Money Matters
So, what’s New or Changing for 2016 Personal Tax Issues?
HOMEOWNERS
Home Accessibility Tax Credit is now available for people who qualify for the Disability Tax Credit! In prior years, it was available only to individuals who were 65 or older.
You can spend up to $10,000 on a Qualifying Renovation.
A Qualifying Renovation includes any altering of an enduring nature that will allow the individual to be: more mobile, gain access, function safer, and reduce risk of harm to themselves.
A fun note – Check to see if these renovations may be combined with the Medical Tax Credit.
Keep your receipts and ask your accountant if you are not sure as to what qualifies.
PARENTS
The Income Splitting Family Tax Credit for couples with at least one child under the age of 18 will be eliminated. Not to be confused with Pension Splitting! Pension Splitting is still available in 2016.
The Children’s Fitness Credit will be reduced to $500 from $1,000 for 2016 with a complete phase out in 2017. The government found that the fitness credit did not encourage any “new” participants into sports.
The Arts Credit will be reduced to $250 from $500 for 2016 with a complete phase out in 2017.
Child Care Deduction Limits have increased by $1,000. New amounts are $8,000 for children under seven, $5,000 for children seven through 15 and $11,000 if the child qualifies for the Disability Tax Credit.
TEACHERS
A new Teacher and Early Childhood Educator School Supply Tax Credit will be in place for 2016.
You must be an Eligible Educator (teacher that holds a certificate) who spends up to $1,000 for eligible supplies that are not reimbursed to you from your employer.
Receipts will be required to be verified by your accountant, and your employer will need to certify the receipts were for teaching or enhancing learning.
STUDENTS
Education and Textbook Tax Credits will be eliminated after 2016. The Tuition Tax Credit will remain available. Your unused tax credits carry forward to future years to help you get a bigger refund when you start earning more income!
Make sure to print off your T2202 slip from your post secondary school in order to be eligible for the Tuition Tax Credit. They do not mail these forms out.
Transit Pass Receipts are also a tax credit. Make sure to keep them.
Student Loan Interest is deductible if your loan is with BC Student Loans or National Student Loans. No write off for interest on Student Lines of Credit.
File On Time! So often people think because they are entitled to a refund that they don’t have to file on time. This is not true and can hold up other benefits you may be entitled to; such as: GST Credits.
Commissions and Tips are Taxable. You should ensure your tips/commissions are being reported on your T4 slip by your employer. If not, you are responsible for reporting these amounts on your tax return.
SAVERS
RRSP’s and TFSA’s can be set up for monthly contributions directly from your bank account. It’s never too early to save for your future.
RRSP’s (Registered Retirement Savings Plan) help save taxes in the year of contribution and while the income earned in an RRSP is tax free, the withdrawal from the RRSP later is taxable.
TFSA’s (Tax Free Savings Account) do not decrease any taxes owing in the current year; however, income earned within the TFSA is tax free so there are no taxes when withdrawn.
Both of these savings options have tax implications and limits so should be discussed with a professional financial planner and your accountant to determine the best option for you.
Sarah Sabo, Chartered Professional Accountant and Certified Management Accountant of Aries Accounting, West Kelowna, let’s Okanagan Woman readers know what’s new when it comes to your 2016 tax return.
