Make the most of your Tax Return

Filling in canadian individual tax form T1 for year 2013It’s that time of year again…tax time! But this doesn’t have to mean stress, or any last minute gathering of receipts. Don’t wait until April to take a look at what you will need for your tax return, early planning can make this year’s taxes simple and help you make the most out of your return.

This article takes an important perspective: “taxes are a year-round activity,” and provides some helpful tips on where to get started when looking at which credits and deductions will benefit you this year. Keep in mind family members and friends when reading this article as well, as they may appreciate the information.

Happy tax season!

BC Budget Summary 2016

BC Budget 2016 Summary Below is a summary of some select changes proposed in BC Budget 2016:
  • BC Training and Education Savings Grant – To help even more parents and families save early for their child’s education, Budget 2016 extends the program to children born on or after January 1, 2006. Previously the program was only available to children born on or after January 1, 2007. The program allows parents to apply at participating financial institutions for a $1,200 grant when their child turns 6 years old. The grant is a one-time payment of $1,200 for every eligible BC resident child born since January 1, 2006, and will be transferred to the child’s registered education savings plan
  • Temporary Top Personal Income Tax Rate expired as promised – A temporary tax rate was introduced for the 2014 and 2015 tax years of 16.8% on taxable income over $150,000. This two-year temporary measure was set to expire December 31, 2015, resulting in BC’s top tax rate being reduced back down to 14.7% on income over $106,543. For 2016, BC tax rates are as follows:
    • Income between $106,544 to $140,388 – 40.7%
    • Income between $140,389 to $200,000 – 43.7%
    • Income above $200,000 – 47.7% (results from Federal Liberal 4% increased top tax bracket)
  • BC Tax Reduction Credit – Effective 2016 the phase out rate was increased to 3.56% of net income, and the credit phase-out threshold was increased to $19,400
  • BC Seniors’ Home Renovation Tax Credit expanded to persons with disabilities
  • Federal Changes to Taxation of Trusts and Estates have been paralleled
  • Property Transfer Tax exemption – Effective for purchases after February 16, 2016, this exemption reduces or eliminates the amount of property transfer tax on the acquisition of newly built homes with a fair market value under $800,000
  • Support for Rural Communities – To help rural communities reinvigorate and diversify their economies, BC is investing $75 million over three years to the Rural Dividend Program. To recognize the importance of public transportation, BC is investing $7 million to expand service in BC Transit’s operating area
  • BC Mining Flow-Through Share Tax Credit – Extended to end of 2016
  • Medical Services Plan Premiums Increased – Premiums are increased about 4% effective January 1, 2017, as well the rate structure is significantly changed resulting in savings for certain families
  • PST – The minister announced a commission on tax competitiveness to “consider ways to modernize the existing tax structure, given the changing economy.” However, it was noted that the “scope of work will explicitly exclude consideration of a harmonized sales tax”

Closer Connection Exemption Statement

FloridaAre you one of the lucky Canadians who choose to spend the dreary winter months in the USA?  Do you consider yourself to be a snowbird?

Did you know that there are limitations on the number of days you may stay in the USA?

Did you know that your extended stays in the USA may have tax implications over the border?

Did you know that you may be required to file a special declaration called the Closer Connection Exemption Statement (form 8840) to be exempt from paying taxes in the USA?

To determine whether you must file this declaration, you must add up the number of days (or part days) you spent in the USA in 2015 plus one-third the number of days spent in 2014 and one-sixth the number of days spent in 2013.  If this calculation adds up to 183 or more days and you were in the USA more than 30 days in 2015, you may be considered to be a US resident for tax purposes under US domestic tax law.

If you make frequent visits to the USA or if your visits are for extended periods of time, we advise you to look carefully at your travel to the USA. You want to be proactive and do this calculation annually and inform your accounting professional when you file your personal tax return. Note that in the past each country couldn’t track the number of days you were in their country as they only saw when you entered their country.  Now Canada and the US share your entry dates with each other, so they know exactly how many days you were in their country. 

The form 8840 must be filed on or before June 15th and you don’t want to miss the deadline.