Getting Ready for Tax Season

Important Dates:

March 2, 2015 – 2014 RRSP contribution deadline.

March 2, 2015 – T5 filing deadline CI Corporate Class dividends declared and paid in 2014 are reported on a T5 “Statement of Investment Income”

March 31, 2015 – T3 filing deadline CI Trust Pool distributions paid in 2014 are reported on a T3 “Statement of Trust Income Allocations and Designations”

April 30, 2015 – filing deadline for a regular T1 Individual “Income Tax and Benefit Return”

June 15, 2015 – filing deadline for T1 Individual “Income Tax and Benefit Return” reporting self-employment income (or a spouse reporting such). Take note that any tax balance is due April 30, 2015

Tax Measures and updates for Canadian Families with minor-aged children:

On October 30, 2014 Joe Oliver, Canada’s Minister of Finance, announced several new tax measures and updates geared towards Canadian families with minor-aged children. These include:

Family Tax Cut Tax Credit – The government has introduced a non-refundable tax credit of up to $2,000. The tax credit is based on the reduction of federal tax when a maximum of $50,000 in taxable income is transferred by an individual to their eligible spouse or common-law partner, who is in a lower income tax bracket. The Family Tax Cut tax credit will be effective for 2014 and subsequent tax years.

Enhanced Universal Child Care Benefit (UCCB) – There will be an increase in UCCB payments.  For 2014 the UCCB of $100 is paid monthly to eligible families for each child under six years of age. Effective January, 2015, the UCCB benefit will be increased from $100 to $160 per month for each child under the age of six, and form $0 to $60 per month for each child aged six to 17. Note, the increase in payments will not start until July 2015, and the July 2015 payment will include all 2015 retroactive amounts. Typically, the UCCB is reported as income by the lower-income reporting parent, or custodial parent.

Elimination of the Child Tax Credit – For 2014, a non-refundable tax credit of $2,255 is available to be claimed for each child under the age of 18. Typically, the Child Tax Credit is claimed by the higher-income reporting parent, or custodial parent, to reduce income taxes otherwise owing. This tax credit will be eliminated after 2014.

Increase in the Child Care Expense Deduction – In 2014, the lower net income spouse or common-law partner can claim a child care deduction on eligible expenses. The deduction is limited to actual expenditures, two-thirds of earned income and:

                $10,000 for each child eligible for the Disability Tax Credit

                $7,000 for each child under the age of 7, and

                $4,000 for each child between  7 – 15 years of age.

For 2015 and subsequent years, each of the upper-range deduction dollar limits has been increased by $1,000 ($10,000 to $11,000, $7,000 to $8,000 and $4,000 to $5,000).

Deduction and Contribution limits for 2015

RRSP – 18% of 2014 earned income, to a maximum of $24,930, plus any unused contribution room carried forward from previous years. If a taxpayer is considering the purchase of a home or post-secondary education within the next few years, consider making a RRSP contribution in order to use:

                The Home Buyers’ Plan to withdraw up to $25,000

                The Lifelong Learning Plan to withdraw up to $10,000/year to a maximum of $20,000/lifetime

TFSA - $5,000 or $36,500 if never contributed

RESP - $2,500 contribution will generate a $500 Canada Education Savings Grant (CESG) annually. Keep in mind the lifetime RESP contribution limit per child is $50,000 and the maximum CESG is $7,200.