Tax Changes in 2018

Working Income Tax Benefit Renamed and Enhanced

The Working Income Tax Benefit is a refundable tax credit that helps give tax relief to low-income individuals and families to encourage them to participate in the workforce. The Working Income Tax Benefit is being renamed the Canada Workers Benefit. It will be enhanced beginning in 2019 and indexed (increased with inflation) thereafter. The CRA will automatically determine if you're eligible to receive the Canada Workers Benefit and assess your tax return as if you've already claimed it, even if you hadn't on filing. If you're an eligible couple making the claim, the CRA will designate the partner who is to receive the benefit.

Claiming Service Animals as a Medical Expense

The medical expense tax credit is being expanded. If you suffer from a severe mental impairment, you may be able to claim the costs of caring for a service animal to help cope with tasks like guiding a disoriented individual, searching the home of an individual with severe anxiety before they enter, and aiding with someone experiencing night terrors (if it was incurred after 2017). Animals that provide comfort or emotional support but have not been specially trained to perform the tasks above will not be eligible. For animals that do qualify, expenses like the cost of the service animal itself to food, veterinary care and cage for the animal can be claimed.

Accelerated capital cost allowance (CCA) rates

The change with CCA takes effect for purchases of equipment made on or after November 21, 2018 and before 2024 and will affect the amount that may be claimed on the 2018 tax return. The "Accelerated Investment Incentive," allows for 150% of the normal CCA rate to be claimed (the amount of CCA that could be claimed in the year of purchase was previously 50%).

New Limited Program for Tax Avoidance

Changes have been made to the Voluntary Disclosure Program. This program encourages Canadians who may not have been completely honest about their tax situation in the past to come forward. If your application is accepted, you'll be required to pay the taxes you owe, plus interest (partially or fully). However, you may be eligible for relief from prosecution or penalties that you'd normally face. The changes that came into effect March 1, 2018 apply to taxpayers who purposely avoided their tax obligations. If that's you, you're now able to apply under a new "Limited Program" and face a lesser penalty.

Employment Insurance Benefit Changes

The Employment Insurance (El) parental sharing benefit, allows parents to take up to five additional weeks of time off, starting in March 2019 after the birth or adoption of a child.

Parents with children born or placed for adoption on or after March 17, 2019 will be eligible.

Parents including same-sex and adoptive parents are eligible for this credit only if both new parents share the time at home with the new baby.

Parents selecting the standard duration of parental leave could receive up to 40 weeks of parental benefits (an increase from the current 35 weeks).

Parents selecting the extended duration of parental benefits could receive up to 69 weeks of parental benefits (an increase from the current 61 weeks). As well, the Working While on Claim rules now apply to sickness and maternity benefits.

EI/CPP Rates

Employment Insurance (El) Premiums are being decreased. The El rate is being reduced from 1.66 percent in 2018 to 1.62 percent in 2019.

Maximum pensionable earnings, the amount used to calculate Canada Pension Plan contributions for the year, will increase to $57,400 in 2019, up from $55,900 in 2018. Likewise, the employee and employer contribution rates for 2019 will increase by 5.1 percent from 4.95 percent in 2018.

The Canada Child Benefit will be indexed to inflation going forward.

Tax-Free Savings Account Contribution Limit Increased

The annual contribution limit on the Tax-Free Savings Account (TFSA) has been upped. In 2019, anyone who's eligible to contribute to the TFSA can contribute up to $6,000 annually, up from $5,500 in 2018.

