April 30th falls on a Sunday this year) unless one of the following applies:
- If you or your spouse or common law partner have self-employment business income you have until June 15, 2017 to file your personal tax return.
- If you died last year between November 1st and December 31st, the due date for your final return is six months after the date of death.
- “I am going on vacation until April 25th. Can I bring all of my personal tax information in on April 26th”?
Yes you can bring your information in but we likely won’t have time to complete it until we return from our holidays. See point 10 below.
- “When are my 2016 personal taxes due?”
May 1, 2017, since April 30, 2017 falls on a Sunday, no matter when your filing due date is.
- “How do I pay my tax liability?”
I recommend that clients set the Canada Revenue Agency (CRA) up as a payee in their online banking, using their social insurance number as the account number, and remit a payment this way.
Not everyone participates in online banking. One of our clients enjoys going directly to a CRA office each year and standing in what he calls the “crying and paying line”. There are several other ways to pay the Canada Revenue Agency. Here is a link to other payment options.
- “Do you need all of my tax slips?”
- “My printer is broken.”
We email our clients forms during our personal tax return season that require to be printed, signed and returned. To facilitate this process, now is a good time to give your printer a check-up, replace your printer or find an alternative way to print the documents we send to you. Before you do please see point 8 below.
- “I don’t have any toner for my printer.”
Now is a good time to buy some toner. Before you do please see point 8 below.
- “My scanner is broken.”
In this crazy hi-tech world we live in, perhaps the need to purchase a separate machine to scan documents is over. There are several apps available for your phone that can receive a document, place your signature on the document and return the document. Tiny Scanner and Tiny Scans are two examples of these apps.
- “You look tired. Are you tired?”
- Are you taking a vacation soon?”
Yes on May 2, 2017 and we will be back in the office on May 15, 2017.
Over the past year a few of our clients have called to say they have received either a threatening telephone call from a person claiming to work for the Canada Revenue Agency who was demanding payment for a tax debt or an email from the Canada Revenue Agency requesting their banking information to facilitate the deposit of their tax refund. In all of these instances we concluded that the communication was a scam.
If you are questioning the validity of any communication received from the Canada Revenue Agency, whether it be regarding a tax debt or refund, we recommend that you review your account online through My Account or My Business Accounts. If you have not yet set up an online account with the Canada Revenue Agency you can also call Personal Income Tax Inquiries at 1-800-959-8281 or Business Inquiries at 1-800-959-5525.
The Canada Revenue Agency is well aware of these and other communication scams. Please visit the Canada Revenue Agency’s webpage that discusses these scams. We recommend that you take a few minutes and watch the Canada Revenue Agency’s video on this topic.