Tax Tips and Pits: The budget and tax prep

The announcing of the federal budget comes with some 2015 tax year goodies.

As tax year 2014 winds down, the federal budget recently announced some 2015 tax year goodies. Being tax time it only seems appropriate to bring some to your attention especially since you might want to take advantage of these during 2015.

The feds have introduced the Home Accessibility Tax Credit (HATC).  For BC residents this appears to be an expansion of the Seniors Home Renovation Tax Credit that has been around for a few years now.

True, but there are some differences.

This federal credit will not be restricted to seniors wanting to enable their ability to remain in their home.  This credit will be available to persons of any age who have an approved Disability Tax Credit Certificate (DTC).

The renovations must be of the nature to aid the person to access the home more easily or increase their safety within the home, although the list of home renovations hasn’t been fleshed out.  Regardless, the big win is the fact that qualifying renovations claimed under this federal credit can also be claimed as a qualifying medical expense.  That’s right, government sanctioned double dipping.

For example, a ramp that is needed to access a home could be claimed under both the federal HATC and also as a medical expense tax credit.  Now, imagine if the BC government would also allow a senior with a DTC to make a third claim under the current provincial credit.

Downside, the HATC will be a non-refundable tax credit.  This means that only the amount needed to reduce tax payable to zero is used.  Any amount over is not given to the taxpayer.  This is unlike the BC Seniors Home Reno Credit – it’s a refundable tax credit.  That is, the balance not needed is paid to the taxpayer.

Question?  Will the BC government now change their credit to a non-refundable credit?  Especially in light of the federal government’s allowable double dipping.   Will BC even continue its credit?

To change modes completely, the feds have introduced a revised – apparently simplified – version of form T1135. This is the schedule used to report foreign investment of $100,000 or greater.   The discussion around this schedule is a column in itself.  Suffice it to say that this is welcome news to anyone who has struggled with the detail required on this form – speaking for tax preparers in Canada, this form can’t come soon enough.

To be accurate though, for those with foreign investment of $250,000 or greater, the T1135 reporting struggle will continue as per usual. The simplified reporting will be for those who have foreign investments greater than $100,000 but less than $250,000.

Also included in the budget was an increased capital gain exemption for farmers and fishers to one million dollars, as well as new rules around gifting of private corporation shares and real estate. And yes, there was the recycled announcement that the kids’ fitness credit will become a refundable tax credit for 2015.

Ron Clarke has his MBA Email him at ron.clarke@JBSbiz.ca. To read previous Tax Tips & Pits columns visit www.JBSbiz.net.

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