Every year, the federal and provincial governments announce a few tax changes, and this year’s no exception. Here are the key changes you need to know for the 2016 tax year, as well as some existing benefits you should keep in mind.
Certain changes to keep in mind
1. Federal refundable children’s fitness tax credit
The federal children’s fitness benefit became a refundable tax credit in the 2015 tax year, meaning you don’t need to pay any tax to be able to claim it.
For 2016, the maximum eligible amount per child is now $500 (down from $1,000 in 2015). This is also the last year Canadian taxpayers will be able to claim this credit on their federal income tax return.
2. Federal non-refundable children’s arts amount
For 2016, the maximum eligible amount per child is $250 (down from $500 in 2015). Just like the children’s fitness tax credit, this is also the last year Canadian taxpayers can claim the children’s arts tax credit.
Good to know: the provincial tax credit for Quebec residents still covers up to $400 of eligible expenses per child for fitness and arts activities combined.
Starting with the 2016 tax year, if you want to claim the full principal residence exemption, you’ll have to report some basic information (date of acquisition, proceeds of disposition and description of the property) on your tax return. Previously, the Canada Revenue Agency did not require any information to be reported if the property was your principal residence for every year you were the owner.
4. Quebec Rénovert tax credit
This temporary tax credit is intended to encourage investments in eco-friendly home renovation work. Eligible work must be done by a qualified contractor under a contract entered into after March 17, 2016 and before April 1, 2017. So, if you had work done in 2016 that falls under the eligibility criteria for the credit, don’t forget to claim the credit. And if you’re planning to have eligible work done in 2017, it’s not too late. You have until March 31, 2017 to sign a contract with a qualified contractor.
5. Quebec health contribution
On October 25, 2016, Quebec’s minister of health announced that the provincial health contribution (often referred to as the “health tax”) would be eliminated in 2017—a year sooner than it was slated to be phased out in the March 2016 budget announcement. That means 2016 is the last year you’ll have to pay this amount on your Quebec income tax return.
6. Quebec tax credit for workers age 64 or older
As the name suggests, a minor change has been made to this credit for 2016, bringing the eligible age down from 65 to 64 years. If you were 64 years of age on December 31, 2016 and meet the other eligibility criteria, congratulations—you’ve just earned an extra year of credit.
A few things to bear in mind:
• Federal public transit amount
This often overlooked credit can really save you money! You can also claim the costs paid by your spouse and children under 19 years of age on December 31, 2016.
• Federal home buyers amount
If you meet the criteria (the main one being that you are the first-time buyer of a qualifying home), you can claim a $5,000 tax credit.
You might be eligible for a credit of up to $6,630 (or $8,670 if you are considered a dependent senior) if you were age 70 or older at any point during 2016. Eligible expenses are determined based on the type of dwelling in which you live. You should also know that you can apply to receive advance payments of the tax credit. No need to wait until you file your income tax return!
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