5 Updates You Should Be Aware Of
The 2020 tax filing season comes with several new changes which can impact your tax return. Here are some of the important updates that you should be aware of:
New Measures Affecting First-Time Home Buyers
The Home Buyer’s Plan (HBP) allows first-time home buyers to make tax-free RRSP withdrawals to purchase a home. The CRA has increased the HBP limit for 2019 from $25,000 to $35,000 for withdrawals made after March 19, 2019. To prevent income inclusion, amounts withdrawn must be repaid in equal instalments over a 15-year period, starting in the second year following the year in which the withdrawal was made.
First-time home buyers who purchased a home during the year may also qualify for the first-time home buyers’ amount, which is a $5,000 federal non-refundable tax credit.
Canada Workers Benefit
Prior to 2019, the earnings of low-income individuals and families in the workforce were supplemented through the Working Income Tax Benefit (WITB). Effective for 2019 and subsequent taxation years, the WITB has been replaced and enhanced by the Canada Workers Benefit (CWB), which is a federal refundable tax credit.
The CWB has two parts: a basic amount and a disability supplement for individuals who have an approved Form T2201, Disability Tax Credit Certificate, on file with the CRA. You may choose to include or not include tax-exempt income when you compute the CWB.
In addition, in 2019, the government clarified that kinship care providers would be considered the parents of a child in their care for the purposes of the CWB.
Donations of Cultural Property
In order to encourage donations of certified cultural property, the Government of Canada provides enhanced tax incentives through Form T871, Cultural Property Income Tax Certificate, to donors.
For 2019, the government further loosened the conditions for donations to be eligible for this benefit. For donations made on or after March 19, 2019, it is no longer required that the property donated be of national importance to qualify as a donation of cultural property.
To read more on the eligible donations, click here.
Ontario Childcare Access and Relief from Expenses Credit
Effective for 2019, the Ontario Childcare Access and Relief from Expenses (CARE) tax credit provides relief for low- and moderate-income families that incur childcare expenses. It is a refundable tax credit.
To qualify for the Ontario CARE tax credit, you must be eligible to claim the Child Care Expense Deduction, have a family income under $150,000, and reside in Ontario at the end of the year.
To read more about the Ontario CARE tax credit, click here.
Other Updates: Amounts and Limits
- TFSA annual contribution limit: increased from $5,500 to $6,000
- RRSP annual contribution limit: $26,500
- Maximum amount of eligible adoption expenses: increased to $16,255 per child
- Lifetime capital gains exemption for dispositions of qualified small business corporation shares in 2019: increased to $866,912
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.