Now that the holiday season has ended and all the presents are unwrapped isn’t it a pleasant surprise to find a few additional gifts tucked away thanks to tax changes introduced by the federal government 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 year before. Reserves brought into income in 2014 as a result of the above sales also qualify but not at the updated rate.
Families fared particularly well this year says Grant Diamond, a senior tax consultant with FBC, a tax advisory service with over 60 years of service to farmers and small business owners.
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 actually represents a form of income splitting. 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 all other income splitting techniques except for pension income splitting. The family tax cut credit (official name) is only available to families with children who were under the age of 18 at the end of the 2014 taxation year. Both spouses must be resident in Canada on December 31 and living together.
Adoptive parents are eligible to claim adoption expenses of $15,000 per child 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 agency, court and legal costs, reasonable and necessary travel and living expenses, document translation fees and mandatory foreign government costs.
Under the children’s fitness tax credit the maximum amount of eligible fees that can be claimed has been bumped to $1,000 per child from $500 last year. Eligible programs must last at least 8 consecutive weeks or 5 consecutive days for children’s camps. The programs must be supervised and require significant physical activity. It is quite possible that the increase in this amount recognizes the significant entry costs in hockey and other sports programs. The annual enrollment cost in hockey programs alone in some cities is rapidly approaching the annual fees for private school tuition.
The costs for service animals used to assist persons 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 lands also qualified for favorable treatment under the budget. Donations made after February 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 up from the previous 5-year period. The land, recipient and fair market value of the donation are subject to the approval of the Minister of the Environment.
There are more tax bonuses than those mentioned here that may well 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 available to you.
Grant Diamond is a tax specialist with FBC, a firm dedicated to providing farmers and small business owners with expert tax services and advice for over 60 years. FBC has branches in BC, AB, SK, MB, ON and NS to serve its 50,000 Members. FBC also provides financial & estate planning. To learn more about FBC, visit www.fbc.ca. If you have any questions regarding this article, email fbc @ fbc.ca or call toll-free 1-800-265-1002.
Accurate as of April 08, 2015