Tag Archives: 2016 Personal Income Tax

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2016 Personal Income Tax Changes

What’s new on the 2016 tax return?

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Personal Income Tax rules change every year in Canada. Deductions and credits are added, amended and removed. You can be sure that the Canada Revenue Agency will inform you of anything you have failed to report, but do not expect them to point out if you have missed a deduction or tax credit. Brooks Financial has outlined some of the more significant changes for Individuals and Families in 2016.

Tax Reporting Change on Sale of Principal Residence

Starting in 2016, all principal residence dispositions must be reported on your tax return. This is true even if the entire gain is fully protected by the principal residence exemption. The penalties for not reporting are steep, $100 per month to a maximum of $8,000.

http://www.cra-arc.gc.ca/gncy/bdgt/2016/qa11-eng.html

http://www.theglobeandmail.com/globe-investor/personal-finance/taxes/how-new-tax-changes-will-impact-every-canadian-homeowner/article32271116/

Marginal Tax Rates

Government has decreased the second marginal tax rate from 22% to 20.5% and introduced a new top marginal tax rate of 33% for income above $202,800 (applicable in 2016 and subsequent tax years).

http://www.budget.gc.ca/2016/docs/plan/ch1-en.html

Canada Child Benefit (CCB)

The CCB has been introduced to replace the current Canada child tax benefit and universal child care benefit. CCB payments will begin in July 2016. The CCB will provide an annual benefit of up to $6,400 per child under six years of age and up to $5,400 per child aged six through 17 years old. The benefit will be phased out as adjusted family net income increases. An additional amount of $2,730 per child eligible for the disability tax credit will continue to be provided. These amounts will be paid monthly to eligible families, will not be taxable and will not reduce the amount eligible for the goods and services tax (GST) credit, the guaranteed income supplement, the Canada Education Savings Grant, the Canada Learning Bond and the Canada Disability Savings Grant. If your household income is more than $200,000 you will not receive a CCB amount.

http://www.cra-arc.gc.ca/bnfts/ccb/menu-eng.html

Income Splitting Credit

Previously, a non-refundable income splitting tax credit was available for couples with at least one child under the age of 18. This credit has been eliminated.

http://www.cra-arc.gc.ca/gncy/bdgt/2016/qa05-eng.html

Increase to Northern Residents Deduction

The maximum residency deduction that each member of a household may claim has increased from $8.25 to $11 per day and, where no other member of the household claims the residency deduction, the maximum residency deduction has increased from $16.50 to $22 per day. Residents of the Intermediate Zone will be entitled to deduct half of these increased amounts.

http://www.cra-arc.gc.ca/gncy/bdgt/2016/qa02-eng.html

Teacher and Early Childhood Educator School Supply Tax Credit

A new refundable tax credit for teachers and early childhood educators to help cover out-of-pocket supplies acquired on or after January 1, 2016. This measure will allow an employee who is an eligible educator to claim a 15% refundable tax credit based on an amount of up to $1,000 in expenditures made by the employee in a taxation year for eligible supplies. For the cost of supplies to qualify for the credit, employers will be required to certify that the supplies were purchased for the purpose of teaching or otherwise enhancing learning in a classroom or learning environment. Individuals making claims will be required to retain their receipts for verification purposes.

Education and Textbook Tax Credits

These credits are being eliminated as of January 1, 2017. The education credit is worth 15% of $400 for each month a student is enrolled in school full-time, while the textbook credit is set at 15% of $65 per month. This measure does not eliminate the tuition tax credit. Unused education and textbook credit amounts carried forward from years prior to 2017 will remain available to be claimed in 2017 and subsequent years.

Children’s Fitness and Arts Tax Credit

As of January 1, 2017, these credits will begin to be phased out. Eligible expenses will be cut in half for 2016 and eliminated for 2017. The fitness credit is now worth up to $150 on expenses of as much as $1,000, while the arts credit is worth up to $75 on expenses of up to $500.

Old Age Security and Guaranteed Income supplement

The age of eligibility has been restored to 65 from 67.

Canada Student Grant

Beginning August 1, 2016 Canada Student Grant amounts will increase by 50%. The grants will increase from $2,000 to $3,000 a year for students from low-income families; from $800 to $1,800 for students from middle-income families; and from $1,200 from $1,800 per year for part-time students from low-income families.

http://news.gc.ca/web/article-en.do?nid=1105439

Canada Student Loan Repayment

Students will not have to repay money borrowed under the Canada Student Loan program until he or she is earning at least $25,000 per year. Previously, single graduates had to start repaying their loans when they were earing at least $20,210 while families of 5 or more would have earn more than $67,825 before starting to repay.

https://www.canada.ca/en/employment-social-development/services/student-financial-aid/student-loan/student-loans/student-loans-repayment-assistance-plan.html

https://www.liberal.ca/realchange/post-secondary-education/

https://www.liberal.ca/files/2015/10/A-new-plan-for-a-strong-middle-class.pdf

To learn more about the 2016 tax return, visit the Government of Canada website:

http://www.budget.gc.ca/2016/docs/bb/brief-bref-en.html

http://www.budget.gc.ca/2016/docs/tm-mf/toc-tdm-en.html

 


Income from Share Economy sources must be reported on your tax return.

DID YOU KNOW?

