Personal Income Tax 2016

Welcome to our web site based Personal Income Tax Letter. We have provided links to the following worksheets for your convenience:

2016 Personal Tax Checklist
2016 Self Employed Worksheet
2016 Motor Vehicle & Home Office Worksheet

To ensure your return is processed on a timely basis, please have your tax information to us by April 5, 2017.

An important piece of information for our records is your Notice of Assessment that you receive each year once your return is filed and accepted. Please make sure we receive this information.

Tax Highlights for 2016

Reporting Requirements For The Sale of Principal Residence
  • On October 3, 2016 the government announced an administrative change to Canada Revenue Agency's reporting requirements for the sale of a principal residence.

    When you sell your principal residence or when you are considered to have sold it, usually you do not have to report the sale on your income tax return and you do not have to pay tax on any gain from the sale. This is the case if you are eligible for the full income tax exemption (principal residence exemption) because the property was your principal residence for every year you owned it.

    Starting with the 2016 tax year, generally due by late April 2017, you will be required to report basic information (date of acquisition, proceeds of disposition and description of the property) on your income tax return when you sell your principal residence.

Eligible Educator School Supply Tax Credit
  • There is a new refundable tax credit if you are an eligible educator. You can now claim a 15% refundable tax credit on up to $1,000 of supply purchases per year.

  • You can only claim this tax credit if you are a teacher or early childhood educator employed at an elementary or secondary school or a regulated child care facility:
    • You must have a teacher's certificate that is valid in the province or territory where you are employed; or
    • You must have a certificate or diploma in early childhood education that is recognized in the province or territory where you are employed.

  • For your supplies to be eligible for this credit, they must be:
    • purchased in the taxation year by an eligible educator;
    • used in a school or in a regulated child care facility for teaching or helping students learn;
    • not reimbursable and not subject to an allowance or other form of assistance (unless the reimbursement, allowance or assistance is included in the income of the teacher or educator and not deductible); and
    • not deducted or used in calculating a deduction from any person's income for any taxation year.

  • Some examples of eligible supplies include:
    • construction paper;
    • flashcards;
    • items for science experiments;
    • art supplies;
    • various writing materials
    • games and puzzles;
    • books for the classroom; and
    • educational support software.

  • If you claim this tax credit, the CRA may ask you to provide a certification from your employer attesting to the eligible supplies expense. You should request the certification from your employer in a timely manner and keep it in your files, along with your receipts, in case the CRA requests it


Family Tax Cut
  • the family tax cut has been eliminated for 2016 and later years.

Home Accessibility Expense
  • you can claim a maximum of $10,000 for eligible expenses you incurred for work done or goods acquired for an eligible dwelling as long as you are over 65 years of age or have a disability tax certificate.

Direct Deposit
  • the government is phasing out cheques, make sure you are signed up for direct deposit.

Lifetime Gains Exemption
  • for dispositions of qualified small business corporation shares and qualified farm and fishing property made after 2016, the lifetime capital gains exemption limit is $824,176.

Revised T1135 - Foreign Income Verification Statements For Years After 2013
  • this form has been revised for 2014 and subsequent years requiring the taxpayer to report in more detail to the Canada Revenue Agency. If you have investments in foreign stocks, you will have to provide us with the monthly broker statements.

Penalties For Missed Tax Slips
  • The Canada Revenue Agency has taken an aggressive stand on income tax slips that have not been included on your tax return. If you have forgotten to include a slip, the Canada Revenue Agency will now include it upon completion of their "matching" program and add a penalty to your return. If you have missed including a slip on more than one occasion, you could face a penalty of up to 50% of the tax owing. (Or 20% of the amount of the slip for repeat offenders)
    Do not forget to supply all slips to your accountant upon submission of your year-end package.
    If you discover a receipt after we have filed your income tax return, please inform us immediately. There may be a charge for filing amendments.

Age Credit
  • The amount on which the Age Credit is $7,125 for 2016.

Employment Credit
  • In 2016 the claim for the employment credit is $1,161.

Registered Retirement Savings Plan
  • The RRSP limits are:
    • 2016   $25,370
    • 2017   $26,010

  • RRSP's must mature before the end of the year in which the annuitant turns 71 years of age. Similarly, registered pension plans and deferred profit sharing plans will generally be required to commence the payment of benefits to members by the end of the year in which the members turn 71 years of age.

Automobile Limits
  • The automobile expenses deduction limits and prescribed rates are as follows; leasing costs are a maximum of $800.00 per month plus taxes, allowances are 54 cents per kilometer for the first 5,000 kilometers and 48 cents for each additional kilometer. Interest deduction of $300.00 per month and the ceiling on capital cost of a passenger vehicle for capital cost allowance purposes is $30,000 for vehicles purchased after 2000.

Children's Fitness
  • The maximum has been reduced to $500 per child for fees paid in 2016 relating to the cost of or membership for physical activities. This credit will be eliminated in 2017.

Children's Arts Amount
  • The maximum eligible fees per child (excluding the supplement for children with disabilities) has been reduced to $250. This credit will be eliminated in 2017.

 

If you have any question, please feel free to contact us.

Paterson & Company Professional Corporation
Chartered Professional Accountants

   
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October
10th - Source Deductions Due Threshold 1
16th - September Source Deductions Due
25th - Source Deductions Due Threshold 1
31st - Quarterly HST Return Calander year filers (July/Aug/Sept)
 
November
10th - Source Deductions Due Threshold 1
15th - October Source Deductions Due
27th - Source Deductions Due Threshold 1