New things you might like to know about for your 2014 personal tax preparation – but first, a disclaimer – this is an overview. Do your research. Talk to a tax professional or visit the Canada Revenue Agency (CRA) website.
The Children’s Fitness Tax Credit has been increased from $500 to $1,000.
This is a 15% non-refundable credit meaning that the $1,000 actual expense you fork out translates into a $150 credit, and since it’s a non-refundable credit, if you don’t need all of it to reduce your tax liability to zero, the balance is not paid to you. However, next year it’s suppose to become a refundable tax credit so any balance will be paid to the taxpayer.
There’s now a Search & Rescue Volunteer Tax Credit. This mirrors the Volunteer Firefighter Tax Credit introduced a few years back. It’s a $450 non-fundable tax credit based on 15% of $3,000 “assumed” expenses (no receipts required).
To qualify, the rescuer cannot be employed by the department and must perform at least 200 hours of volunteer service including call-out time, training time and at meetings. If the rescuer is also a volunteer firefighter, those hours should be included to achieve this 200 total because only one claim is allowed – either the Search & Rescue or the Firefighter.
A letter from the department stating 200 hours of service must be supplied or CRA will deny the claim. By the way, if any amount of CRA’s allowable $1,000 income exemption is claimed on a T4, this expense credit cannot be claimed in addition to that income exemption. The $1,000 income exemption is more beneficial.
Some new items have been added to the eligible Medical Expense list. The cost to design a personal therapy plan in some situations is now deductible, as are the costs for service animals to aid persons with severe diabetes. As always, check the CRA website.
The amount claimable for Adoption Expense has been increased to $15,000. This is a non-refundable tax credit calculated by adding up eligible expenses and subtracting reimbursement received, if any. The net amount can be split between adoptive parents.
As discussed in the last column, the biggest addition to 2014 tax prep is the new Family Tax Cut. This is a non-refundable $2,000 maximum tax credit for eligible couples with a child under 18. For all the specifics, visit the CRA website.
By the way, effective April 1, 2016, the Government of Canada is switching to direct deposits for all federal payments to individuals so if you aren’t set up yet, it’s simple to do during tax prep using form T1-DD.
CRA is also pushing taxpayers to email communications. You have to set-up your CRA “My Account” because CRA, for security reasons, only sends emails to you directing you to check your in-box in your CRA “My Account”. Reminder that the safety deposit box deduction is gone.
Finally, coming soon to an App Store near you, a mobile application for your smart phone so you can access CRA anytime, anywhere! Lucky you.
Ron Clarke has his MBA and is a business owner in Trail, providing accounting and tax services. Email him at ron.clarke@JBSbiz.ca.
To read previous Tax Tips & Pits columns visit www.JBSbiz.net.
