Two Deductions Changing Canadians’ Tax Bills in 2017
Easter has come and gone and we are in the final stretch of having customers’ taxes filed prior to the deadline of May 1, 2017. One of the recurring questions that we have been deflecting this year stems around the tax bill that certain consumers are expected to pay this year, especially when the income level has not changed much from 2015.
After reviewing a number of returns that have been questioned, we have noticed two tax deductions that are standing out this year.
Family Tax Cut
The Conservative Government introduced the Family Tax cut in 2014. When the Liberals came into power in 2015, they repealed this credit for the 2016 taxation year. Even though the tax cut benefited a limited number of taxpayers, it seems to be affecting thousands of taxes being prepared right now.
This tax cut affected only families that had children under 18 and helped families by decreasing the federal amount owed by up to $2,000 per family. This isn’t significant to some, but to others it was unexpected surprise this year after meeting with us.
First Time Super Donor Credit
The First Time Super Donor Credit came into effect in 2013 and is scheduled to be abolished in 2017. This credit is on top of the regular credit earned on donations. To be considered a first time donor, you, your spouse or your common-law partner must not have claimed the charitable donations tax credit in the past 5 years to take advantage of this “top up” on the donation credit.
So what does that mean to the taxpayer who donated for the first time in 2015? The first $200 worth of donations gives you a 15% federal tax credit (or about 25% when you factor in the provincial component). The federal credit increases to 29% (or almost 45% when you include the provincial component) for donations over $200. When you are a first time donor, you will receive an additional 25% to the federal credit.
If you were one of the people that took advantage of either of these initiatives last year, you will not be doing so this year. That is going to create a difference in the amount you will be paying. Keep in mind that you, the consumer, need to pay attention to your situation. It’s worth sitting down with your tax professional to discuss any issues you have halfway through your taxation year.
There is nothing worse then unpleasant surprises that can be deflected or eliminated with a little forward thinking.
Enjoyed this article? Did you find a useful tip? Then share on Social Media! Let someone else get the same benefit by clicking on the button below. And leave a comment to let us know that you enjoyed it.
Until the next time,