The 2015 Federal Budget was the first for Finance Minister Joe Oliver, and it tabled a number of proposals that will impact the financial, tax and estate plans of Canadians. The following is a summary of the most relevant budget proposals that may impact financial advisors and their clients.
Federal Tax Rates
There are no changes to personal federal income tax rates or income brackets for the 2015 tax year.
Home Accessibility Tax Credit
Budget 2015 proposes to introduce a new Home Accessibility Tax Credit. This will take the form of a non-refundable credit providing tax relief of 15 per cent on up to $10,000 of eligible expenditures per calendar year, per qualifying individual, to a maximum of $10,000 per eligible dwelling.
A qualifying individual is a taxpayer who is age 65 or older at the end of the year and qualifies for the Disability Tax Credit at any time during the year. In addition to the qualifying individual, an eligible individual may also claim the Home Accessibility Tax Credit on behalf of the qualifying individual. An eligible individual will be an individual who has claimed (or could have claimed) the spouse or common law partner amount, eligible dependant amount, caregiver amount or infirm dependant amount on behalf of the qualifying individual. As a result, the eligible individual could include the spouse or common-law partner of the qualifying individual, as well as a host of other family members of the qualifying individual and his or her spouse or partner. Where more than one person is making a claim in respect of an eligible dwelling, the total claim cannot exceed $10,000 per dwelling. Generally speaking, the eligible dwelling must be the principal residence of the qualifying individual at any time during the year.
To qualify for the Home Accessibility Tax Credit, the expenses must have been incurred in relation to a renovation or alteration that allows the individual to gain access to, or be more mobile or functional within the dwelling, or reduces the risk of harm to the individual within the dwelling. The expenses must be enduring in nature and be integral to the home. Examples of eligible expenses include wheelchair ramps, walk-in bathtubs, wheel-in showers and grab bars. Other costs, such as routine repairs and maintenance, household appliances, financing costs of the renovation and outdoor gardening are not eligible for the credit. The Home Accessibility Tax Credit will be available for expenses paid after 2015 and must be supported with receipts.
Planning Point: The Home Accessibility Tax Credit will not be affected by any other tax credits or grants to which a qualifying individual is entitled. For example, in the case of an individual who claims an eligible expenditure that also qualifies for the Medical Expense Tax Credit, that individual will be permitted to claim both tax credits.
The Family Tax Cut – Education Credits
The Government recently introduced the Family Tax Cut – a federal non-refundable tax credit of up to $2,000 for couples with children under age 18. The Family Tax Cut allows a higher-income spouse or common-law partner to notionally transfer up to $50,000 of taxable income to a spouse or common-law partner, effective for 2014 and subsequent years.
Under the current system, the Family Tax Cut prevents the transfer of personal tax credits to avoid double counting in calculating the Family Tax Cut. However, education-related amounts (Tuition, Education and Textbook Tax Credits) do not present a double-counting issue and therefore couples do not currently receive the full value of the Family Tax Cut where education-related credits are transferred between them.
Budget 2015 proposes to revise the calculation of the Family Tax Cut for the 2014 and subsequent taxation years to ensure that couples transferring education-related credits between themselves receive the appropriate value of the Family Tax Cut. Also, the CRA will automatically reassess affected taxpayers for the 2014 taxation year to ensure that they receive any additional benefits to which they are entitled under the Family Tax Cut
To read complete budget details, click here
Mackenzie Tax & Estate Planning, Mackenzie Investments
Reprinted with permission