It’s tax-filing season once again, and this year April 30 falls on a Saturday. In accordance with Canada Revenue Agency (CRA) policy, the deadline for filing individual tax returns is extended to the next business day, Monday, May 2. By the way, it’s just a quirk of the calendar that this also happens to be a leap year; this has no direct effect on the filing due date.
For someone who runs a business as well as for that person’s spouse, the tax-return due date is Wednesday, June 15, though any tax payments remain due by the May 2 individual filing deadline.
In this summary, we’ve included new developments, some items we felt worth reiterating from recent years and an update on the continuing efforts of the CRA to improve communications with taxpayers.
Registered retirement income fund (RRIF) minimum withdrawals
The 2015 Federal Budget reduced the RRIF minimum withdrawal amount for those aged 71 to 94. An individual who received a greater amount in 2015 than required had the ability to recontribute the excess to a RRIF no later than February 29, 2016, for which a deduction may be claimed on the individual’s 2015 return.
Family tax cut
Introduced by the former Conservative government, this provision is slated to be repealed by the current Liberal government. In the meanwhile, it remains valid for 2015 tax filing. Parents of children under age 18 may use Schedule 1A to calculate their reduced tax liability based on a notional shift of up to $50,000 income from one parent to the other. The net reduction in tax may be claimed as a tax credit, capped at $2,000.
Child care expense deduction
This deduction must be claimed by the lower-income parent if there are two parents in the household. The maximum per-child limit was increased by $1,000 for 2015, applied as follows:
- Born in 2009 or later, for whom the disability amount cannot be claimed: $8,000
- Born in 2015 or earlier, for whom the disability amount can be claimed: $11,000
- Born in 1999 to 2008 (and born in 1998 or earlier, with a mental or physical impairment, for whom the disability amount cannot be claimed): $5,000
First-time donor’s super credit
This credit, announced in the 2013 Federal Budget, can be claimed only once from 2013 to 2017. It allows an additional 25% tax 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.
Lifetime capital gains exemption (LCGE) – Farming and fishing
The 2015 Federal Budget increased the LCGE for farming and fishing from $813,600 to $1 million. This higher amount may be claimed for dispositions after April 20, 2015.
Foreign-income reporting
The foreign-income reporting changes first announced in the 2013 Federal Budget have again evolved. The general requirement remains that where the cost amount of specified foreign property (generally investment property) exceeds $100,000, the T1135 Foreign Income Verification Statement must be filed.
For 2015, if the total cost amount is less than $250,000, the taxpayer is not required to use detailed “per-asset” reporting. The T1135 now has a “Part A: Simplified reporting method” that is significantly streamlined. The taxpayer need only check the box adjacent to each relevant property type, indicate the top three countries where property is located and disclose the sum of income and gains/losses from dispositions.
The T1135 continues to be due on the same date as the individual’s tax return. This form may be filed electronically.
Repeated failure to report income penalty
A taxpayer who fails to report income is subject to penalties (in addition to any unpaid taxes and interest), and penalties are even higher for repeat offences. At times, this penalty can be disproportionate to the associated tax liability. Under proposed changes from the 2015 Federal Budget, beginning with the 2015 tax-filing year, the penalty is to be capped at the lesser of 10% of the unreported amount and 50% of the difference in understated tax (or overstated credits).
Communications with CRA
In recent years, CRA has made a concerted effort to better communicate with taxpayers. This year’s highlights include the following:
- MyCRA – Though touted as a mobile app, this is mainly a mobile browser bookmark to access streamlined data of a taxpayer’s MyAccount. Nitpicking aside, it is a useful access point
- Auto-fill my return – For taxpayers registered with MyAccount, this service draws from sources such as T3, T4 and T5 slips to populate corresponding fields in an individual’s tax return
- Notice of assessment (NOA) – CRA has revamped the NOA to make it easier to see the most essential information first. With the May 2 deadline fast approaching, we shall see soon enough
More information can be found on the CRA website at
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/whtsnw-eng.html.