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2017 Personal Income Tax Return Update


February 12th. 2018

The deadline for filing your 2017 personal income tax return is April 30th or June 15th for self-employed individuals.  A checklist to assist you in gathering and summarizing your information can be accessed through this link:  CLICK HERE.  We request that you forward this completed checklist, together with your 2017 personal tax information, to our office as soon as possible.  Please ensure that you have received all of your information slips prior to forwarding us your information.  Most information slips are issued by the end of February, however T3 and T5013 slips do not have to be issued before the end of March.  We respectfully request that we receive your personal income tax information before April 15th in order to guarantee the timely filing of your return.

 

Please remember that after your tax return has been prepared, we must receive a signed Form T183, Information Return for Electronic Filing of an Individual’s Income Tax and Benefit Return, in order to e-file your return.  We will send this form to you with your completed tax return.

 

Our office hours throughout March and April are Monday to Friday from 8:30 a.m. to 5:00 p.m.  There will often be team members here earlier and later than these hours, as well as on weekends, to accommodate your visit.

 

As you gather information for your 2017 income tax return there are several things that you should keep in mind.

 

Personal tax rates

The following chart is an overview Ontario’s two highest marginal tax rates for 2017 and 2018. 

 

 

 

 

Dividends

 

Capital

Gains

Interest & Ordinary Income

Eligible

Non-

Eligible

2017

 

ON  ($202,800 - $220,000)

25.98%

51.97%

37.19%

43.48%

ON  > $220,000

26.76%

53.53%

39.34%

45.30%

2018

 

ON  ($205,842 - $220,000)

25.98%

51.97%

37.19%

45.03%

ON > $220,000

26.76%

53.53%

39.34%

46.84%

 

Tuition – Federal and Provincial

For 2017 and subsequent years, the federal education and textbook amount have been eliminated.  However, any unused federal tuition, education and textbook amounts from prior years will still be available to claim in 2017 and if not fully used can still be carried forward.  Please note that the tuition tax credit for federal tax purposes has not been eliminated.

 

In addition, the Ontario tuition and education tax credits are being discontinued.  Ontario students will still be able to claim the tuition amount for eligible tuition fees for studies before September 5, 2017.  Similarly, they will be able to claim the education amount for months of study prior to September 2017.  Any unused amounts will carry forward and will be available to claim in future years.

 

Canada Caregiver Amount

Effective for 2017 and later years, the Federal government eliminated the infirm dependant credit, the caregiver credit (for in-home care of a relative) and the family caregiver credit and replaced them with the new Canada Caregiver Credit (CCC).

 

If you have a spouse or common-law partner, or a dependant with physical or mental impairment, you may be entitled to claim the CCC.  The CCC is based on two amounts:

 

  1. CCC Higher Amount

A higher maximum amount of $6,883 (in 2017) can be claimed by a caregiver in respect of each infirm dependant, who is an eligible relative.  An eligible relative is a person over the age of 18 who at any time in the year is dependent on you for support because of a mental or physical infirmity, and is 1) your or your spouse’s or common-law partner’s child or grandchild or 2) if they are resident in Canada at any time in the year, your or your spouse’s or common-law partners’ parent, grandparent, brother, sister, uncle, aunt, niece or nephew.  The amount will be reduced dollar-for-dollar by the amount of the dependant’s net income above $16,163 (in 2017).

 

New this year, the dependant will not be require to live with the caregiver in order for the caregiver to claim the credit.  However, a credit will no longer be available in respect of a non-infirm individual over 65 years of age who resided with the adult child.

 

  1. CCC Lower Amount Plus Top-Up:

A lower maximum amount of $2,150 (currently known as the family caregiver amount) for infirm dependants will remain as part of the following amounts (on Schedule 1, Federal Tax):

  • The maximum spouse or common-law partner amount (line 303);
  • The maximum amount for an eligible dependant (line 305);
  • The amount for infirm children under age 18 at the end of the tax year (line 367).

In cases where an individual claims an amount for an infirm spouse or common-law partner or an amount for an eligible dependant who is infirm, the individual must claim the CCC at the lower amount (maximum $2,150 for 2017).  Where this results in less tax relief than would be available if the CCC higher amount (maximum $6,883 for 2017) were claimed instead, a top-up will be provided to offset this difference.

 

Note:    The top-up does not apply with respect to an amount claimed for an eligible dependant who is age 18 or under at the end of the year.

 

 

Ontario Caregiver Tax Credit

The provincial tax credit mirrors the federal rules.  The OCTC will begin phasing out when the dependent’s net income exceeds $16,401 for 2017.

 

Eliminated Tax Credits

For 2017 and subsequent years, the following tax credits were eliminated:

  1. Public transit amount (effective July 1, 2017.  So any costs incurred prior this date will still be eligible);
  2. Children’s arts amount;
  3. Children’s fitness tax credit;
  4. Ontario Healthy Homes Renovation Tax credit.

 

Ontario Seniors’ Public Transit Tax Credit (OSPTTC)

New for 2017 is the OSPTTC.  This is a refundable tax credit to help senior with public transit costs.  To qualify for the credit, individuals must be 65 years of age at the beginning of the year and live in Ontario at the end of the year.  Senior taxpayers can claim up to $3,000 in eligible public transit expenses and receive up to $450 each year.  However, for 2017, only transit expenses incurred on or after July 1, 2017 can be claimed for the credit.  As such, seniors will be able to claim only up to $1,500 in transit expenses.

