Changes to note for the 2016 taxation year
Various changes have been introduced by the Liberal federal government which impact the 2016 taxation year. A few of these changes are highlighted below:
Did you sell your home this year?
If you sold your house (principal residence) in 2016, you are now required to file form T2091 with your tax return to report the sale. Though in most cases there is no taxable gain on the sale of a principal residence, this filing is now required to improve compliance and administration of the tax.
Eligible Educator School Supply Tax Credit – new for 2016
If you are an eligible teacher or early childhood educator employed at an elementary or secondary school or a regulated child care facility, you can claim a 15% refundable tax credit based on up to $1,000 of supplies purchased per year. Examples of eligible supplies include art supplies, items for science experiments, games and puzzles, and educational support software.
Phase out of the Children’s Fitness and Arts Tax Credits
2016 will mark the last year for the Children’s Fitness and Arts Tax Credits. The fitness credit will be reduced from $1,000 to $500 and the art credit will be reduced from $500 to $250.
Phase out of the Education and Textbook Tax Credits
2016 will mark the last year for the Education and Textbook Tax Credits. The Tuition Tax Credit will still be available. Unused credits will still be carried forward to 2017 and subsequent tax years.
Changes to the top federal tax rate
2016 saw the introduction of a new tax rate on income above $200,000 – up to 33% from 29%. In B.C. that’s a marginal rate of 47.70% on regular income. If you pay tax at this new rate, you may also qualify for a 33% federal charitable donation tax credit.
Changes to mutual fund taxation in non-registered accounts
Previously, if you held investments in certain mutual fund corporations and exchanged one corporate class fund for another within the same mutual fund corporation, there was no tax effect. Effective January 1, 2017, these exchanges will be considered a sale at fair market value for tax purposes and capital gains or losses will result.
If you would like any further information on any of the above or other tax changes, please contact Church Pickard.