With the 2014 budget fresh in-mind, here is what most of us need to know for personal taxes.
Search and rescue volunteers, effective 2014 tax season, have their own tax credit identical to the volunteer fire fighter $450 credit introduced a few years back. Individuals cannot claim both credits.
And that’s really all the tax prep excitement for the new budget.
How about 2013 tax prep getting underway?
The 2013 budget - tabled a year ago - brings about a dozen tax changes for 2013 tax prep and 2014 tax planning.
Announcing the “First-time Super Donation Credit” for 2013. “First time” refers to a taxpayer AND his/her spouse, NEITHER having claimed a charitable donation in the past FIVE years. It doesn’t refer to a donor who gives to a charitable organization for the first time. To keep the math simple, the maximum amount is $1,000 of 2013 monetary donations and calculates into a $250 bonus tax credit. It’s a one-time credit but can be used in any of the next five years.
There are also 2013 tax changes applicable to small segments of taxpayers. Check out the CRA website if you have anything to do with mineral exploration credits, LSVCC credits, synthetic dispositions, character conversion transactions, loss-trading in trusts, accelerated capital cost allowance, restricted farm losses, or corporate control provisions.
For 2014 tax planning purposes, the “Lifetime Capital Gains Exemption” increases from $750,000 to $800,000. This is used to mitigate the tax liability of taxpayers who have capital gains upon the sale of qualified Canadian small business corporations, farm or fish properties.
But where the government giveth, it also taketh away. The dividend tax credit formula applicable to the aforementioned Canadian small corps “non-eligible dividends” has been changed for 2014 so the effective tax rate is now marginally higher meaning the shareholders of these small companies will pay more tax on dividends paid.
And effective 2014, the borrowing against 10/8 life insurance policies and leveraged insured annuity policies and then claiming the interest expense accrued for the investment made within these types of policies is no longer permitted .
Finally, the long time safety deposit box expense will no longer be an allowable deduction for next year’s tax prep.
Looking for good news? How about a reminder of some lesser known credits from prior years still in effect.
First available in 2013, the BC Government continues encouraging seniors to stay in their home by again offering the “Seniors’ Home Renovation Tax Credit”. This is a refundable tax credit of up to $1,000 available to seniors, or to those who have a senior living in their home, to make the home elderly friendly. Examples include installing hand rails, door levers or motion lights and widening doorways, lowering counters or building elevators. Also included are major fixtures like ramps and tubs.
The “New Home Buyer” $750 non-refundable tax credit continues. This is not a credit for a new home purchase. It’s for a first time buyer defined as someone who has not owned a home for the previous five years.
Ron Clarke has his MBA and is a business owner in Trail, providing accounting and tax services. Email him at ron.clarke@JBSbiz.ca. Previous Tax Tips & Pits columns visit www.JBSbiz.net.