 

Reporting of sale of principal residence

Just a reminder that since 2016, individuals who sell their principal residence have to complete the “principal residence” section on page 2 of schedule 3 of their personal tax return even though the gain is fully exempt by the principal residence exemption.  Similar to the old rules, if the residence is not designated as a principal residence for all the years it was owned, Form T2091 will still need to be completed. The information required includes the address of the property, the date it was acquired, the amount of the proceeds of disposition as well as the cost.  Taxpayers failing to report the disposition of their principal residence on their personal tax return can be reassessed beyond the normal reassessment period in respect of that disposition.  The designation can be filed late but will be subject to a late designation penalty, which is the lesser of $8,000 or $100 times the number of completed months between the filing due date of the personal tax return and the date the designation is filed with the CRA. 

 

You are only allowed to designate one property as your principal residence at any point in time.  If you own two or more residences in a year, the choice of which property you designate as your principal residence for a year requires serious consideration.  We strongly recommend that you keep the purchase document as well as all your receipts for improvements made to each property in order to keep track of the cost of each property.  This will simplify the calculation of the capital gain on each property and will help you make a better decision as to which property should be designated as your principal residence.

 

Please note that a change of use of a principal residence to an income producing property, will trigger a deemed disposition and consequently the requirement to complete schedule 3 or Form T2091.

 

Home Accessibility Tax Credit

Effective for 2016 and subsequent years, an individual may be eligible to claim a non-refundable tax credit calculated at the rate of 15% of the renovation expenditure incurred for the benefit of a qualifying individual (i.e. a person aged 65 or older at year-end) or of a disabled person (who is entitled to claim the disability tax credit).  The individuals who may claim this credit are the qualifying individual or an eligible individual.  An eligible individual is:

 

  1. a spouse or common-law partner of a qualifying individual; or
  2. for a qualifying individual who is 65 years of age or older, an individual who has claimed the amount for an eligible dependant, caregiver amount or amount for infirm dependant age 18 or older for the qualifying individual, or could have claimed such an amount if:
  • the qualifying individual had no income;
  • for the eligible dependant amount, the individual was not married or in a common-law partnership; and
  • for the amount for an infirm dependant age 18 or older, the qualifying individual was dependant on the individual because of mental or physical infirmity;

            OR

  1. if (b) does not apply, an individual who is entitled to claim the disability amount for the qualifying individual spouse or common-law partner.

 

The expenditure must be incurred for the home that is the principal residence of the qualifying individual or eligible individual.  Further, the total eligible expenses cannot be more than $10,000 for the year.  In order for the expenses to qualify they must be incurred to improve the qualifying individual’s mobility, improve the accessibility and functionality or reduce the risk of harm for the individual.

 

Lifetime Capital Gains Exemption (LCGE)

Individuals who realize a gain on the disposition of Qualified Small Business Corporation (“QSBC”) shares, qualified farm property and qualified fishing property may be able to offset part or all of the gain by claiming a capital gain deduction.  For dispositions in 2017 of qualified small business corporation shares, the LCGE is $835,716.  For dispositions of qualified farm or fishing property, the LCGE is $1,000,000.

 

Foreign reporting

Canadian residents who hold specified foreign property with a cost amount over $100,000 in the aggregate at any time during the year continue to be required to file the information return T1135 – Foreign Income Verification form along with their personal income tax return.

 

Please note that a specified foreign property includes (but is not limited to):

  • funds held outside Canada (foreign bank accounts or foreign brokerage accounts);
  • shares of non-Canadian corporations (other than foreign affiliates), including shares held in a Canadian brokerage account;
  • beneficiary/owner of certain trusts;
  • real estate located outside Canada (other than personal use property and real property used in an active business);
  • indebtedness owed to you by non-residents (including government and corporate bonds, debentures, mortgages and notes receivable);
  • interest in a foreign insurance policy;
  • precious metals, gold certificates, and future contracts held outside Canada;
  • all other foreign property.

 

Although Form T1135 is only an information return, it is extremely important that it is completed accurately.  There are severe penalties for failure to file this information return with the CRA, and the reassessment period for the tax return can now be extended by an additional three years if the T1135 return is filed late, incorrect or incomplete or if the taxpayer fails to report in their personal tax return, the income from a specified foreign property

 

Since this information is not readily available to us during the preparation of your personal income tax return, we kindly ask that if you hold specified foreign properties at any time in 2017 with an aggregate cost of at least $100,000 that you provide us with the information.  We recommend that you ask your investment advisor for assistance.   

 

S+C Partners Personal Tax Return Value Proposition

  1. Your personal tax return will be prepared by accounting professionals and reviewed by full-time tax practitioners with CPA, CA designations and more than 5 years of full-time experience.
  2. We will assess your filing positions with seasoned preparers and reviewers (home office, automotive expenses).
  3. We analytically review your current year tax filing in comparison with the previous 5 years’ filings.
  4. A Client Service Partner will final review your return.
  5. We electronically deliver your personal tax return through our secure internet portal.
  6. We guarantee the on-time filing of your personal tax return through the electronic transmission channel to the Canada Revenue Agency (CRA).
  7. We provide light post-preparation assistance as we receive inquiries from the CRA about your electronic submission.

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