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Tips and tricks for Canadian tax filers at every stage of life from UFile's tax expert Gerry Vittoratos



Tax Changes

by UFile Team Équipe ImpôtExpert | Feb 15, 2019   Comments:

UFile Blog - Tax changes

A new year means a new tax return to file. Are there any significant changes to take into account this year? Let’s find out.

Climate Action Incentive – residents of New Brunswick/Ontario/Manitoba/Saskatchewan

The Climate Action Incentive (CAI) is a new refundable tax credit to compensate residents from these provinces for the effects of the federal climate action plan, which now sets a price on carbon emissions. The credit itself is not income tested, which means that every resident of these provinces is eligible to claim it regardless of income. The amount of the credit will depend on your family situation.

Situation

New Brunswick

Ontario

Manitoba

Saskatchewan

Single w/o children

$128

$154

$170

$305

Single parent

$205

$231

$255

$457

Couple w/o children

$205

$231

$255

$457

Additional amount
per child
(single or couple)

Add
$32/child

Add
$38/child

Add
$42/child

Add
$76/child

An additional 10% will be added to the amount you can claim if you live outside what the CRA considers a Census Metropolitan Area (CMA). To know more, please visit this page on the CRA’s Web site: canada.ca/census-metropolitan-areas.

If you have a spouse, either one of you can claim the credit but not both.

Tax on Split Income (TOSI)

The Tax on Split Income (TOSI), or what was commonly known as the “kiddie tax,” has been expanded to include adults. In simple terms, the TOSI is a special tax charged on individuals who receive dividends (typical example) from family corporations (where parents, siblings and/or spouses are also shareholders) but who have not sufficiently contributed to these businesses according to the CRA. Sufficient contributions include working for the company (minimum of 20 hours per week on average) or transferring capital assets (such as equipment) to the family corporation. The special tax is applied by simply charging the highest federal/provincial tax rate to the dividends received without considering the tax bracket to which you belong based on the total income earned in the year.

Accelerated Investment Incentive (accelerated depreciation)

If you are self-employed and you purchased a capital asset for your business after November 20, 2018, you can now triple the depreciation rate that you would ordinarily apply on this asset in the first year. Essentially, in the first year of use of the capital asset, you will be able to triple your depreciation expense. Here’s an example.

John purchased a car worth $20,000 for his business on December 3, 2018. The amount that he can deduct as a depreciation expense off his business income is

$20,000 x 45%= $9,000

Had John purchased the vehicle before November 20, 2018, the amount he could have deducted off his business income would have been

$20,000 x 15% = $3,000

This tripling of the rate will be applicable for any eligible asset purchased after November 20, 2018, then gradually phased out after 2024.

Medical expenses – service dogs

It is now possible to claim expenses related to service dogs used by individuals with a severe mental impairment; these include the cost of the animal, care and maintenance of the animal, reasonable travel expenses for the patient to attend a facility that trains individuals in the handling of service animals, and reasonable board and lodging for the patient’s full-time attendance at the facility.

Tax-Free Savings Account (TFSA)

The annual TFSA limit for 2019 has been increased from $5,500 to $6,000.

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For info about Quebec taxes changes
Read our article about Tax changes affecting your Quebec return for 2019.

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Would you like to know more about these and other changes for the 2018 tax year? Connect with us on Facebook and Twitter for news and updates on the 2018 tax return and UFile online tax software. Visit Tax & U to get accurate answers to all your questions about your 2018 tax return.

 

 

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