Tax Tips for 2018 Returns

Personal Income Tax Checklist 2018 Returns

Information all Clients Must Provide

  1. All information slips. such as: T3, T4, T4A, T4A(OAS), T4A(P), T4E, T4PS, T4RiE T4RSR T5, TIO, T2200, T2202, T101, T1163, T1164, TL11A, B, C and D, T5003, T5007, T5008, T5013, T5018 (Subcontractors), and corresponding provincial slips
  2. Details of income for which no T-slips have been received. such as:
    • other employment income (including any tips or gratuities received, details on stock option plans and Election Form T121 2),
    • business, professional, partnership, and rental income (including all amounts received from the sharing economy, such as AirBnB, VRBO, Uber, etc),
    • alimony, separation allowances. child maintenance (including divorce/separation agreement),
    • pensions (certain pension income may be split between spouses),
    • interest income earned but not yet received (such as amounts from Canada Savings Bonds, Deferred Annuities, Term Deposits, Treasury Bills, Mutual Funds, Strip Bonds, Compound Interest Bonds),
    • scholarships, fellowships. and bursaries, and
    • any other income received (e.g. director fees, executor fees, etc).
  3. Details of other investments, such as
    • capital gains/losses realized (this may be obtained, in some circumstances, from your investment advisor)
    • real estate, or oil and gas investments -- including financial statements,
    • bitcoin or other cryptocurrency transactions,
    • and any other investments.
  4. Details of other expenses, such as
    • employment related expenses - provide Form T2200 - Declaration of Conditions of Employment, signed by employer (where expenditures have a personal component, provide an allocation of personal versus employment usage),
    • business, professional, investment and rental expenses (including capital purchases, such as vehicles, and equipment), and
    • home office expenses (with respect to employment. professional or other business income.
  5. Details and receipts for other deductions and tax credits, such as:
    • moving expenses
    • child care expenses
    • alimony, separation allowances, child maintenance (including divorce/separation agreement)
    • adopted related expenses,
    • interest paid on qaulifying student loans,
    • professional and union dues,
    • medical expenses for you and any dependent persons,
    • charitable donations and political contributions, clergy residence deduction information (including Form T1223),
    • tuition fees for both full-time and part-time courses for you or a dependant - including mandatory ancillary fees, and Forms T2202, TLlIA, B, C and D where applicable (note that the federal education and textbook tax credits were eliminated in 2017),
    • disability supports expenses (speech, sight, hearing, learning aids for impaired individuals and attendant care expenses),
    • mining tax credit expenses,
    • Registered Retirement Savings Plan and any other pension plan contributions and withdrawals (including withdrawals and repayments for the Home Buyers Plan and Life Long Learning Plan)
    • film and video production expenditures eligible for a tax credit
    • tools acquired by tradespersons and eligible apprentice mechanics,
    • scientific research and experimental development expenses,
    • Home Accessibility Tax Credit - Certain expenditures (up to $10,000) may be eligible for a tax credit if made in relation to a renovation or alteration of your home to enhance mobility or reduce the risk of harm for an individual who is either, eligible for the Disability Tax Credit, or 65 years of age or older at December 31, 2018. Examples of eligible expenditures include amounts relating to wheelchair ramps, walk-in bathtubs, wheel-in showers and grab bars. And,
    • Eligible Educator School Supply Tax Credit - if you are a teacher or early childhood educator, please provide receipts lup to $1,000) for eligible school supplies purchased in the year. An eligible supply expense is an amount paid in the year for supplies used or consumed in the school or regulated child care facility in the performance of your employment. Supplies include consumable goods such as construction paper, flashcards, items for science experiments, art supplies, and stationary items, and durable goods limited to games, puzzles, books, containers and educational support software. Please also provide a certification from your employer attesting to the eligible supplies expense.
  6. Details on the disposition of your principalresidence or other real property. If disposing of your principal residence. please provide: proceeds of disposition, a description of the property, and the year the property was acquired. If disposing of ether real property, please provide the cost of the property in addition to the requirements listed above. This is required even if there is no gain on the disposition of the property. In addition, please indicate if you have a change-in-use of your property. This could include, for example, converting some or all of your principal residence into an income earning property, such as a rental suite.
  7. Name, address, date of birth, social insurance number (SIN), and province of residence on December 31, 2018, if changed in the current year.
  8. Personal status - single, married, common-law, separated, divorced, or widowed. If there has been a status change in the year, please provide the date of the change.
  9. List of dependants/children including their income, birth date, and SIN.
  10. Details regarding residence in a prescribed area which qualifies for the Northern Residents Deduction.
  11. Details on 2018 income tax instalments, or payments of tax
  12. 2017 Notice of Assessment/Reassessment and any other correspondence from CRA (including correspondence received after the filing of this personal tax return) .
  13. Details of foreign property owned at any time in 2018 including cash, stocks, digital currency (such as Bitcoin), trusts, partnerships, real estate, tangible and intangible property, contingent interests, convertible property, etc. Required details include: description of the property. related country, maximum cost in the year, cost at year- end, income. and capital gain/loss for each particular property.

    For property held in an account with a Canadian securities dealer or Canadian trust company, please provide the country for each investment, fair market value of the investments at each month-end, income or loss on the property, and gain/loss on disposition of the property.
  14. Details of income from, or distributions to, foreign entities such as foreign affiliates and trusts.
  15. Copy of any foreign tax returns filed and any associated tax assessments.
  16. If we are not preparing your spouse or common-law partner's personal tax return, please provide their return for review and tax planning.
  17. Internet Business Activities - if you have business, professional, farming, or fishing income, please indicate whether you have Internet business activities. According to CRA, Internet business activities include any activity where you earn income from your webpages, websites. or Apps. Information only webpages and websites like directories or ads wilmot generally trigger this information requirement.

    If you have Internet business activities, please provide:
    • The number and address of webpages or websites that your business generates income from. If you have more than 5. provide the 5 that generate the most income.
    • The percentage of income generated from the Internet (if you do not know the exact percentage, provide an estimate).

