Nov
16
By Fin MacDonald
As we approach the end of 2013 I'm going to look at some of the changes to the Income Tax Returns, both federally and provincially and a related program that has now expired. Using my lens of "Helping You to Keep More of Your Money" I hope that this information will be helpful.
First-Time Donors Super Credit
Outside of the normal inflation adjustment in the Federal Non-Refundable Tax Credits, this is the only new Federal credit; and it is quite small. The credit on charitable donations has been 15% on the first $200 and 29% on the remainder; for example a $1000 donation would earn a non-refundable tax credit of $262. With the new credit, there is an additional credit of 25% on CASH donations of upto $1,000. So, on a $1,000 donation the credit would now be a total of $512 ($262 + $250). The details: Super Credit only available once per family during the period 2013 - 2017. First-Time is defined as having made NO donation in the previous five years. (This is a Non-Refundable Tax Credit; it will reduce your tax payable but will not give you a refund if you are not taxable.) Tax Tip - Save up your donations until you reach the $1,000 limit and then claim them and the Super Credit. Donations can be saved for upto five years before claiming them
BC Sales Tax Credit
After a three year absence (due to the HST debacle) the BC Sales Tax Credit has returned, without any changes. This is still a Refundable credit of upto $75 for a single adult (with or without dependants) and $150 for couples. The maximum credit is paid to singles with incomes less than $15,000 and to couples with incomes less than $18,000. The credit is reduced for singles as income rises and disappears at an income of $18,750 and for couples at $25,500. These amounts are unchanged since 2002. However, for very low income people, this is a good reason to file one's tax return early to receive the credit.
BC Non-Refundable Tax Credits
Also as a result of the end of the HST three of the BC Non-Refundable Tax Credits have been reduced. The Basic Personal Amount has been lowered to $10,276 from $11,354; this will increase the amount of tax payable by $54.55 for all who are taxable. The Spousal Amount and Amount for Eligible Dependants have been lowered to $8,860 from $9,964. If you have a spouse with no income, this will increase your tax by $55.86; and by the same amount for each child under 19. The other Non-Refundable Credits that were indexed in the past, are again indexed (e.g. Disability or Age amounts), while those that weren't indexed (Pension or Tuition) are still not.
BC Seniors' Home Renovation Tax Credit
This is a Refundable tax credit introduced in the 2012 budget. The maximum refund is $1,000, and the claimant does not have to have tax payablre. Expenses must have been made after April 1, 2012. There is no scheduled end date for this credit. The Credit is based on expenditures of upto $10,000 on renovations that will make a principal residence "improve accessibility or help a senior be more functional or mobile at home." The requirement is that one of the residents of the home be 65 by the end of 2013. No Disability Tax Credit is required. If non-seniors share the residence the tax credit may be split between them upto the maximum of $10,000. The credit is paid on the tax return and is equal to 10% of the eligible expenses upto $10,000; to a maximum of $1,000.00. There does not appear to be any restriction on the number of years one can claim this credit; if $10,000 is spent on a stair lift in 2013, accessible showers and toilets could be done in 2014 and so on.
Examples of eligible expenses are: stair lifts, handrails, walk in baths or showers, lowered cupboards, widened doorways, motion sensitive lights and non-slip surfaces in bathrooms. If the renovations also qualify for the Medical tax credit, then the expenses may be claimed on both.
BC First Time New Home Buyers Bonus
This was a stimulus measure in effect from February 21, 2012 to April 1, 2013 that allowed qualified buyers of qualified new homes a refund of upto $10,000. This must be applied for before March 31, 2015 and is separate from the tax return; form FIN520 is used. Applicants must have filed a 2012 tax return to be eligible. Not to be confused with another program that allows first time buyers of homes to obtain a rebate of the Property Transfer Tax; that program is still extant.
Next month, yearend tax planning. Turning 71? RRSP, LLP and HBP and RIFs. Self-employed? Capital Gains or Losses? Medical and Charitable expenses? I'll look at what needs to be done before year end.