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7/25/2019 22 - Tax Credits Lesson 2
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Taxable Income and Tax Payable
for Individuals
Lesson 2
Tax Credits Continued
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Non-Refundable Tax Credits
Basic Personal Amount !ousal Amount
"li#ible $e!endent Amt
Care#iver Amount
Amounts for an Infirm$e!endent over %&
A#e Amount
Pension Income Amount
Canada "m!loyment
Ado!tion "x!enses
'edical "x!enses $isability Amount
Tuition ( "ducation
Textboo) Tax Credit
Interest Paid on tudentLoans
CPP*+PP Contributions
"I Premiums
Public Transit Passes C,ild itness*Arts
C,aritable $onations*.ifts
Political Contribution
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'edical "x!enses
Not all medical and ,ealt, care costs are coveredby !rovincial or !rivate ,ealt, care !lans
'edical costs not reimbursed by ,ealt, care!lans/ in excess of t,e lo0er or 12/23 and 45 of
NITP/ 6ualify for t,e %75 medical tax credit 'edical ex!enses must be !roven 0it, recei!ts
and must be !aid 0it,in any %2 mont,s endin#
0it,in t,e year8J F M A M J J A S O N D J F M A M J J A S O N D
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+ualifyin# "x!enses
+ualifyin# ex!enses include amounts !aid to8 doctors and dentists ull-time ,ome attendants ull-time nursin# ,ome care or institutions for t,e disabled
Ambulance trans!ortation Reasonable travel ex!enses for medical care Artificial limbs/ !rescri!tion eye#lasses or contact lenses/ or
any device !rescribed by a medical !ractitioner9 ,omemodification for a 0,eelc,air
:xy#en eein# eye do#s/ ca!tionin# for ,earin#*s!eec, im!airment $ru#s/ medicine/ laboratory 0or)/ or#an trans!lant Premiums !aid for !rivate ,ealt, service !lans
:ver 2 !ara#ra!,s of "tc;
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'edical "x!enses
for !ouse and $e!endent
'edical ex!enses for a tax!ayer include t,ose of t,etax!ayer
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"xam!le
'r; >ones/ ,is s!ouse/ and ,is c,ildren/ %?year old 'ary and %@ year old Tom/ ,ave
incurred medical ex!enses of 1//
14// 12/ and 13// res!ectively;'r; >ones 0ill claim ,is c,ildrenones< medical ex!ense tax
credit;
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olutionTotal 'edical "x!enses8
'r; >ones 1 /'rs; >ones 4/
'ary under %3 2/
$educt t,e lesser of8
4513/ or 12/23 2/23ubtotal 1 ?/&@2
Tom over %38 Lesser of8
13/ D Eleast of 12/23 or 451@/2F &/&2"li#ible for Credit 1%/ 7%?
Rate %75
'edical "x!ense Tax Credit 1 2/%&&
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Refundable 'edical "x!ense
u!!lement T,ere is an additional su!!lement for lo0 income
Canadians 0it, ,i#, medical ex!enses
T,e individual must be %3 and over and ,ave earnedem!loyment*business income of at least 14/2% T,e credit is t,e lesser of8
1%/%&2/ or 27*%7 of t,e 'edical "x!ense Tax Credit
T,is amount is reduced by 75 of family NITPover 127/@4@ and is com!letely eliminated0,en family NITP reac,es 1@/4&@
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"xam!le of 'edical "x!ense u!!lement T,e tax!ayer earned 1%@/ durin# t,e year and
incurred 17/ in medical ex!enses; 'edical "x!ense Tax Credit8
'edical "x!enses 17/
Less8 Lesser of 12/23 or 451%@/ 7&
1/4 x %751 ??7
u!!lement8 Lesser of
1%/%&2 :R 27*%7 x 1??7 G 1%/%3 1%/%3Less 75 of NITP :ver 127/7? NIL
Refundable Amount 1%/%3
T,e taxes !ayable 0ill be reduced by 1%/%3 and any
excess 0ill be refunded;
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$isability Amount
An individual is eli#ible for t,e $isability Tax credit0,en t,ey suffer from a !,ysical or mental im!airment0,ic, restricts t,e activities of daily livin# and ,aslasted or can be ex!ected to last for at least %2 mont,s
Basic activities of daily livin# include8D mental functions necessary for everyday !erceivin#/ t,in)in#/rememberin#
D eedin# or dressin# oneselfD !ea)in# suc, t,at t,e individual can be understood in a 6uiet
settin# by someone familiar 0it, t,emD Hearin# suc, t,at t,e individual can/ in a 6uiet settin#/
understand someone familiar 0it, t,emD Bo0el or bladder functions/ orD 0al)in#
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To 6ualify for t,e disability credit/ a doctor
must certify t,at t,e individual is severelyim!aired on form T22%
T,e disability tax credit is 1&/3@@
T,ere is an additional su!!lement of 1/?& fora disabled c,ild 0,o is under t,e a#e of %3 at
t,e end of t,e year Total credit of 1%2/7?
