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Tax update 2019

From tax expert Gerry Vittoratos
February 10, 2020

In this article, we will see the major changes that are coming to the 2019 tax return.

New look T1 tax return

The Canada Revenue Agency (CRA) has reworked the tax return; more specifically, the line numbers on the return that were 3 or 4 digits are now 5 digits. They have also simplified the language on the forms. Schedule 1 has also been eliminated and is now part of the expanded T1 tax return.

Home Buyer’s Plan limit increase

The withdrawal limit for the Homer Buyer’s Plan has been increased from $25,000 to $35,000.

Cannabis products eligible for the medical expense credit

Marihuana, marihuana plants or seeds, cannabis or cannabis oil purchased after October 16, 2018, can be eligible for the medical expense credit if used for personal medical use and in accordance with the Access to Cannabis for Medical Purposes Regulations or section 56 of the Controlled Drugs and Substances Act.

Canada Training Credit (2020)

Starting in 2019, you can accumulate a $250 per year limit towards an upcoming 2020 refundable credit called the Canada Training Credit (CTC) [ITA 118.5(1.2)]. The credit itself will reimburse a portion of eligible tuition and other fees paid for courses taken in 2020 and subsequent taxation years.

In order to accumulate the limit, you must meet all of the following conditions:

·         file a tax return for the year;

·         be at least 25 years old and below 65;

·         be resident in Canada throughout the year;

·         have a total of $10,000 or more of income from:

o   maternity and parental benefits, and

o   working income (income from an office or employment, business income, the taxable part of scholarship income and research grants, the tax-exempt part of earnings of status Indians and emergency service volunteers, and income under the Wage Earner Protection Program Act).

·         have individual net income for the year that does not exceed the top of the third tax bracket in that year ($147,667 in 2019).

The lifetime limit you can accumulate is $5,000.

The credit you can claim in 2020 will be the lesser of:

·         half of the eligible tuition and fees paid in respect of the year, and

·         the individual’s Canada training credit limit for the taxation year.

Eligible tuition fees for this credit are the same as the ones eligible for the Tuition tax credit.

The amount you claim for this credit will be subtracted from the amount of tuition fees you can claim for the tuition tax credit.

Zero-emission vehicles

If you’re self-employed and you purchased a zero-emission vehicle after March 18, 2019, for use in your business, you can fully expense the cost of the vehicle against your business income. New CCA classes have been created for these vehicles: Class 54 (vehicles ordinarily under classes 10 and 10.1) and Class 55 (vehicles ordinarily under classes 10 and 10.1). The prescribed amount for these vehicles is capped at $55,000 plus applicable sales taxes [ITR 7907(1.1)].

Canada Workers Benefit

The Working Income Tax Benefit (WITB) has been renamed and enhanced with the Canada Workers Benefit (CWB).  It is a refundable tax credit that provides tax relief for eligible low-income individuals and families who are in the workforce.

For 2019, the maximum benefit of the CWB has been increased by $170.  The income level at which the benefit is phased out completely has also been increased. The maximum benefit provided through the CWB disability supplement is also increased by an additional $160.

Source: 2018 Budget

New methods of paying balance owing

Starting in 2019, you will be able to pay your balance owing by credit card, e-transfer or PayPal through  third-party service providers, which are Plastiq (http://plastiq.com/cra) and PaySimply (https://www.paysimply.ca/cra/). A fee will be charged by these providers.
 

Tax exempt income under the Indian Act

A new form has been added, the T90, in order to indicate the income that is exempted from tax under the Indian Act. A new tick box has also been added to page 2 of the T1 tax return.

Change in use elections ITA 45(2) and 45(3) for multi-unit properties

Starting as of March 19, 2019, elections under ITA 45(2) and 45(3) to defer the deemed disposition is now available for a portion of a property. For a more detailed look at these elections, please consult this previous blog article (https://www.thomsonreuters.ca/en/dtprofessionalsuite/blog/principal-residence-disposition-special-topics.html).

 

Tax Changes 2019 - Quebec

Elimination of the additional contribution for subsidized educational childcare

As of 2019, families no longer have to pay an additional contribution for a subsidized daycare. This amount was an extra charge on the daily childcare rate for subsidized daycares based on net family income. This additional amount was paid directly as an income tax on the tax return.

Tax Shield

Starting in 2019, the Tax Shield credit can now be split amongst a couple. The Tax Shield is a credit that helps prevent the reduction of certain credits, like childcare and the Worker’s Premium, due to a small increase in income from one year to the next.

Tax credit for career extension

The tax credit for experienced workers has been renamed and enhanced with the tax credit for career extension. The minimum age of eligibility has been lowered from 61 to 60. The maximum eligible working income is $10,000 for workers aged 60 to 64 and $11,000 for workers aged 65 or over. The maximum tax credit is $1,650.

Zero-emission vehicles

If you’re self-employed and you purchased a zero-emission vehicle after March 18, 2019, for use in your business, you can fully expense the cost of the vehicle against your business income. See the Federal changes articles for more details (post link).

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