No matter what kind of taxpayer you are, 2014 is a tax year full of changes that will affect your tax return. Before starting your tax return, take a moment to acquaint yourself with the many changes to the Federal return and with those that apply to your own province.
You will no longer be required to apply for the GST/HST Credit as the Canada Revenue Agency will automatically determine if you are eligible to receive the GST/HST Credit. You will be notified by the CRA that you are eligible for the GST/HST Credit. In the case of eligible couples, the GST/HST Credit will be paid to the spouse or common-law partner whose tax return is assessed first.
The Family Tax Cut.
Also known as family tax splitting, this is a new federal tax credit that applies to couples with children under the age of 18 only. It will allow a spouse to, in effect, transfer up to $50,000 of taxable income to a spouse in a lower tax bracket. This transfer will cause the calculation of a credit that will provide tax relief of a maximum of $2000. Please note this credit is calculated on a special Schedule 1 form.
Children's Fitness Tax Credit.
This credit has changed dramatically for 2014. The allowable amount for this credit has been doubled to $1000 from $500.
In the future, the credit will be made refundable (effective for the 2015 and subsequent tax years).
Search and Rescue Volunteers Tax Credit.
Eligible volunteers participating in land, air and sea search and rescue activities are eligible for a non-refundable 15% tax credit on an amount of $3,000.
Note: An individual is eligible for an exemption of up to $1,000 related to a payment from a government, municipality, or other public authority for performing the duties of an emergency services volunteer. For 2014 and subsequent years, an individual who claims the volunteer firefighter tax credit or the search and rescue volunteer tax credit will not be eligible for the exemption.
Safety Deposit Box expense.
This expense may no longer be claimed as a deduction. Therefore, the Deduction for Safety Deposit Boxes will no longer be in effect for 2014 and later years.
The gross-up factor applicable to non-eligible dividends paid after 2013 has been reduced from 25% to 18% and the corresponding dividend tax credit has been reduced from 13.33% to 11.0169%.
Overseas Employment Tax Credit (OETC).
The OETC is being phased out. The percentage of qualifying foreign employment income (QFEI) and the maximum QFEI used in the calculation of the OETC (previously 60%) will be reduced as follows:
- 2014 - 40% of QFEI to a maximum QFEI of $40,000
- 2015 - 20% of QFEI to a maximum QFEI of $20,000
- 2016 - 0% of QFEI to a maximum QFEI of $0
This phase-out will not apply to the QFEI earned by you in connection with a contract that your employer committed to in writing before March 29, 2012 (referred to as protected QFEI). The phase-out rules will apply to all QFEI that is not protected. For more information visit: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns409-485/426-eng.html
Adoption Expense Tax Credit.
The maximum amount of eligible expenses for 2014 is now $15,000 per child and will be indexed according to inflation for later tax years. The adoption period has been revised to include at the earlier of:
- the time that an application is made for registration with a provincial or territorial ministry responsible for adoption or with an adoption agency licensed by a provincial or territorial government; and
- the time, if any, that an application related to the adoption is made to a Canadian court.
Newfoundland and Labrador
Dividend Tax Credit.
In order to align with the federal government, the rate for the Newfoundland and Labrador (NL) Dividend Tax Credit has changed. The NL government has reduced the rate for the tax credit on ordinary dividends from 5% to 4.1% and the rate for the tax credit on eligible dividends from 11% to 5.4%. These rates will become effective for the dividends received after July 1st, 2014. Please review the NL dividend tax credit workchart if you have dividends.
Venture capital tax credit.
This is a new non-refundable tax credit for Newfoundland and Labrador. This tax credit is 30% of the qualifying investment. Lifetime maximum is $75,000. Unused credit can be carried back three years and carried forward seven years.
Prince Edward Island
Dividend Tax Credit.
In order to align with the federal government, the rate for the Prince Edward Island (PEI) ordinary dividend tax credit has been increased from 2.9% to 3.2%.
Dividend Tax Credit.
In order to align with the federal government, the rate for the Nova Scotia (NS) ordinary dividend tax credit has been increased from 7.7% to 5.873%.
Non-refundable age tax credit.
Nova Scotians are eligible for this new tax credit if they met all of the following conditions:
- you were a resident of Nova Scotia on December 31, 2014;
- you were 65 years of age or older on or before December 31, 2014 AND
- your taxable income from line 260 was less than $24,000.
Graduate retention rebate.
The Graduate retention rebate non-refundable tax credit has been eliminated for the 2014 taxation year.
No new tax measures.
Dividend tax credit.
