Perhaps one of the most important things to note at this time of year, during tax filing, almost goes unspoken. There are always changes that we should be aware of and we often have to rely on our tax preparers or determine ourselves through research. Fortunately, those that use tax filing software such as TurboTax, UFile and H&R Block, as more of us are doing annually, will be advised of those changes that affect our individual situations while preparing their tax returns.
The message here is that Canadians now rushing to file their taxes before the looming April 30 deadline should stop to check the changes the Canada Revenue Agency (CRA) made since last season. Whether you’re a parent, a student, a commuter or a caregiver, these changes may have an impact on your taxes. First, let’s review the credits that have been eliminated for 2017.
Of notable interest, a number of personal tax credits have been eliminated for federal tax purposes starting with the 2017 tax year including:
The education and textbook tax credits – For 2017, the federal education and textbook amounts have been eliminated. Any unused federal tuition, education and textbook amounts from 2016 and previous years can still be carried forward. Some provinces, such as Ontario have also eliminated the provincial tuition credit, the federal tuition credit remains available. Ottawa said it eliminated the education and textbook tax credits because they were not targeted based on income.
The children’s fitness and arts tax credit – The eligible amounts for these credits were reduced by half for 2016, and have been fully eliminated for 2017. Previously, filers could claim the fees for fitness and arts programs – up to $500 and $250, respectively, in 2016 for a child of the taxpayer, spouse or common law partner.
The public transit tax credit – This tax credit is eliminated as of July 1, 2017. This means that you can claim the cost of monthly public transit passes or passes of longer duration for travel on public transit for the period of January 1, 2017 to June 30, 2017.
Medical expense tax credits
Those who need medical intervention to conceive a child may now be eligible to claim certain expenses, even if they do not have a medical condition. Prior to the change to the Medical Expenses Tax credit (METC) in 2017, individuals had to prove medically that they had difficulty conceiving a child in order to get tax relief. The CRA has now expanded eligibility for this tax credit. Expenses eligible for the METC are often updated with advances in medical care. For 2017, the government clarified that costs related to reproductive technology use are eligible for the METC, where such costs are incurred by an individual who requires medical intervention to conceive a child, even where treatment is not on account of medical infertility.
This measure will apply to 2017 and after. It is also important to note that expenses incurred in previous years can be claimed by electing that this measure apply for any of the immediately preceding 10 taxation years. A comprehensive list of treatments eligible for the METC can be found on the CRA website.
Tuition tax credit
The expenses eligible to be claimed for the federal tuition credit have been expanded to include fees for an individual’s tuition paid to a university, college or other post-secondary institution in Canada for occupational skills courses not offered at the post-secondary level. The credit will be available in these circumstances if the course is taken to provide the individual with skills (or improving skills) in an occupation and where the individual is at least 16 years old by December 31, 2017. Because of this change, students receiving a scholarship in qualifying occupational skills programs will be able to claim the scholarship exemption where all of the qualifying conditions are met. The other change is that the transfer of federal tuition credits to parents and grandparents has been eliminated.
Disability tax credit
As of March 22, 2017, nurse practitioners have been added to the list of medical professionals who may certify eligibility of a person for the disability tax credit. The federal government has added nurse practitioners to the list of medical professionals who can now certify an application form for the disability tax credit. With an estimated 4,500 nurse practitioners across the country, the change is expected to give Canadians with disabilities more options when applying for the tax credit.
Canada caregiver amount
While the Canada caregiver amount (CCA) is a new non-refundable tax credit for 2017, it is actually a consolidation of three credits that were available in previous years:
- credit for infirm dependents age 18 or older
- caregiver credit
- family caregiver credit.
The new credit will provide tax relief for certain infirm dependents. The calculation of the credit amount depends on the relationship and age of the dependent. The maximum claim amount for the new credit has increased to $6,883.
Claims for the Canada caregiver credit are very similar to its predecessors’ except for one key change. Canadians who support a parent or grandparent who is 65 years of age or older, and living with them, can no longer make a claim. Now, the parent or grandparent in question must be infirm in order to claim the credit.
Its a significant change. There’s a lot of multigenerational families living together, and if the parent was 65 or older, whether they were infirm or not you could claim a credit for them if you were supporting them. While it is key to be aware of the new changes made by the CRA, it equally important for Canadians to look at changes in their own life, and what that means for their taxes.
Principal residence exemption reporting
If you disposed of your principal residence in 2017 and wish to claim the principal residence exemption, make sure that the disposition is reported on Schedule 3 of your income tax return. Dispositions in 2017 and after, you also need to complete the Designation of a Property as a Principal Residence by an Individual form. Reporting this disposition will require the following information:
- year of acquisition
- proceeds of disposition
- address of the property being designated as a principal residence
- total number of years the property was owned
- number of years that the property is designated as a principal residence.
This new reporting requirement generally applies for deemed dispositions of a principal residence as well, including dispositions arising because of a change in use. As of 2016, the CRA only allows the principal residence exemption to be claimed where you report the sale and the designation of your principal residence on your income tax return. The CRA will have the ability to accept a late-filed designation in respect of a principal residence, but a penalty may apply.
As the ancient Chinese proverb says, “the only thing that’s constant is change.” Your 2017 tax return has a number of significant changes. How these changes affect your bottom line depends on your personal tax situation. There are so many underlying rules to some of these credits, it is highly recommended that you consult with a tax professional to see how these new rules apply to you.