With the news that the Provincial Government is looking into allowing ride-sharing companies, like Uber, to operate in Manitoba, it’s important to remember that the Canada Revenue Agency considers income derived from Sharing Economy activities to be taxable income. In addition to ride-sharing, the term “Sharing Economy” encompasses: accommodation sharing (Airbnb), music and video streaming (Spotify), online staffing (Freelancer.com), crowdfunding (GoFundMe), etc.

Just like any other business, you are required to report all income earned through sharing-economy activities. As well, you must meet all the GST reporting and remittance obligations. Not reporting this income would be viewed by CRA as tax evasion leaving you subject to fines, penalties or even jail time. If you have missed reporting this income in the past it would be prudent to correct your tax affairs by having your previous tax returns adjusted.

http://www.canadianbusiness.com/innovation/canada-sharing-economy-uber-airbnb/

Did you know… that if you have received money under a crowdfunding arrangement, Canada Revenue Agency could consider it as taxable income? Funds raised through crowdfunding could represent a loan, capital contribution, gift, income, or a combination thereof. The terms and conditions of each situation may vary greatly, consider hiring a tax professional to help you understand what your tax obligation will be.

http://www.cbc.ca/news/business/taxes/tax-season-2016-crowdfunding-1.3460787

Contact Brooks Financial today for help with your Personal Income Tax Return. Only 24 days left until it is due (May 1, 2017).


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Use our Personal Income Tax Checklist to help you file your taxes in time

Canadian Personal Income Tax Checklist and Filing Due Dates for Your 2016 Tax Return

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The personal income tax deadline for filing your return is typically April 30, however, because this date falls on Sunday this year, the CRA will consider you on time if it is received on or before Monday, May 1, 2017.

Self-employed individual returns are due Thursday, June 15, 2017, however if any amounts are owing, they must be paid by May 1, 2017.

Contact Tesia today to file your 2016 Personal Income Tax Return.

Our 2016 Personal Income Tax Checklist will get your started!


Here’s an overview of what you need to file your return.

NEW CLIENTS

  • If you made income tax installments for 2016, please provide us with the balance in your account.
  • Please provide us with your spouse’s 2016 net income (unless we prepare his/her return) and names and birth dates of your children
  • Please provide a copy of your 2015 notice of assessment and any notice of reassessment of other years, if received in 2016
  • Please provide a copy of your 2015 personal tax return

INFORMATION T-SLIPS

INCOME

  • T4 Employment and commissions
  • T4A (OAS) Old Age Security
  • T4A Other Income
  • T3 Investment Income
  • T5 Investment Income
  • T4E Employment Insurance Benefits
  • T5007 Worker’s Compensation
  • T4RSP, T4RIF
  • UCCB payments
  • T5013 Partnership

DETAILS OF OTHER INCOME

  • Please provide details of any disposal of capital property (shares, bonds, real estate, etc.) in 2016, provide broker’s summaries and year end holdings where applicable
  • Summary of income and expenses for rental properties
  • Details of self-employed business, revenue and expenses
  • Any other unusual items received in the current year
  • Foreign exchange gains/losses on currency transactions (when a previously purchased foreign currency is converted to Canadian currency, this activity can create a foreign exchange gain/loss)
  • Copy of your non-registered investment broker statement as of December 31, 2016
  • If you do not receive broker statements and it is convenient, forward a summary of your investments as of December 31, 2016, by name, quantity held and cost paid

DEDUCTIONS & CREDITS

  • RRSP Contributions
  • T2202 for tuition for yourself, spouse and/or dependents
  • Interest paid on investment loans (a letter from the lending institution(s) stating the purpose of the loan and the amount of interest should be obtained)
  • Interest paid on loans under the Canada Student Loan Act or provincial equivalent
  • If you are self-employed, a summary of all your business expenses
  • If you are an employee and entitled to deduct employment expenses, Form T2200
  • Declaration of Employment Conditions – Office and Employment Expenses must be signed by your employer and filed with your return. Please provide details of your employment expenses, including details of your home office and vehicle use if applicable
  • Child care expense receipts which must include the name, address and S.I.N. of the caregiver
  • All medical and dental bills for yourself, spouse and dependents paid in 2016
  • Charitable donation receipts
  • Political donation receipts
  • Receipts for professional or union dues paid
  • The cost of public transit passes purchased
  • Receipts for qualifying fitness and children’s art activity programs (2016 is the final year for such deductions)

FOREIGN PROPERTY REPORTING

  • Did you hold or own foreign property at any time in 2016 with a total cost in excess of CAD. If yes, you will be required to file an information return, form T1135, with your 2016 personal tax return.

Tesia Brooks’ training as a Certified Financial Planner (CFP®), Master Financial Advisor (MFA™), Certified Divorce Financial Analyst (CDFA™), Certified Divorce Financial Analyst (CDFA™), Chartered Financial Divorce Specialist (CFDS) and Certified General Accountant (CGA), literally brings a wealth of knowledge to her role as an Income Tax Consultant. Her financial expertise, specifically with regard to financial planning, wealth management, RRSPs, pension and retirement investments will prove to be a strong asset when it comes to preparing both your income tax return, and personal income tax planning throughout the year.

Brooks Financial provides financial planning and income tax services in Winnipeg, Manitoba, Canada. Brooks’ specialties include financial consulting, retirement financial planning, divorce financial planning, wealth management, insurance coverage, accounting and income tax services.


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