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Tax Changes

From tax expert Gerry Vittoratos
March 29, 2019


In this article, we will see the major changes that are coming to the 2018 tax return.

Climate Action Incentive – Residents of New Brunswick/Ontario/Manitoba/Saskatchewan

The Climate Action Incentive (CAI) is a new refundable tax credit to compensate residents from these provinces for the effects of the Federal climate action plan, which now sets a price on carbon emissions. The credit itself is not income-tested, which means every resident of these provinces is eligible to claim the credit regardless of income. The amount of the credit you can claim will depend on your family situation:

 

Business Income

Passive Income

Ontario

Manitoba

Saskatchewan

Single w/o children

$128

$154

$170

$305

Single with child

$205

$231

$255

$457

Couple w/o children

$205

$231

$255

$457

Additional amount per child (single or couple)

Add $32/child

Add $38/child

Add $42/child

Add $76/child

 

An additional 10% is added to the amount you can claim above if you live outside what the CRA considers a Census Metropolitan Area (CMA). To determine this, the CRA has setup a website: canada.ca/census-metropolitan-areas.

If you have a spouse, either one of you can claim the credit, but not both.

Tax On Split Income (TOSI)

The major change brought to the Tax on Split Income (TOSI) rules is to the definition of the “specified individual”. For 2018 and on, a specified individual is any taxpayer who is a resident of Canada (for a child under 18 years old, one of the parents must be a resident) [ITA 120.4(1)]. This is quite different from prior years, where a specified individual was only a taxpayer that was under 18 during the tax year. Because of this change, the process to determining if there is TOSI to pay or not will depend on the source of the income (split income), and the age of the recipient. The exclusions to TOSI have also been re-worked.

For a detailed look at the changes, and a detailed questionnaire flowchart, please consult the prior blog entry on this topic.

Accelerated Investment Incentive (accelerated depreciation)

If you’re self-employed and you purchased a capital asset for your business after November 20th, 2018, you can now triple the depreciation rate you would ordinarily apply on these assets in the first year.

This tripling of the rate will be applicable for any asset purchased after November 20th, 2018, and will be gradually phased out after 2024.

Medical expenses – Service dogs

Expenses related to service dogs used by individuals with a severe mental impairment can now be claimed, such as the cost of the animal, care and maintenance of the animal, reasonable travel expenses for the patient to attend a facility that trains individuals in the handling of these service animals, and reasonable board and lodging for full-time attendance at the facility.

Tax Free Savings Account (TFSA)

The annual TFSA limit for 2019 has been increased from $5,500 to $6,000.

Click here to read the major changes that are coming to the Quebec 2018 tax return.

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