With the 2016 income tax and benefits returns deadline coming up, many of you may be starting to panic about getting everything ready by April 30, 2017.
Tip: Since this date falls on a weekend, you actually have until midnight of May 01, 2017 to file your taxes without any penalties.
That being said, the CRA has made some changes this year, so make sure to read the 6 important changes (below) before submitting your tex return!
1. Good news for middle class families!
The personal income tax rate for income between $45,282 to $90,563 has been reduced from 22% to 20.5%. So, that is some relief, is it not? Single individuals in this bracket will see an average reduction of $330 per year, and couples will see an average reduction of $540 per year.
For high income earners, your tax rate is 33%, meaning for every dollar you earn over $200,000, you will be paying 33% income tax.
2. No more income splitting with your spouse
Income splitting was introduced in 2014 to ease the tax burden on young families. This program allowed families with children under 18 years old to lower the tax bracket for the spouse or common-law partner with a higher taxable income. And, unfortunately, this family tax cut credit has been eliminated for 2016.
3. A new tax credit for educators
A refundable tax credit has been introduced for educators in an elementary, secondary, or a regulated childcare facility. If you were an educator in 2016 and hold a teaching certificate, you can claim the expenses incurred for eligible teaching supplies.
4. Home accessibility is even more affordable
Canadians eligible for the disability tax credit or over 65 years of age can claim renovation expenses. This renovations allow the eligible person to safely access and move around their home. And if you have been caring for an eligible person, you can claim this non-refundable credit as well. Any home renovated must be owned by the eligible person or caregiver, and the maximum amount of allowable renovation expenses is $10,000.
5. Reduced children’s fitness and art credits
Arts Credits (non-refundable) — maximum fees allowable to claim per child have been reduced from $500 to $250.
Fitness Credits (refundable) — maximum allowable fees to claim per child have gone from $1,000 to $500.
Note: 2016 will be the last year these credits are applicable. The children fitness & arts credits have been eliminated for Tax Year 2017.
6. Reduced TFSA contribution limits
The contribution limit has been reduced from $10,000 to $5,500. So, if you are actively contributing in a TFSA, this affects you.