Each year, the federal government releases an annual budget outlining proposed changes to the country’s tax rules designed to benefit Canadians and the economy. What does this mean for you? It means that some of the changes in the budget might have a direct impact on you and your family. Let’s take a look at how the changes for 2017 affect your tax situation this year:
Personal tax credits and deductions
New! Canada Caregiver Credit
Starting in 2017, families who’re struggling to take care of their loved ones will be able to claim this new tax credit that replaces the existing Caregiver credit, Infirm dependant credit, and Family caregiver tax credit. Simplifying the existing system, the new non-refundable Canada caregiver credit will apply to caregivers whether or not they live with their family member. This credit will provide tax relief on an amount of:
- $6,883 for the care of infirm dependent relatives (including those with disabilities) such as parents, brothers and sisters, adult children, and other specific relatives OR
- $2,150 for the care of an infirm dependent spouse/common-law partner or minor child (including those with a disability)
The Canada caregiver credit will start to be reduced when the dependant’s net income is above $16,163. Note that, this amount will be revised each year as it gets adjusted for inflation.
Note: The Canada caregiver credit will not be available for non-infirm seniors who live with their adult children.
Disability tax credit certification
Nurse practitioners will now be able to certify your T2201: Disability Tax Credit Certificate if you’re applying for the tax credit on or after March 22, 2017.
Extending eligibility for the Tuition tax credit
Starting 2017, the range of courses that qualify for the Tuition tax credit will expand to include occupational skills courses (such as training in a second language or in basic literacy and numeracy to improve job skills) that are taken at a post-secondary institution in Canada, and will allow the full amount of bursaries received for such courses to qualify for the scholarship exemption (where conditions are otherwise met). Currently, students who take these courses at a college or university cannot claim the Tuition tax credit.
Medical expenses —treatment of fertility-related expenses
If you require medical intervention to conceive a child (such as in vitro fertilization), even if you don’t have a medical condition preventing you from conceiving, you might be eligible to claim the same expenses under the medical expense tax credit that’s normally only available to individuals with medical infertility.
Elimination of the Public transit tax credit
The Public transit tax credit will be eliminated for amounts paid for transit passes and electronic payment cards after June 30, 2017. Be sure to keep proof of payment for your transit passes for the period of January 1, 2017 to June 30, 2017 and remember to claim these amounts on your 2017 tax return!
Note: If you’re 65 years or older and a resident of Ontario, you might be able to claim the new Ontario Seniors’ Public Transit Tax Credit. For 2017, this credit is only available for eligible expenses paid on or after July 1, 2017.
Elimination of the Home relocation loans deduction
For 2018 and subsequent tax years, the home relocation loans deduction will be eliminated.
Expiration of the First-time donor's super credit
The 2017 budget confirms that the First-time donor’s super credit will be allowed to expire in 2017 as planned. If you and your spouse or common-law partner (if applicable) haven’t claimed your donations since 2007, don’t forget to claim the First-time donor’s super credit for any cash donations you made after March 20, 2013.
Anti-avoidance rules for RESPs and RDSPs
To prevent tax planning strategies that enable Registered educations savings plans (RESP) and Registered disability savings plans (RDSP) holders to take out funds from the plan without including it in their income for the year, new anti-avoidance rules (which already exist for tax-free savings accounts (TFSAs) and registered retirement saving plans (RRSPs)) will apply to RESPs and RDSPs. With these rules, there will be a special tax on certain tax advantages, prohibited investments, and non-qualified investments related to an RESP/RDSP. The new anti-avoidance rules will apply on RESP/RDSP related transactions March 22, 2017 onwards.
Previously announced changes to tax credits
The following tax credit eliminations were announced in the 2016 budget for discontinuation starting January 1, 2017:
- Children’s arts and fitness tax credits
- Education and textbook amounts – if you’ve carried forward unused education and tuition amounts from previous years, you’ll still be able to claim these on your tax return for 2017 or subsequent years . You can still claim the Tuition tax credit. For more information on the elimination of the education and textbook amounts, click here.
Elimination of the billed-basis accounting
Are you an accountant, dentist, or a lawyer carrying on a business that is a professional practice? If so, starting March 21, 2017, you can no longer elect to use the billed-basis method of accounting. Refer to the Canada Revenue Agency (CRA) website for more information on how this change will impact the tax treatment of your work in progress.
GST/HST rules to extend to ride-sharing services
Effective July 1, 2017, GST/HST rules that apply to taxi services will now also apply to ride-sharing services such as Uber. This means, even if your annual revenue from ride-sharing services don’t exceed the small supplier threshold of $30,000, you still need to be registered for a GST/HST number and collect it on the services you provide.
Extension of the Mineral exploration tax credit
The Mineral exploration tax credit was due to expire on March 31, 2017. However, the 2017 budget proposes to extend the credit an additional year, until March 31, 2018.
Reclassification of expenses renounced to flow-through share investors
The 2017 budget proposes to reclassify expenses renounced to flow-through share investors. Small oil and gas corporations will no longer be able to treat the first $1 million of Canadian development expenses (CDE) as Canadian exploration expenses (CEE). If you’re an investor of flow-through shares who relies on the tax benefits associated with claiming the CEE on your personal tax return, this measure will impact you and apply to expenses paid after 2018.
Canada Savings Bonds being phased out
Starting 2017, the Canada Savings Bonds program will be phased out and the government will stop the sale of new Canada Savings Bonds.
Ecological gifts program
To protect gifts of ecologically sensitive land, the following measures will apply to transactions or events related to ecologically sensitive land that occur on or after March 22, 2017:
- Transfers of ecogifts
If the transferee of the property changes the use of the property or disposes of the property without the consent of Environment and Climate Change Canada (ECCC) a 50% tax will be applied.
- Approval of recipients
Where a registered charity is the recipient of an ecogift, the Minister of ECCC must approve the recipient on a gift-by-gift basis. This requirement to approve recipients will be extended to municipalities and municipal and public bodies performing a function of government.
- Private foundations
Private foundations will no longer be permitted to receive ecogifts.
- Personal servitudes
In Québec, only real servitudes can be donated under the ecogift program. If a number of conditions are met, certain donations of personal servitudes might qualify as ecogifts.