Your Taxes: Top 10 Things to Know & Tax Filing Tips and Traps

Your Taxes: Top 10 Things to Know & Tax Filing Tips and Traps

Presented by:Faizal Valli

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Top 10 Things to Know

The new federal budget was released on March 22nd, confirming:

1. New top federal personal tax bracket of 33% for taxable income over $200,000 (increase from 29%)

2. Reduction in federal personal tax bracket for middle income earners – approx. $45,000 to $90,000; reduction from 22% to 20.5%

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3. Canada Child Benefit is now replacing the CCTB and UCCB. New benefit is phased out for higher income families.

Check out the government’s CCB Calculator here:

http://www.budget.gc.ca/2016/tool-outil/ccb-ace-en.html

4. Family Tax Cut, a tax credit announced by the Conservative government for 2014 and 2015, has been repealed effective 2016.

5. Northern Residents Deduction is increased







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6. New Teacher and Early Childhood Educator School Supply Credit - 15% refundable tax credit on up to $1,000 in expenditures made by an employee for eligible supplies

7. Mineral Exploration Tax Credit for Flow Through Share Investors - extended until 2017

8. Education and Textbook Tax Credit; this is a fixed tax credit based on the number of full-time and part-time months in school. This credit is eliminated after 2016. Existing unused credits will still be able to be carried forward

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9. Children’s Fitness and Arts Credits - halved for 2016, so $500 for fitness and $250 for arts. Eliminated in 2017

10.Mutual fund corporation switches - after September 2016, switches between mutual fund corporations will now be considered dispositions at market value

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TIPS AND TRAPSFiling your personal taxes

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Foreign Reporting • T1135 expanded foreign reporting. Form T1135 is used to

report “specified foreign property” with a cost greater than CAD $100,000 at any time in the year

• Common examples: • Shares of non-resident corporations held in non-

registered accounts, either private or public; • Real estate property (excluding personal property, e.g.

vacation property); • Debts such as bonds owed by non-residents, etc. etc.

• Effective 2015 there is a simplified reporting method for a taxpayer who owned held specified foreign property with cost less than $250,000 throughout the year

• Brokerage accounts are capable of providing information for non-registered accounts to be inputted into the T1135

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Tips and Traps - Investments

Return of Capital• ROC reduces the ACB of the investment, which may

result in capital gains when the investment is eventually sold

TFSA• It’s not a chequing account!• Be careful of re-contributions in the same year• Did you know that you can contribute to your spouse’s

account?• Be careful of day traders who use TFSA accounts - can

get audited

RRSPs• Balancing between your RRSP and TFSA

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Lesser-known Tax Credits and Rules

• First time home buyers credit

• Fun fact – become a volunteer firefighter and get a tax credit

• Children’s Fitness Tax Credit• Refundable - money in your pocket. (In BC, that’s

$0.20 on the dollar. Spend $500 and get $100 back)

• Halved for 2016, so $500 for fitness and $250 for arts.

• Eliminated in 2017

• RRIF withdrawals• Effective 2015, minimum withdrawal rates

reduced by approx. 2% for individuals aged 71-94

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Manage Your Taxes Online

Using CRA’s My Account for:

• Individuals • Returns and assessments• RRSP & TFSA

Contribution room• Copies of slips• Statement of accounts

(taxes owing or refundable) and direct deposit information

• Businesses and self-employed people• GST / HST

Keep up with the latest from CRA (Search for: 2015 T1 Guide, etc.)

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Tips and Traps – Real Estate

Change in use • From principal residence to rental property and vice

versa• Deemed disposition• What is Fair Market Value? Your realtor can get this info

for you• Get a comparative when selling a condo

Lifetime capital gains exemption • Only for the sale of certain things (Qualified Small

Business Corporation shares, Qualified Farm or Fishing Property)

• Principal residence exemption is different • Example: If you have a cottage, may choose to claim

principal residence exemption on sale

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