Federal Budget 2017 and Your Income Taxes
In March 2017, there were a few new announcement that will change the personal income taxes for 2017. I'll explain some of the changes and also revisit other changes to the 2017 taxes that were announced in the past year.
First, there is a new Canada Caregiver Credit that replaces three existing federal credits: Caregiver Amount, Infirm Dependant Credit and the Family Caregiver amount. It appears the only real change is for the few taxpayers that have an older adult (parent) aged 65+ living with them. Until 2016, you could claim a credit depending on their income. But starting in 2017, you can only claim it if they are infirm or disabled and depending on their income.
We haven't seen all the details of how the new Canada Caregiver Credit will affect the taxpayers, but it's clear the current Federal Government is making more credits “tied to income” so those with higher incomes will receive fewer tax breaks (much like the Canada Child Benefit is completely based on income).
The Public Transit Credit has been eliminated. This credit was mostly used by those living in larger cities like Winnipeg, or those that may have used the “park and ride” options.
The Disability Tax Credit can now be certified by a Nurse Practitioner. Not sure how this changes for taxpayers in Manitoba: I do not know if the Nurse Practitioners in Manitoba have regular patients that they have medical records for and would be able to complete the form. I'm hoping a practicing Nurse Practitioner can contact me to enlighten me.
EI Premiums will be increasing for both employees and their employers.
The rest of the changes I would like to remind you about were previously announced, but are not well known.
First, students (and their financially supporting parents) will be greatly affected in 2017 and not in a good way. The credits are reduced: no more Education credits and no more Textbook credits. Students will only be able to claim the actual tuition amount indicate on the official tuition receipt: the T2202a issued by the Post-Secondary Education Institutions. There will be fewer credits available to transfer to a parent or a spouse or less to carry forward to future years.
Let me give you an example. If a student pays about $4,000 in tuition and is in school full time for eight months, the additional Education and Textbook credits (about $3,200) increase the total credits to over $7,000 and would save the student and/or the parent almost $2,000 as a tax refund.
By removing the Education and Textbook credits, the current federal government has removed about $500 out of the pockets of students (or their parents) each year. I believe they did this to stop helping “rich families”, but they also affect other families with lower incomes. We do not know what will happen to the provincial credits and if the Manitoba Government will also eliminate these credits.
The First-Time Donor's Super Credit Tax Credit is about to end: if you make a charitable donation for the first time in 2017, take advantage of the federal First-time Donor's Super Tax Credit, which provides a 40% tax credit for donations of $200 or less, and a 54% credit for donations over $200 and up to $1,000. This has been a temporary tax credit and 2017 will be the last taxation year it is available. If you have not made a charitable donation since 2007, consider making a sizeable (up to $1,000) donation in 2017 and get back more than half of what you donated!
The Children's Fitness and Arts credits are eliminated for 2017. Just when I had parents well trained to keep all these receipts for tax time. The reason is the increase in the Canada Child Benefit has offset these credits.
A few reminders to those who have not yet filed your 2016 income taxes (or maybe you have but need to make an adjustment).
One new wrinkle this year is for those who have sold property in 2016 including your Principal Residence. Canada Revenue Agency needs you to start disclosing anytime you sell a property. If it has been your Principal Residence for the entire time you owned it you will continue to have no capital gains to pay taxes on.
Remember if you do not disclose, you can face penalties of up to $100 per month until you file the election. If you have already filed your taxes and didn't disclose the sale of your home, you need to get that information to CRA by May 1 to avoid penalties.
The second reminder is for those who are 65+ and own their own home. Remember to include your property tax bill information to be able to claim the Manitoba Senior School Tax Rebate. If your family income is under $63,000 you will get all or a portion of the maximum $470 credit.
The Home Accessibility Tax Credit is new this year, to assist seniors and those eligible for the Disability Tax Credit, with certain home renovations such as grab bars, wheelchair ramps, walk-in bathtubs and showers etc.
The 2016 tax year filing deadline is Monday May 1. Hurry hard and get your taxes done on time! For those of you that are self-employed (and their spouse), your deadline is June 15, 2017.
And remember that a Service Canada representative comes to Ste Anne the third Thursday of every month (April 20) at the Manitoba Service Centre located at 30 Dawson Road (next to my office). See her about your CPP, OAS, EI, SIN and more!
Anni Markmann is a Personal Income Tax Professional and Certified Financial Planner; living, working, and volunteering in our community. Contact her at 204.422.6631 or 36 Dawson Road in Ste Anne (near Co-op) or Info@SteAnneTaxService.ca