Personal Tax Changes 2016 Tax Season

Personal Tax Changes 2016 Tax Season

Personal Tax Changes for 2016 Tax Season

Personal Tax Changes for 2016 Tax Season

Changes and Updates for 2016 Tax season

We will discuss the personal tax changes 2016 tax season in this article. Following key changes to existing services, credits, and amounts impact individual taxpayers in the 2016 tax-filing season:

  • Updated notice of assessment – The Canada Revenue Agency (CRA) has updated the format of the notice of assessment to be simpler. Taxpayers can now find the most important information about the assessment on the first page.
  • Universal child care benefit (UCCB) – For the 2015 tax year, the UCCB was expanded to children aged 6 through 17. Also, payments that parents receive for children under the age of 6 increased to $160 per month for each child. To learn more about the UCCB read our full blog post here. This Personal Tax Changes 2016 Tax Season was implemented before 2016.
  • Disability Tax Credit – This year, Canadians claiming the Disability Tax Credit (DTC) will be able to file their T1 return online regardless of whether or not their Form T2201, Disability Tax Credit Certificate has been submitted to the CRA for that tax year.
  • Children’s fitness amount – As of January 1, 2015, this is now a refundable tax credit available to families with children enrolled in a prescribed program of physical activity. For tax years prior to 2015, this credit was non-refundable. The Children’s Fitness Tax Credit allows you to claim eligible fees paid in the year up to a maximum of $500 per child (an additional amount of $500 is available if the child is eligible for the Disability Tax Credit and a minimum of $100 has been paid for eligible fees in the year). The child must have been under 16 years of age (or under 18 years of age if eligible for the disability tax credit) at the beginning of the year in which an eligible fitness expense was paid.
  • Child Care Expense Deduction limits – As of the 2015 tax year, the Child Care Expense Deduction dollar limits have increased by $1,000. The maximum amounts that can be claimed have increased to $8,000 for children under age seven, to $5,000 for children aged seven through 16, and to $11,000 for children who are eligible for the Disability Tax Credit.

For more information on the above key changes that may impact you, contact Cheema CPA Professional Corporation. Cheema CPA can help you understand personal tax changes 2016 tax season.  Visit the CRA website for more personal tax changes and updates 2016 tax season.

Income Splitting Family Tax Cut

 

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How the Family Tax Cut actually work?

The Canadian tax system taxes individuals and families based on there marginal tax rate. The more money you make the more tax you pay. As a result, when one person in a family has all the income, they end-up paying more tax than if the income was split amongst the couple. As an example, if the husband has $100,000 taxable income and the wife has zero taxable income, they would end up paying more tax than if they each had $50,000 taxable income. This is where the Income Splitting Family Tax Cut comes in and transfers part of the income to the lower income spouse.

The Family Tax Cut allows a spouse to transfer up to $50,000 of taxable income to a spouse in a lower income tax bracket, providing tax relief up to a maximum of $2,000. To qualify for this tax credit the both partners have to complete their tax return at the same time. This credit is effective for the 2014 tax year and subsequent tax years after.

Who can apply for the income splitting Family Tax Cut in 2014? 

  • You are a resident of Canada on December 31, 2014
  • You have an eligible spouse or common-law partner for 2014 and they have not claimed the Family Tax Cut;
  • You have a child who is under 18 at the end of 2014, who ordinarily lives with you throughout the year
  • You were not confined to a prison or similar institution for a period of at least 90 days during the year;
  • Neither you nor your eligible spouse became bankrupt in the year;
  • Neither you nor your eligible spouse elected to split eligible pension income in the year; and
  • Both you and your eligible spouse file an income tax and benefit return for the year.

 Can the credit be split?

The Family Tax Cut can not be split and has to be claimed by one spouse.

 How to apply?

The credit can be claimed on your T1 personal income tax return on Schedule 1-A and enter the calculated amount on line 423 of the Schedule 1.

Cheema CPA Professional Corporation
Contact Cheema Chartered Professional Accountants for your 2014 personal & corporate tax needs. We optimize every tax return and will automatically consider your family for the income splitting family tax cut credit. Book an appointment now using our web-app:

Personal Income Tax Returns–> We have expertise in preparing taxes for:

Individuals Executives Pension Income-Splitting
Families Employee Expenses Late filed returns
Self Employed Investment Income Investment portfolios
Rental Properties Capital Gains/Losses Non-Resident

Corporate Tax Returns–> We have expertise in preparing taxes for:

Corporation Tax Returns Accounting and Bookkeeping Late Filed Returns
Corporation Tax Planning Financial Statements  Sales Tax Returns (HST/GST/QST/PST)
Notice To Reader Reports Payroll filings (T4, T5) CRA Audit & Appeals
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