The federal government has introduced some tax changes for the 2014 tax year.
The lifetime capital gains exemption for dispositions after 2013 of qualified small business corporation shares and qualified farm and fishing property has increased to $800,000 from $750,000 the previous year. Reserves produced in the current year as a result of the above 2014 sales also qualify.
Families fared particularly well under the new tax rules.
You may be able to claim a non-refundable tax credit of up to $2,000 to reduce your federal income tax. This is a new initiative that represents a form of income splitting.
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It is based on the net reduction of federal tax that would be realized if up to $50,000 of an individual’s taxable income was transferred to the individual’s eligible spouse or common-law partner with a lower income tax bracket.
This is separate from other income splitting techniques except for pension income splitting.
The family tax cut credit is available only to families with children who were younger than 18 at the end of the 2014 taxation year. Both spouses must be resident in Canada on Dec. 31 and living together.
Adoptive parents are eligible to claim adoption expenses of $15,000 per child, which is up from $11,669 in 2013. The expenses can be claimed in the year that includes the end of the adoption period for the child. Eligible expenses include fees to provincially or territorially licensed adoption agencies, court and legal costs, reasonable and necessary travel and living expenses, document translation fees and mandatory foreign government costs.
The maximum amount of eligible fees that can be claimed under the children’s fitness claim has been increased to $1,000 per child from $500 last year. Eligible programs must last at least eight consecutive weeks or five consecutive days for children’s camps. The programs must be supervised and require significant physical activity.
The increase in this amount may recognize the significant entry costs in hockey and other sports programs.
The annual enrolment cost in hockey programs in some cities is rapidly approaching the annual fees for private school tuition.
The costs for service animals that help people eligible for the disability tax credit and with severe diabetes can now be claimed as medical expenses. The use of the animals must be part of a therapy plan to manage the illness and covers blindness, deafness, severe physical impairment, autism and epilepsy. This is a new addition to the tax act for expenses incurred after 2013.
Gifts of ecologically sensitive land also qualify for favourable treatment under the budget. Donations made after Feb. 10, 2014, under the current budgetary proposal will extend the carry-forward period for the unused portion of the eligible amount of donations of ecologically sensitive land to 10 years, which is up from the previous five-year period.
The land, recipient and fair market value of the donation are subject to the approval of the environment minister.
There are more tax bonuses than those mentioned here, which may reflect a judicious loosening of federal budget strings. Talk to your tax professional to make sure you’re taking advantage of all the tax credits and deductions that are available to you.