DT,is su!!lement is reduced by c,ild care orattendant care costs in excess of 12/?@@
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Transferrin# t,e $isability Tax Credit
T,e disabled !erson often ,as little or noTaxable Income a#ainst 0,ic, to use t,e
credit
In t,ese situations/ all or !art of t,e creditt,e unused !ortion can be transferred to a
s!ouse or a su!!ortin# !erson 0,o claims
t,e disabled individual as a de!endent undert,e eli#ible de!endents !rovision !arent/
#rand!arent/ c,ildren/ #randc,ildren/
brot,er/ sister/ aunt/ uncle/ niece or ne!,e0
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Tuition Tax Credit Individuals can receive a tax credit of %75 of
6ualifyin# tuition fees !aid for t,e calendar year to8D A university/ colle#e or ot,er !ost-secondary institution
D An institution certified by t,e 'inister of Human Resource$evelo!ment for a course t,at develo!s or im!roves s)ills
in an occu!ation for a student %? years of a#e or over
A university outside Canada/ ifenrolled full time in a course t,at
0as at least %4 consecutive 0ee)sin duration or individuals near t,e J;;
border/ a J;; colle#e oruniversity
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Tuition Tax Credit
T,e tuition tax credit includes all mandatoryancillary fees suc, as library c,ar#es/
laboratory c,ar#es/ ,ealt, services/ at,leticsand various ot,er services
Non-mandatory eli#ible ancillary fees to amax; of 127 can be included
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"ducation Credit
tudents receive an education credit of 1 !er mont,of full-time attendance at a desi#nated institution
ull-time is a !ro#ram t,at runs for at least 4 consecutive0ee)s and !rovides at least % ,ours of instruction eac,
0ee) t,rou#,out its duration Part-time students may claim an education credit of 1%2
!er mont,
Part time is defined as receivin# less t,an % ,ours of
instruction at a 6ualifyin# institution Individuals 0,o 6ualify for t,e disability tax credit may
claim an education tax credit as a full-time studentre#ardless of 0,et,er t,ey attend full or !art time
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Textboo) Tax Credit
T,e tax credit for textboo)s is 1?7 for eac,mont, of full-time education tax crediteli#ibility and 12 for eac, mont, of !art-time
education tax credit T,e credit is not based on t,e actual !urc,aseof textboo)s
Any unused textboo) tax credit can
be transferred to a s!ouse/ !arent or#rand!arent
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Transfer of Tuition/ "ducation and Textboo)
Tax Credits
Jnused education-related tax credits can be transferredto a !arent/ #rand!arent or s!ouse of t,e student to amaximum of 17/ less amounts used by student
To 6ualify/ t,e student must desi#nate/ in 0ritin#/ t,e
amount transferred To determine t,e amount transferable8
tudent
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Carry or0ard
of Tuition ( "ducation Credits A student may not ,ave sufficient income to use t,eir
education-related tax creditsD Per,a!s t,e student may not ,ave transferred t,e tax credits
to a su!!ortin# !erson/ orD Per,a!s t,e student may ,ave more t,an 17/ of
education-related tax credits
T,e student can carry t,ese tax credits for0ardindefinitely
Jnused amounts t,at are carried for0ard can nolon#er be transferred to a su!!ortin# !erson
c,edule %% calculates t,e amounts 0,ic, must beclaimed
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Credit for Interest Paid on
tudent Loans An individual is entitled to deduct %75 of amounts
!aid in t,e year/ or in any of t,e five !recedin#
years/ on account of interest !aid on loans under t,eCanada tudent Loans Act/ t,e Canada tudent
inancial Assistance Act or a !rovincial statute
#overnin# t,e #rantin# of financial assistance to
students at t,e !ost-secondary sc,ool level T,ere is a five-year carry for0ard on unused student
loan interest deductions
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CPP Contributions
Tax!ayer
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"m!loyment Insurance Premiums
"m!loyment Insurance !remiums are based onmaximum insurable earnin#s of 1@/7 on
0,ic, em!loyee
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:ver!ayments to CPP and "I
:ver contributions may occur due to error
or 0,en em!loyees c,an#e ob
"xcess contributions are not tax credits9t,ey are refunded to t,e tax!ayer in t,e
form of an increased refund or a decrease in
t,e tax liability
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Cla0bac)s
or tax!ayers 0,ose incomes exceed
s!ecific t,res,old levels/ benefits received
under :ld A#e ecurity and "m!loyment
Insurance !ro#rams must be re!aid
T,e income t,res,olds8
D:ld A#e ecurity :A is 1&2/3@
D"m!loyment Insurance benefits is 1?%/3&7
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=or)in# Income Tax Benefit
