Taxpayers with children will notice that the family tax cut is gone for 2016. Enhanced child care tax free benefits (CCB) have been introduced along with increases in UCCB. The family tax cut or split elimination does not affect the pension tax split enjoyed by many seniors. That is still in effect. If you missed the pension split adjustments can be made back 3 years.
Principal Residence Exemption (PRE)
Home ownership and taxes has just become much more complicated. Sale of your house or cottage, change in usage such as converting your house to a rental property or from rental property to personal use will result in having to report this on your tax return. Failure to report this can be costly if you have not done so and adjustments to your previous tax returns would be needed. Even if your home was used strictly as your principal residence for all the years you have owned it, if you sell or change the usage of it in 2016 and going forward, this has to be reported on Schedule 3 of the tax return.
Tax Free Savings Accounts TFSA
For 2016 the contribution amount is $5,500. If you do not use it or the previous amount you may not have contributed you do not lose that and can make up for it in future years. While you do not get a tax deduction for TFSA all gains within the TFSA are tax free and that includes withdrawals. Pay attention to your limit and do not exceed that or you will face penalties and interest. The tax of 1% per month will continue to apply for each month that the excess amount remains in the TFSA.
Child Fitness Amount and Children’s Art Tax Credit
Effective for the 2016 taxation year, the maximum eligible amount per child will be reduced to $500 from $1,000 for the children’s fitness tax credit (which will remain refundable for 2016) and to $250 from $500 for the children’s arts tax credit. The supplemental amounts for children eligible for the disability tax credit will remain at $500 for both credits for 2016.
Effective for the 2017 and subsequent taxation years, both credits will be eliminated.
The amount parents can claim for child-care expenses has increased by $1,000 annually, per child, to $8,000 for a child under six and $5,000 for a child aged between seven and 16 years old.
Canada Apprentice Loan
Students in a designated Red Seal trade program can now claim interest on their government student loans.
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This is for information only and subject to change at any time. Canada Revenue Agency, CRA, has this and other tax information posted on their website.