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
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
Some examples of eligible supplies include:
- construction paper;
- 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
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.
The amount on which the Age Credit is $7,125 for 2016.
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.
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.
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