The tax-filing deadline is almost upon us. For your 2016 tax return, the government has made a few changes to various credits and deductions, and has added some services, which it says are designed to make the painful act of filing taxes less painful. We'll see. Here's a summary of the tax changes you should be aware of when filing your 2016 return.
New benefits and credits
Canada Child Benefit. The new Canada Child Benefit (CCB) is a tax-free monthly payment made to eligible families to help with the cost of raising children under the age of 18. The CCB is meant to replace the Canada Child Tax Benefit, National Child Benefit Supplement, and the Universal Child Care Benefit.
Northern Residents' Deduction. If you have lived, on a permanent basis, in a prescribed northern or intermediate zone for a continuous period of at least six consecutive months, you may be eligible for a Northern Residents' Deduction. For 2016 and later years, the basic and the additional residency amounts used to calculate the Northern Residents' Deductions will be increased to $11 per day from $8.25.
Teaching supplies credit. Eligible educators may be able to claim a 15% refundable tax credit based on up to $1,000 of eligible teaching supplies bought during the tax year.
New CRA services
Express Notice of Assessment. This new service delivers an instant assessment result message and provides a Notice of Assessment directly to your certified tax software the next day. To use the service, you must be registered for online mail and you must file electronically, using a certified tax software.
Account alerts . As a fraud prevention measure, this new service notifies you by email when an address has changed, banking information for direct deposit has changed, or if mail sent to you by the CRA was returned. You may register for this service through "My Account" on the CRA website or the MyCRA mobile app.
Account links. You can now access the CRA My Account and the My Service Canada Account (online sign in) through a single sign-in session.
MyBenefits CRA mobile app . You can use the CRA's new web-based mobile app to securely view your next benefit payment dates and amounts, the status of your CCB application, update your marital status, and change information about children in your care.
Enhanced services
Online mail. This service provides the option of signing up to receive certain CRA correspondence in your secure, online CRA My Account instead of by paper mail. Throughout 2016, additional types of correspondence were added to the online mail service, including benefit notices and slips, and instalment reminders.
Community Volunteer Income Tax Program (CVITP). The CVITP helps Canadians with modest income and those in a simple tax situation by preparing their tax returns free of charge. In order to expand this program to more communities, the CRA recruited more organizations and volunteers to help such Canadians do their taxes and ensure they are receiving the credits and benefits they are eligible for.
Auto-fill my return. Enhancements to this service include extended log-in sessions so you can stay logged into the service for a longer period than before, more tax slips, and the use of the service for previous-year returns.
MyCRA mobile app. The MyCRA mobile app now allows you to update your marital status and sign up for account alerts.
Other changes
Income-Splitting Tax Credit. The family tax cut has been eliminated for the 2016 year and future tax years. However, if you are receiving a pension, you may be able to split your eligible pension income with your spouse or common-law partner to reduce your taxes.
Children's Fitness Tax Credit. For 2016, the maximum eligible fees in the year is reduced to $500 from $1,000, though the additional amount of $500 for children eligible for the Disability Tax Credit has not changed. Therefore, the maximum credit is reduced to $75 ($150 for a child eligible for the Disability Tax Credit).
Children's Arts Tax Credit. For 2016, the maximum eligible fees in the year is reduced to $250 from $500. The additional amount of $500 for children eligible for the Disability Tax Credit will not change. Therefore, the maximum credit is reduced to $37.50 ($112.50 for a child eligible for the disability tax credit).
Home Accessibility Tax Credit (HATC). For 2016 and subsequent tax years, you can claim a non-refundable tax credit for eligible expenses incurred for work performed, or goods acquired for a qualifying renovation of an eligible dwelling of a qualifying individual.
Reporting the sale of your principal residence. Starting with the 2016 tax year, you are required to report basic information (date of acquisition, proceeds of disposition, and address) on your tax return when you sell your principal residence to claim the full principal residence exemption. You do not have to pay tax on any capital gain when you sell your house as long as it was your principal residence for all the years you owned it and you did not use any part of it to earn income.
Previously published in The Fund Library.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
