What’s new this 2015 Tax year
Every year, the federal government releases a new 2014 budget with new rules that is a good idea to keep up to date on. 10 changes that could affect how much you owe or how much you save, this year, as you prepare their 2014 tax returns.
Family tax credit
The government announced a tax changes for families with children. But only one of those changes — the family tax cut — is in effect for the 2014 tax season. Only the income-splitting part of the family package is in effect for the 2014 tax year. So, it’s something Canadian families need to familiarize themselves with now as they prepare to file their returns.
- It applies only to two-parent families with at least one child under the age of 18 — so, no single parents, no families where both parents are in the same tax bracket, and no childless couples need apply.
- It allows the higher-income spouse or common-law partner to effectively transfer up to $50,000 of taxable income to their lower-income partner.
- The amount of tax that could be saved by this transfer becomes a non-refundable tax credit that can be claimed by either spouse.
- The credit is capped at $2,000
Enhancements to the universal child care benefit and increases to child care expense deductions don’t take effect until this year, as does the elimination of the child tax credit.
- Benefit rises from $100 to $160 a month for each child under age 6, effective Jan. 1, 2015.
- New benefit of $60 a month for each child between ages 6 and 17, effective Jan. 1, 2015.
- Above benefits will not be reflected until the July 2015 payments, resulting in a retroactive adjustment.
- The enhanced UCCB will replace the current child tax credit as of 2015. But the UCCB changes will not replace the Canada child tax benefit (CCTB) you may currently receive.
Single parents, couples without children, and parents who each earn about the same amount will not benefit from the credit.
Children’s fitness tax credit
Total fitness expenses that can be claimed go from $500 to $1,000. Since the credit is worth 15 per cent of each child’s registration or membership fees, the federal credit is now worth up to $150 per eligible child under 16 (or under 18 if the child is eligible for a disability tax credit.
Starting with the 2015 tax year, the credit is also being made refundable, which will allow low-income families to take full advantage of it, too. A credit that’s non-refundable means parents whose incomes are too low to pay taxes don’t save any money.
Adoption expense tax credit
The maximum eligible adoption expenses that qualify for this tax credit were boosted to $15,000 in 2014, up from $11,669 in 2013. In 2015 and subsequent years, this credit will be indexed to inflation.
Medical expense tax credit
Most people are aware they can claim some medical expenses on their tax return, but many don’t keep a running tally because they simply forget or don’t think it will add up to a worthwhile savings. There are two changes to note here.
- The cost of designing a therapy plan for someone who qualifies for the disability tax credit
- Cost of service animals that help people with severe diabetes.
Another of the most-often overlooked credits is the disability tax credit — which coincidentally happens to be the most lucrative non-refundable tax credit, worth up to $2,500 in real money depending on the province of the tax filer, with additional amounts of $680 federally and from $181 to $1,030 provincially for a taxpayer with a disabled child under 18.
See a list of eligible medical expenses.
Search and rescue volunteers credit
People who spent at least 200 hours as a search and rescue volunteer in 2014 now qualify for $450 in tax relief, thanks to a new credit that was introduced in the 2014 federal budget.
Sharing information with U.S. on snowbirds
As of June 30, 2014, new rules allow Canadian and U.S authorities to keep closer track of the cross-border movements of their residents.
What does this mean for Canadians?
It will be very easy for Uncle Sam to figure out if you meet the “substantial presence” test, which requires the filing of a statement with the IRS. For snowbirds and other Canadians who spend significant time south of the border.
Safety deposit box deduction eliminated
As of the 2014 tax year, you can no longer deduct the cost of renting a safety deposit box to store all those precious investment records. For corporations, that change already took effect in March 2013.
Tax-free savings accounts
Another $5,500 can be socked away in 2015, bringing the total cumulative contribution room from 2009 to $36,500 as of this year. Amounts withdrawn from a TFSA in 2014 can also be recontributed this year, increasing 2015’s available contribution room.
Gifts of cultural property
The 2014 federal budget closed a loophole on a tax shelter for gifts of certified cultural property. Here’s how these arrangements used to work: Donors would buy a “culturally significant” artifact or property through the promoter of a tax shelter. The property would then be appraised at a value far higher than what the donor paid for it. Then, the buyer would gift the property to a charity, and the donor would claim a big tax benefit, thanks to the inflated valuation. The CRA would usually reject these claims and disallow the deductions, sometimes years later. Now, people won’t even by able to try to slip these through.
As of Feb. 10, 2014, the value of a cultural property gift made through a tax shelter arrangement is limited to what the donor paid for it in the first place.
You no longer need to apply for the GST/HST credit. The tax department’s computers will now analyze your return and figure out if you’re eligible.
Mineral exploration tax credit
The government announced in March that it will extend the 15 per cent tax credit for investors in flow-through shares of mineral exploration companies for another year — until the end of March 2016.
Flow-through shares are a way for junior mining companies that have trouble raising capital to finance exploration and development to shift these expenses onto shareholders by passing on the tax credits they accrue from their expenses to investors, who use them to offset their taxable income.
The temporary credit was introduced in the October 2000 budget update and has since been extended several times. The aim of the credit, according to Natural Resources Canada, is to “assist junior mining companies in raising new equity through flow-through shares” in order to help “maintain or increase the amount of exploration activity in Canada.” The credit is a non-refundable tax credit that can be carried back three years and carried forward 20 years.
The government said the credit has helped junior mining companies raise more than $5 billion to fund exploration and development since 2006.
Federal tax brackets – 2014 tax year:
- Up to $43,953 — 15%
- $43,954-$87,907 — Tax Rate 22%
- $87,908-$136,270 —Tax Rate 26%
- $136,270 — 29%