By Fin MacDonald,
Fin Tax ServiceFin MacDonald has over 20 years experience providing retirement and Income Tax planning advice. Readers are however cautioned that the responsibility falls on the taxpayer to ensure that all information is adequate and correct.
James Bay MLA and Finance Minister Carole James brought down her first full budget on February 20. A wide range of measures were announced. Some of the highlights:
Medical Service Plan Premiums: cut in half, eliminated on January 1, 2020; to be replaced by a Payroll Tax on payrolls greater than $500,000.
Pharmacare deductibles will be eliminated for families with net incomes of less than $30,000 on January 1, 2019. For families with net incomes up to $45,000, deductibles will be reduced.
Rental Assistance: Both Shelter Aid for Elderly Residents (SAFER) and Rental Assistance Program (RAP) saw increases in benefits but no lowering of income levels to qualify. No increase in Shelter Allowance for Persons With Disabilities or B.C. Benefits recipients. No sign of $400 per year Renters’ Tax Credit from last year’s election promises.
New anti-speculation taxes and increased enforcement of tax evasion are promised to cool an over-heated property market.
Federal Finance Minister Bill Morneau, in his budget of February 27, brought forward modest changes. For Canadian Controlled Private Corporations (CCPC): the tax on “passive income” over $50,000 will no longer be at the Small Business Tax Rate, which was lowered a full percent. (B.C. lowered its Small Business Tax Rate last fall.)
The Working Income Tax Benefit is re-branded as the Canada Workers Benefit (CWB), with both the income ceiling and maximum benefits increased. For both the CWB and the Canada Child Benefit, increased outreach to ensure all potential recipients receive the benefits are also promised.
In summary, the two budgets brought some relief to lower income British Columbians while postponing major changes to the tax structure. Exempting most CCPCs from paying the Payroll Tax that replaces MSP Premiums, while lowering their tax rates, is not, in this writer’s opinion, sound tax policy.
Friday Forum Tax Questions
I always enjoy meeting with seniors at my annual presentation at the James Bay New Horizons. Some of the questions that were brought up include:
CRA Extended Hours
Until April 30 the CRA hours are extended Monday-Friday from 9 AM to 9 PM; on Saturdays from 9 AM to 5 PM. There is no Saturday service on March 31 (Easter Weekend).
When calling the CRA number; 800-959-8281, it is best to pause 15 or 20 seconds before entering the final digit. This allows you to move farther up the queue, possibly getting through. Once you do get through, and hear the beginning of the pre-recorded messages, press the star * key to be put in the queue to speak to an agent.
My Account, Auto Fill Return
My Account enables you to go on-line and get your information slips, check your payments and make changes to your tax return. If you are able to speak to an agent, it can expedite the sending of the needed code to open a My Account account.
Auto Fill Return was rolled out for the 2016 tax returns; I avoided it last year as I knew there would be teething problems; and so there were. This program allows you, if you have My Account and Tax Software, to download all of the information slips that the CRA has for you. I have used it for several of my clients this year. It is useful but can still have errors. For one client, it found two undeducted RRSP contributions. This seemed too good to be true; and sure enough, after getting through to an agent, it turned out there was only ONE undeducted contribution.
B.C. Home Renovation Tax Credit
The Home Renovation Tax Credit is a B.C. refundable Tax Credit that allows for a refund of up to $1,000. Expenses up to $10,000 result in a 10% refundable credit. To qualify, you must either be 65 years of age or older or have the Disability Tax Credit. Eligible expenses are those that allow the person “to gain access to, or to be more mobile or function within the home”; “reduce the risk of harm … within the home” and must be of “an enduring nature and integral to the home”.
Examples of Eligible Expenses include: grab bars in bathrooms, walk-in tubs and showers, ramps and railings, widening hallways and doors, levers rather than knobs on doors, motion-activated lights, taps and doors, and non-slip flooring. Non-Eligible expenses include roof repairs, aesthetic improvements, new windows or regular floors. Devices such as wheelchairs, walkers, and smoke alarms are not eligible. Services such as alarm systems and home care are also not eligible.
As always, Dear Readers, I look at taxes and tax policy through my lens of Helping You to Keep More of YOUR Money. Next month I will continue with Friday Forum Feedback including Taxes and the Transition to Retirement, Registered Retirement Income Fund (RIF) withdrawals and Mutual Fund Fees – Deductible or Hidden.