:ften/ individuals 0,o are on socialassistance and obtain some ty!e of 0or) loset,eir benefits and*or t,eir subsidiMation
T,is incentive to 0or) a!!lies to individuals0,o are %@ years of a#e or older/ and not full-time students or in !rison for @ days or more
T,e benefit is a refundable tax credit on t,elesser of8D275 of eac, dollar of income in excess of 14/
D1@@3
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Limits on =ITB
T,e =or)in# Income Tax Benefit is calculated onfamily income earned from em!loyment or business0it,out reference to any losses
T,e maximum benefits are8D 1@@3 for a sin#le individual and is reduced by %75 on
income in excess of 1%%/442
D 1%/3%4 for a family cou!le or sin#le !arent and isreduced by %75 on income in excess of 1%7/?@
or a disabled individual/ a =ITB disabilitysu!!lement of 275 commences on earned income of1%/%7
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Public Transit Passes Credit
Transit services include trans!ortation by bus/ferry/ sub0ay/ train or tram
T,e tax credit is %75 of t,e cost of mont,lytransit !asses or electronic !ayment cards
T,e tax!ayer can claim t,e cost of !asses fort,emselves/ t,eir s!ouse and for de!endentc,ildren under %@ years of a#e
T,e tax!ayer must retain all recei!ts
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C,ild Arts Tax Credit
T,e C,ild Arts tax credit a!!lies for t,e enrollmentof a c,ild under %? in an eli#ible !ro#ram
T,e credit is %75 on amounts u! to 17 to a
maximum tax credit of 1&7 %75 of 17
or ,andica!!ed c,ildren/ t,e a#e limit is increased
to %3 and t,e credit is 1%/
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C,ild itness Tax Credit
T,e C,ild itness tax credit a!!lies for t,eenrollment of a c,ild under %? in an eli#ible !ro#ram
T,e credit is %75 on amounts u! to 1%/ to amaximum tax credit of 1%7 %75 of 1%/
or ,andica!!ed c,ildren/ t,e a#e limit is increasedto %3
T,e C,ild itness Tax Credit is refundable
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irst Time Home Buyeranuary 2&/ 2@
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olunteer irefi#,ter Credit
A volunteer firefi#,ter 0,o !erforms at least
2 ,ours of volunteer firefi#,tin# services
durin# a taxation year receives a tax credit of14/
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Amounts Transferred from a !ouse
ive s!ecific tax credits can be transferred to a s!ouse
or common-la0 !artner8 A#e credit $isability credit Pension income credit Current year tuition/ education and textboo) tax credits to a
maximum of 17// and
T,e transferrin# s!ouse must first use t,ese credits to
reduce t,eir o0n tax liability to Mero before t,e excess
can be transferred
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All of t,e Tax Credits 0e
,ave examined so far !rovide
a %75 tax relief
T,e follo0in# Tax
Credits !rovide
uni6ue amounts of
tax relief
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C,aritable $onations
C,aritable donations include all amounts donated to8
% Total c,aritable #ifts/ includin# #ifts to8 a re#istered Canadian c,arity/ includin# Canadian
Jniversities a re#istered Canadian amateur at,letic association
a Canadian munici!ality t,e Jnited Nations or an a#ency t,ereof a !rescribed university outside of Canada/ and a c,aritable or#aniMation outside of Canada to 0,ic, t,e
.overnment of Canada ,as made a #ift in t,e current year
or !recedin# year2 Total Cro0n #ifts
4 Total cultural #ifts as !er t,e Cultural Pro!erty ( Im!ort Act
Total ecolo#ical #ifts ecolo#ically sensitive land
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$onation Limits
C,aritable donations eli#ible for t,e tax credit arelimited for individuals to &75 of t,e tax!ayer
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Calculatin# t,e Tax Credit T,e tax!ayer receives a %75 tax credit on
t,e first 12 of contributions and 2@5 ont,e remainder of t,e donation
"xam!le8
A tax!ayer 0it, a NITP of 177/ ,as made12/7 in c,aritable donations durin# t,e year;
'aximum $onation8 &75 x 177/ G 1%/27
Tax Credit8
%75 x 12 1 4
2@5 O 12/4 1??&
Total Tax Credit 1?@&
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Political Contribution Tax Credits
Individuals contributin# to a federal!olitical !artys or candidates can claim tax
credits for t,eir contributions in t,e
follo0in# manner8Contributions Credit ate Tax Credit
irst 1 4* 14
Next 147 %*2 1%&7
Next 1727 %*4 1%&7
'aximum 1%/2&7 1?7
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Also Remember
$ividend Tax Credit8
D :n "li#ible $ividends8 435 #ross-u! of dividends
received and federal tax credit of ?*%% of #ross-u!
D :n Ineli#ible $ividends8 %35 #ross-u! of dividendsreceived and federal tax credit of %4*%3 of #ross-u!
D Provinces 0ill offer t,eir o0n rate of tax credit
orei#n Tax Credits8
D t,e federal #overnment 0ill offer Canadian tax!ayers aforei#n tax credit for taxes !aid to a forei#n nation on
income earned abroad