End of year tax updates you need to know
2016 -end of year tax updates you need to know
It has been a whirlwind of tax changes so I have put together a short video that shares the end of year tax updates that you need to know by Dec 31st.
Principle Residence Exemption
The Principal Residence rules allow every family unit to sell one principal residence tax-free per year. In the past, you didn’t even have to tell CRA about it, but that’s changing. This year’s tax update as of Oct 2016, requires a sale of your primary residency must be reported in your tax return. It used to be that there was no form or reporting, but that has changed. CRA is drafting new versions of a form called Schedule 3 where you will now report the sale and claim an exemption from paying any capital gains tax.
Children’s fitness and arts credits
This will be the last year before the tax updates that parents will be able to claim these credits. As well, their value has been halved from 2015 values, from $1,000 to $500 for the fi tness credit (though it remains refundable) and $500 to $250 for the arts credit. Effective 2017, both credits are eliminated. However, if a program begins in 2016 and extends into 2017, payments made in 2016 will qualify for the credit. You may want to prepay and receive your receipt for 2016 while the credit exists.
Education and textbook amount
This will be the last opportunity to make use of the education credit and textbook credit, both of which are eliminated after 2016. For full-time students, these credits are respectively worth $400 and $65 for each month a student is in school. Unused education and textbook credit amounts carried forward from years prior to 2017 will remain available to be claimed in 2017 and subsequent years. The tuition credit remains in place.
There are also 2 credits that can be claimed for the first time in 2016, The Home Accessibility Tax Credit and the Eligible Educator School Supply Tax Credit.
The Home Accessibility Tax Credit is available to help support a person age 65 or over that has costs associated with renovation expenses to help add more accessibility, like wheel chair ramps, walk in showers.
As for the educator credit, provincially certified teachers and early childhood educators can now claim up to $1,000 in eligible school supply costs. “You’ll be able to claim a 15% credit for the cost of those supplies,
Tax Free Savings Account
And a quick update for your Tax Free Savings Account- limit for next year will be $5,500. That will make the total cumulative available room to be $52,000 in 2017.
RRSP contribution deadline is Wed March 1st for your 2016 contribution year.
Call us if you have any questions.