Additional Information - New Clients Must Provide

  1. All CRA correspondence for the past three years.
  2. Details of previously claimed capitalgain exemptions. business investment losses and cumulative net investment loss accounts.
  3. A listing or copy of receipts for significant capital assets purchased previously, which are currently held.
  4. Details of carry-forward amounts from previous years (ex. losses, donations. forward averaging amounts, RRSP).

Questions to Answer

  1. Did you receive interest, dividends, or benefits from a business in which a relative is a key party (in terms of ownership or involvement)?
  2. Are you a U.S. citizen. Green Card Holder. or were you, or your parents born in the United States? You may have U.S. filing obligations.
  3. Are you an aboriginal person? Special tax rules may apply.
  4. Are you or any of your dependants disabled? if so. provide Form T2201, Disability Tax Credit Certificate. The transfer rules allow claims for certain dependent relatives. In addition, are you, or would you like to provide support to a disabled person? Tax planning opportunities may be available, such as the establishment of a Registered Disability Savings Plan.

    Persons with disabilities may also receive tax relief for the cost of disability supports(e.g. sign language services, talking textbooks, etc.) incurred for the purpose of employment or education. If you or your dependents are disabled but do not ha./e a T2201 Form please provide details so v/e can explore v/hither you are eligible for special credits or benefits.
  5. Are you the caregiver for any infirm family members? Did you provide in home care for an infirm dependent relative?
  6. If you have children up to the age of 17, have you received the Canada Child Benefit (CCB)? The CCB is an income tested benefit and therefore may not be provided to certain higher income individuals who previously received the Universal Child Care Benefit which ceased in mid-2016.
  7. Have there been any other significant life events in the past year, such as the death or impairment of a loved one? There can be tax planning opportunities.
  8. Did you incur costs to access medical intervention required in order to conceive a child which was not previously allowed as a medical expense? Amounts may be claimed in respect of any such expense for the previous 1 0 years (if amounts were incurred in 2008. a claim must be made by the end of 2018).
  9. Did you purchase a new home in 20] 8? if so. you may be eligible for the new residential property GST/HST rebate. Also, are you a first-time home buyer in 201 8? A federal tax credit based on $5,000 (@15% = $750) may be available.
  10. Have you spent more than 200 hours acting as a volunteer firefighter or a search and rescue volunteer? You may be eligible for a federal tax credit.
  11. Have you made any contributions to a gifting tax shelter?
  12. Did you receive any significant prizes or awards from your, or a related person's place of employment?
  13. Did you receive a retroactive lump-sum payment over $3,000 (for example, spousal support)? in certain cases. some tax relief may be available.
  14. Do you want your tax refund deposited directly into your account at a financial institution?
  15. Do you authorize CRA to give your name, address. date of birth, and citizenship to Elections Canada to update the National Register of Electors?

Other

  1. Instalments required for 2019? A Pre-Authorized Debit Arrangement is an online service-payment opts on which authorizes CRA to v/ithdraw a pre- determined payment amount directly from a bank account on a specific date to pay taxes(Debit option). This may help avoid penalties on late and/or missing instalment payments.
  2. MYCRA mobile App -- This web App allows you to access and view key portions of your tax informahon such as your notice of assessment, tax return status, benefit and credit information, and RRSP and TFSA contribution room.
  3. Canada Job Grant -- 2/3rds of certain employee training courses may be eligible for this grant. If interested in improving your skills, ask your employer about this opportunity.
  4. CRA Online Services -- Account Alerts -- Individuals can register with CRA to be notified by email when CRA's record of an individual's address has changed, banking information for direct deposit has changed, or if mailsent by CRA was returned.
  5. CRA Online Services -- Link between CRA's My Account and My Service Canada Account -- Individuals can now access these two accounts through a single sign-in session. When switching between Accounts, users must authorize their SIN to be transmitted to the other department. My Service Canada administers a number of programs such as Employment Insurance, Old Age Security, Guaranteed Income Supplement and Canada Pension Plan.

    Also, the Government has released a new Direct Deposit Sharing Initiative which will allow CPP recipients to update and share their direct deposit banking information between CRA and Employment and Social Development Canada (ESDC). CPP recipients can update their direct deposit banking information using CRA's My Account, MVCRA mobile app, or ESDC's My Service Account. With consent, the individual's banking information will be shared between both organizations, providing updated information for various programs such as the GST7 HST credit, Canada child benefit, the working income tax benefit (Canada workers benefit, commencing in 2019), and income tax refund.
  6. Additional provincial/territorial credits and programs may be available (such as the Ontario Seniors' Public Transit Tax Credit).