Changes to the federal budgets of 2016 and 2017 will soon affect certain tax credits that have been particularly beneficial to families in the past. Tax credits related to some children’s activities as well as tax benefits enjoyed by people who move their families for work have been reduced or eliminated altogether. So as you prepare your 2016 tax filing, be sure to take advantage of these tax-saving opportunities before they’re gone.
In 2016, the federal government made changes to four child-related tax credits which affect fitness, arts, education and textbooks. The Children’s Fitness Tax Credit and the supplement for children with disabilities can be claimed for the last time on your 2016 tax return. This credit allows you to claim up to a maximum of $500 per child for enrolling them in a prescribed program of physical activity, such as swimming lessons or hockey.
To claim the maximum allowable amount for the Children’s Arts Tax Credit, you must have registered your child in a prescribed program of artistic, cultural, recreational or developmental activity. Activities that would qualify include music lessons, performing arts, languages and heritage programs. The regular credit has been reduced to $250 for 2016, and will be eliminated completely in 2017.
The Federal Textbooks and Education Tax Credit will not be available after 2016, as outlined in last year’s budget. However, you can still claim the larger Tuition Tax credit, which can be transferred to a parent (if the student doesn’t need it), or carried forward to next year’s filing. You will need to print the tax form T2202A from your child’s post secondary institution’s website to claim this tax credit.
The 2017 federal budget is eliminating the Public Transit Tax Credit after June 30, 2017, meaning you can only claim your transit passes for the first six months of that year. This could make a difference of several hundred dollars in tax rebates annually for families that purchase multiple passes per month. The rebate loss will be a bit less pronounced for individuals, but notable nonetheless.
The latest budget will also eliminate the Home Relocation Loan Benefit Deduction – starting in 2018. If you moved to another home in Canada due to a change in employment, you may have received a low-interest loan from your new employer to help with the move. Your new employer will include a taxable benefit on your T4 slip for the advantage of receiving this low-interest loan. However, you can currently claim a deduction for the same amount on your tax return to offset this taxable benefit.
Families that have been claiming a combination of these benefits in the past could see a notable difference in future income tax returns. Having an effective financial plan that helps you stick to a sensible budget, and ensures you’re optimizing any potential tax benefits, could help offset some of the benefits you may be losing.
Marcy Ages is a passionate, detail-driven provider of financial planning services, including investment management and tax preparation. As founder of The Care Network, Marcy also works with other service professionals to support high-net-worth individuals with their estate planning and assisted living issues.