It’s just about time for your annual reacquaintance with the Canada Revenue Agency (CRA). Circle Wednesday, April 30 to get your return and tax payment in, though if you or your spouse run a business, the return itself may not be due until Monday, June 16.
Apart from the usual indexation of brackets and tax credit amounts, there are few broad-based measures for 2013.
The most substantial change is arguably the foreign asset reporting requirements. Though obviously only relevant to a small subset of the population, it will have a large compliance impact on those affected taxpayers.
Apart from that, the following summary mostly touches on the items the CRA itself has drawn attention to as we head into tax-filing season.
Foreign income reporting
Announced in the 2013 Federal Budget, the T1135 Foreign Income Verification Statement has been revised to require more detailed information, including the names of specific foreign institutions and countries where offshore assets are located, the foreign income earned on those assets and the maximum cost amount of those assets during the year.
Since the initial June 2013 release, the form and process have been adjusted somewhat, now allowing a streamlined transitional reporting method for the 2013 tax year only. The filing deadline is generally the same as for one’s tax return, but in February 2014 the deadline for the 2013 form was extended to Thursday, July 31, 2014.
Pension items
Canada Pension Plan (CPP) – Post-retirement benefit
As of January 1, 2013, the new post-retirement benefit began to be paid. Credits to this pension arise when someone between 60 and 70 has made CPP contributions while already collecting a CPP retirement pension.
Old Age Security (OAS)
As of March 1, 2013, an OAS pensioner in the first six months of payments may pay back received amounts, and reapply for an increased pension at a later time. As of July 1, 2013, an otherwise qualified 65-year-old has the option to defer the OAS pension for up to five years, with a 0.6% monthly premium applying to the deferred period.
Pooled registered pension plans (PRPP)
PRPP contributions are now included in the same line previously used to record RRSP-deductible amounts. Similarly, PRPP payments are also now included as a type of pension payment alongside RRIF payments and other similar receipts.
Retirement compensation arrangements
Beginning in 2013, payments from a retirement compensation arrangement may be included as eligible pension income to be split with a spouse. The payments must be in the form of a life annuity that supplements a registered pension plan (but not an individual pension plan). This is subject to an annual maximum, which for 2013 is $94,383 less other eligible pension income.
First-Time Donor’s Super Credit
A first-time donor will be allowed an additional 25% credit on charitable donations made in cash up to $1,000. This applies to the federal credit only. To qualify, neither the taxpayer nor his/her spouse or common-law partner may have claimed any amount of the charitable donation tax credit in any of the five preceding tax years. This is a temporary credit that can only be claimed once from 2013 to 2017.
Family matters
Family caregiver tax credit
This credit, for 2013 and subsequent years, may be available for a taxpayer who personally attends to the needs of someone else; for example, to drive that person to doctor’s appointments. The dependency must be due to physical or mental impairment, generally confirmed by a statement from a medical practitioner. The credit is calculated based on an amount of $2,040 that augments one or more of the spouse or common-law partner amount, amount for an eligible dependant, amount for children born in 1996 or later, and the caregiver amount.
Adoption expenses
For adoptions finalized in 2013 or later, the qualifying adoption period is extended back to when an application was made to the appropriate provincial ministry, licensed agency or Canadian court. Previously, expenses only became qualified after a child was matched with his or her adoptive family.
Grants to parents of missing children
A parent may be entitled to a new federal grant where a child is missing or has died as a result of a criminal offence. This grant must be reported as “other income.”
Business matters
Restriction on farming losses
The amount that may be claimed under the restricted farm loss rules has been capped at $8,750 since 1998. For 2013 and following years, the amount has been doubled to $17,500: 100% of the first $2,500 of net farming loss plus 50% of the next $30,000 net farming loss. However, also for 2013 and following years, other sources of income must be subordinate to farming income in order for the farming losses to be deductible against those other sources.
Earnings on the Web
Individuals are now required to report websites and Web pages from which they generate income. This is a very broad provision that includes creating an online profile on someone else’s website, including blogs, auctions, directories or other marketplaces.
Want to “PAD” your tax payments?
And speaking of online activity, the CRA is encouraging taxpayers to sign up for its new pre-authorized debit (PAD) payment option. The service attaches to the My Account service.
Among the suggested benefits, it can simplify (and assure) the process for those who make their tax payments by instalments, and enable a taxpayer to file an income tax return early while scheduling payment closer to the required deadline.
More information can be found on the CRA website at
http://www.cra-arc.gc.ca/prthrzddbt-eng.html.