With less than 40 days left to file your taxes, most people are rolling up their sleeves and trying to get all their paperwork in place to file their 2012 tax return. This article will highlight the major changes for your 2012 tax return and provide some hints to help you get a bigger tax refund:
• This year the CRA is urging most tax payer to file electronically using NetFile. If you have no computer or access to internet, than you can still pick up a paper copy at Canada Post or Services Canada offices.
• Ontario Healthy Homes Credit- A new refundable tax credit of 15 per cent of eligible expenses is available for Ontario residents over the age of 65 who spent money to make their home safer. The deduction is also available to those who live with a family member who is a senior.
Eligible expenses includes changes to make a first-floor or secondary suite for a senior. It also includes grab bars and handrails, wheelchair ramps, walk-in bathtubs, no-slip flooring and hands free taps and hand held showers. Wheelchairs or walkers are not deductible, nor are general repairs incurred to increase the value of the home.
• Maximize OAS- As of July 1, OAS may be deferred for up to five years. If you decide to do so you will receive a larger pension when you elect to receive it and this may be good tax planning if you decide to withdraw other retirement savings investments such as RRSPs first. Also, there is the opportunity to pension split with your spouse.
• CPP Premium Opt Out: The way you contribute to the Canada Pension Plan (CPP) changed in January 2012. If you are between 60 and 64, you must continue to pay premiums if you work, even if you are drawing benefits from the plan. That makes you a “Working Beneficiary.” Any such additional contributions to the CPP will be saved in a “Post Retirement Benefit” (PRB) account and will increase your monthly pension benefit entitlements beginning the following year.
Note that if you continue to work from age 65 to 70, you may elect to either continue to pay premiums or opt out by filing a new form. The primary reason for opting out is the premium expense, which may be put to another use; to pay medical insurance premiums or costs, for example.
• Change to Caregiver Amount: There is a $2,000 bump in the family caregiver amount if your spouse, child or adult dependant has a mental or physical infirmity. Ensure you provide support from your medical doctor to support your claims providing specific information about the infirmity and expected duration. If the doctor charges you a fee you can claim that as an eligible medical expense.
• New medical expense claim form- There is a new method of deducting automobile expense for out of province travellers for medical expense.
• Employee Profit Sharing Tax- If you have a significant interest in your company- you may be classified as a “ specified employee” if your contributions exceed 20% of the salary withdrawn and could be paying tax on the contributions to an employee profit sharing plan. You may also take a corresponding deduction. Please contact a tax professional to properly treat this new change.
• Executors-There may be a higher surcharge for those earning greater than $500,000, the combined marginal rate is now about 48%. It is extremely important to do some retirement planning and ensure that the proper tax saving vehicles are being used (RRSP, RRIFs) to limit your income tax liability.
As Chartered Accountants in Toronto and Mississauga we can help you prepare your Canadian tax return and ensure your refund is maximized. Contact a Chartered Accountant for more tax tips by email at firstname.lastname@example.org or call us at 647-725-2537 for consultation.