By Fin MacDonald, Fin Tax Service

First, a correction: In the last issue of the Beacon I wrote that the Tax Free Savings Account contribution room, if a person had never made a contribution, was $51,000. It is actually FIFTY-TWO thousand dollars.

The filing deadline for 2016 tax returns is April 30, 2017. Self-employed individuals have until June 15, 2017 to file; any amount owing is due April 30. For Deceased individuals, the filing deadline is the later of April 30, 2017 or six months after the taxpayer passed away.

As you begin the preparation for your 2016 tax return, the question to ask is: “How has my life changed in 2016, and how (if) it affects my tax return?” Did your source of income change? Did you retire or start work or school? Did you buy or sell some of your investments? Did your family have an addition or departure?

Provincial Changes

First, let’s look at the changes. On the provincial level, there is the indexing of tax brackets that happens each year. This year the top tax bracket has been eliminated, leaving five brackets. This is one of two major tax cuts in the provincial return. It only benefits you if your income was more than $151,050 in 2016. If your income was $200,000, the tax savings, compared to your 2015 return, will be $1,027.95.

For parents with children there is the new “Back to School Amount”. This allows a parent to claim $250 for each child, that they or their spouse are the parent of, who was between 4 and 17 at the start of 2016. For a family with two qualifying children the tax savings will be $25.30. This is a Non-Refundable Credit.

The other change is an extension of the Seniors’ Home Renovation Tax Credit (BC Schedule 12) to include Persons With Disabilities who have the Disability Tax Credit (DTC). This allows up to $10,000 in renovations that enable the taxpayer to have better access to their residence. The REFUNDABLE Tax Credit is 10% of the eligible expenses, up to a maximum of $1,000. It is similar to the Federal Schedule 12, except that it is refundable.

A word on Refundable vs. Non-Refundable Tax Credits. A refundable credit is payable; a non-refundable credit reduces the amount payable but does not create a refund unless tax has already been paid.

Federal Changes

The federal Government has amalgamated all of the Child-related programs into one: the Canada Child Benefit. It is income tested, with higher benefits flowing to families with incomes of less than $30,000. The Children’s Arts and Fitness Amounts, both Non-Refundable Tax Credits, have both been cut in half; Arts to $250; Fitness to $500 per eligible child. Both will be eliminated for 2017.

There is a new Home Accessibility Expenses (Schedule 12) for the federal taxes. However, unlike the BC Schedule 12, which is refundable, the Federal one is a non-refundable tax credit. It has the same $10,000 ceiling the BC program has, but will benefit only those who have taxes payable; up to $1,500.

The “Family tax cut”, which was income splitting for non-seniors, has been eliminated. There is a new Educator school supply tax credit. This allows teachers to deduct up to $1,000 for supplies they bought; resulting in savings of $150.

Reporting Your Income

There have been no changes this year as to what is not “income”: lotteries, GST cheques, gifts and inheritances, life insurance payments after a person’s death, etc. The interest earned on the non-income amounts IS income and needs to be reported.

You are required to report your world-wide income on your Canadian tax return. Any foreign tax paid will be taken into account on your return.

Lump sum payments must be reported for the year received. If the amount is more than $3,000, and the result is better for the taxpayer if the income is included in the year it was earned, you can request the CRA to do so.

Most income received will have an appropriate “T” slip: T4 for employment, T5 for interest and dividends, T3 for income from trusts and mutual funds; T4A, T4A(OAS), T4A(P) for various pension payments. Particularly for employment income, the lack of a T4 slip does not allow you to not report the income. Most T slips are due by the 28th of February. T3s are due by March 31st; and a few Partnership forms such as T5013s may not show up until mid-April.

The sale of investments may or may not cause a T slip to be issued. The net income or loss from such sales must be reported. 2016 is the first year that the sale of a Principal Residence must be reported. If it was used solely as your home, there will be no tax implications.

Once you believe that you have all your income accounted for, look at your last year’s tax return. Are the income amounts similar? If amounts are different or the types of income are different, can you account for the differences.

Once you have accounted for all of your income, it’s time to make sure you have all of your credits, deductions, donations and other items on the plus side of your return. I will look more closely in next month’s issue of the Beacon at those amounts. As always, through my lens of Helping You to Keep More of YOUR Money.