The tax credit rate for ordinary dividends has been reduced from 8% to 7.05%.
Refundable tax credit for seniors' activities.
Quebec has put in place a refundable 20% credit on the cost of enrollment (to a maximum of $200) to encourage activity among the senior population. You may qualify if you are a resident of Quebec and
- are 70 years of age or older;
- your income for the year does not exceed $40,000 (indexed each year); AND
- you are not exempt from tax.
A qualified expense includes any amount paid by the individual in the year regarding the cost of the individual's registration or membership in a recognized program of activities. To that end, this will include the cost of the program with respect to the program's administration, instruction, rental of required facilities, as well as uniforms and equipment. However, the cost must not include the cost of accommodation, travel, food or beverages. Consequently, in order for the aforementioned refundable credit to apply, the recognized programs of activities must meet certain conditions that are stated in the budget.
This measure will apply to the amounts paid as of June 5, 2014, for a program that will start on this date or after. For more information visit http://www.revenuquebec.ca/en/salle-de-presse/nouvelles-fiscales/2014/2014-09-25.aspx
Splitting retirement income between spouses.
Effective starting in tax year 2014, the tax legislation on pension splitting will be amended to allow the income splitting mechanism to be applicable only for the person that reached 65 before the end of this person's tax year.
Tax credit for the acquisition of shares of Capital régional et coopératif Desjardins.
This tax credit for shares acquired during a capital-raising period beginning in such year will be reduced from $2,500 to $2,250.
Quebec Pension Plan.
For 2014, the QPP contribution rate has increased from 10.20% à 10.35%. This rate corresponds to a contribution rate of 5.175% for the employee and 5.175% for the employer.
Volunteers participating in search and rescue.
For the purpose of harmonization with the federal budget of February 11, 2014, Quebec has also introduced a tax credit for volunteers participating in search and rescue activities, that uses the rate applicable to the first taxable income bracket of the personal income tax table.
LogiRénov tax credit for home renovation.
This is a new tax credit for home owners which allows for a maximum credit of $2500 per eligible dwelling. It is based on 20% of the amount in excess of $3000 which was paid for recognized home renovation work on the dwelling. This credit is claimed on line 462 under code 27 when completing Form TP-1029.LR.
Personal Income Tax Rates.
The Ontario government has made the following tax rate changes:
- The taxable income threshold for the 13.16% tax rate has been lowered from $514,090 to $220,000;
- A new tax rate of 12.16% on taxable income between $150,000 and $220,000 has been added.
Dividend Tax Credit.
To mitigate the impact of the federal changes announced in the 2013 federal budget and improve the fairness of the taxation of dividends, Ontario will
- Apply the dividend tax credit after the surtax;
- Increase the eligible dividend tax credit rate from 6.4% to 10%.
As a result of these changes, for 2014 and later years, the top marginal rate on non-eligible dividends is 40.13% and the rate on eligible dividends is 33.82%.
Tax Credit for Farmers Who Donate to Community Food Programs.
This new non-refundable income tax credit for farmers who donate agricultural products to community food programs, including food banks, is worth 25% of the fair market value of the agricultural products donated. It may be claimed for donations made beginning January 1, 2014.
In order to align with the federal government, the MB government has reduced the rate for the tax credit on ordinary dividends from 1.75% to 0.83%.
You can claim a non-refundable tax credit for eligible investments you made in Manitoba community enterprise development projects from January 1 to June 11, 2014. For eligible investments you made from June 12 to December 31, 2014, in Manitoba community enterprise development projects, you can claim a refundable tax credit.
A new Manitoba employee share purchase tax credit has been introduced for tax year 2014.
In order to align with the federal government, the Saskatchewan government has reduced the rate for the tax credit on ordinary dividends from 4% to 3.4%.
In order to align with the federal government, the AB government has reduced the rate for the tax credit on ordinary dividends from 3.5% to 3.1%.
Personal income tax rates.
For individuals with an income exceeding $150,000 per year, the tax rate has been increased from 14.7% to 16.8% for 2014 and 2015 only and will revert back to 14.7% in 2016.
In order to align with the federal government, the BC government has reduced the rate for the tax credit on ordinary dividends from 3.4% to 2.59%.The BC mining flow-through share tax credit will be extended to the end of 2014.
In order to align with the federal government, the YK government has reduced the rate for the tax credit on ordinary dividends from 4.51% to 4.03%.
No new tax measures.
In order to align with the federal government, the NV government has reduced the rate for the tax credit on ordinary dividends from 4% to 3.051%.