In March, the Liberal government announced the federal budget for 2017-2018, which included several important changes that impact taxpayers in Canada. Although there were relatively few tax measures mentioned on March 22, it's important to know what these changes are and what the implications will be for you and your family in the coming years.
(Photo: Dean Mitchell via Getty Images)
Below are some of the main tax changes you should be aware of:
Farewell, public transit amount
Much to the disappointment of many Canadians who rely on public transportation and used to claim those expenses in their tax returns, the government announced the elimination of the public transit amount. According to the Liberals, they found that the credit hasn't been effective enough in encouraging the use of public transit and reducing greenhouse gas emissions. The good news, however, is that the public transit amount won't be eliminated until July 1, 2017, so it will make one last appearance when you file your 2017 tax return -- hooray!
HST/GST for ride-sharing services equals leaner wallets
In an attempt to level the playing field between taxis and ride-sharing services, the government will be introducing HST/GST charges to Uber and Lyft rides. What that means is the average consumer is now going to see an HST or GST charge on their receipts after using a ride-sharing service, just like they would on a regular taxi ride -- ultimately making their ride more expensive than it was before. The change will take effect on July 1, 2017, so there's still a bit of time to get mentally prepared for that.
Time to claim that fertility treatment
Many Canadians who have used assisted reproductive technologies over the past 10 years may now be eligible for a tax break thanks to a change announced during the federal budget. Previously, Canadians had to be diagnosed as medically infertile to be able to claim the cost of reproductive technologies as part of their medical expenses in their tax filing.
Now, you don't have to be medically diagnosed as infertile, which opens the tax credit to people like single women who want to have a child or same-sex couples who want to start a family. Did you know that this tax change will also be retroactive? This means anyone who has incurred expenses over the past 10 years for reproductive technologies such as in vitro fertilization can re-file their taxes for that year and claim the expense.
Employment Insurance enhancementsThe government announced a number of positive changes to Canada's Employment Insurance (EI) program:
- Individuals will now be able to take up to 15 weeks off work to support a family member who is recovering from a critical illness or injury
- Parents of critically ill children (who are already entitled to 35 weeks of benefits) will be able to share these benefits with more family members
- Unemployed workers will now be allowed to return to school to get training without losing their EI benefits
- Changes will also be made to parental benefits to allow parents to receive them over an extended period of 18 months at a reduced rate
- Women will be allowed to claim maternity benefits for up to 12 weeks before their due date instead of the current 8 weeks
First-time donor's super credit no more
The federal budget confirmed that the first-time donor's super credit will expire at the end of 2017. The super credit was introduced in the 2013 federal budget and provides an additional 25 per cent tax credit for the first $1,000 donated to a registered charity by a donor who has not claimed a charitable donation tax credit since 2007. This measure was always intended to be temporary, available only for gifts made after 2012 and prior to 2018. Donors who have not claimed a charitable donation tax credit since 2007 should consider making a donation before the end of 2017 to take advantage of the super credit before it expires.
Tax evasion be gone
During the budget meeting, the government reiterated that it is committed to cracking down on tax evasion and combating tax avoidance. According to the government, this will be accomplished by increasing verification activities, hiring additional auditors and specialists with a focus on the underground economy, developing structures to target high-risk international tax and abusive tax avoidance schemes and also improving the investigation of criminal tax evaders. For Canadians who are transparent about their taxes each year, this shouldn't affect them -- it just means everyone needs to pay their fair share moving forward.
Click here for more information on what was announced in the federal budget.
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Highlights from the 2017 federal budget tabled Wednesday, March 22 by Finance Minister Bill Morneau: (Source: The Canadian Press)
Employment insurance premiums are going up five cents to $1.68 per every $100 of insurable earnings, up from $1.63 — the maximum allowable increase under the Employment Insurance Act. Read more here. (Source: The Canadian Press)
The deficit is at $23 billion, down from $25.1 billion in the last fiscal update, and is projected to reach $28.5 billion for 2017-18 — including a $3 billion contingency fund — before declining to $18.8 billion in 2021-22. Read more here. (Source: The Canadian Press)
The 71-year-old Canada Savings Bond program, first established in 1946, is no longer cost effective and is being phased out. Read more here. (Source: The Canadian Press)
Higher taxes on alcohol and tobacco products: the excise duty rate on cigarettes goes up to $21.56 per carton of smokes from $21.03, while the rates on alcohol are going up two per cent. Both will be adjusted every April 1 starting next year, based on the consumer price index. Read more here. (Source: The Canadian Press)
The public transit tax credit, which allows the cost of transit passes to be deducted, is being eliminated effective July 1. Read more here. (Source: The Canadian Press)
The budget dedicates $11.2 billion to cities and provinces for affordable housing over 10 years as part of the second wave of the government's infrastructure program, $5 billion of which is to encourage housing providers to pool their resources with private partners to pay for new projects. Read more here. (Source: The Canadian Press)
An "innovation and skills plan'' to foster high-tech growth in six sectors: advanced manufacturing, agri-food, clean technology, digital industries, health/bio-sciences and clean resources Read more here. (Source: The Canadian Press)
$523.9 million over five years to prevent tax evasion and improve tax compliance, including more auditors, a crackdown on high-risk avoidance cases and better investigative efforts. Read more here. (Source: The Canadian Press)
$7 billion in spending over 10 years for Canadian families, including 40,000 new subsidized daycare spaces across Canada by 2019, extended parental leave and allowing expectant mothers to claim maternity benefits 12 weeks before their due date. Read more here. (Source: The Canadian Press)
$2.7 billion over six years for labour market transfer agreements with the provinces and territories to modernize training and job supports, to help those looking for work to upgrade skills, gain experience, start a business or get employment counselling. Read more here. (Source: The Canadian Press)
$59.8 million over four years, beginning in 2018-19, to make student loans and grants more readily available for part-time students, and $107.4 million over the same period for assist students with dependent children. $287.2 million over three years, starting in 2018-19, for a pilot project to facilitate adult-student access to student loans and grants. Read more here. (Source: The Canadian Press)
A national database of all housing properties in Canada, known as the Housing Statistics Framework, to track details on purchases, sales, demographics and financing, as well as foreign ownership. Read more here. (Source: The Canadian Press)
$400 million over three years through the Business Development Bank of Canada for a "venture capital catalyst initiative'' to make more venture capital available to Canadian entrepreneurs. Read more here. (Source: The Canadian Press)
A comprehensive spending review of "at least three federal departments,'' to be named later, to eliminate waste and inefficiencies, as well as a three-year review of federal assets and an audit of existing innovation and clean-tech programs. Read more here. (Source: The Canadian Press)
$225 million over four years, starting in 2018-19, for a new organization to support skills development and measurement. Read more here. (Source: The Canadian Press)
$395.5 million over three years for the youth employment strategy. Read more here. (Source: The Canadian Press)
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