2019 CHANGES AND NEW ADDITIONS:
- First-Time Home Buyer’s Plan (HBP): Budget 2019 proposed to increase the maximum amount that can be withdrawn under the Home Buyer’s Plan for 2019 and subsequent years. Commencing March 20, 2019, the amount that can be withdrawn by an individual from their RRSP plan under this plan has been increased to $35,000; an increase from the previous limit of $25,000. The Home Buyer’s Plan has also been enhanced to allow access to individuals who have separated from their spouse/partner for a period of at least 90 days due to marriage or relationship breakdown and would not otherwise qualify as first-time home buyer’s.
- Medical Expense Tax Credit – Cannabis: As per the 2019 Budget, a patient may be able to claim a medical tax credit if they hold a medical document to support their use of cannabis for medical purposes. The amounts paid for cannabis, cannabis oil, cannabis plant seeds, or cannabis products purchased for medical purposes from a licensed holder will qualify. This measure was applied for expenses incurred on or after October 17, 2018, the same date recreational cannabis was legalized.
- Principal Residence Exemption – Change in use rules to include multi-unit residential properties: The 2019 Federal Budget proposes to extend the change in use election available to owners of a single unit residence to owners of multi unit residences where there is a change in use of part of the property. The election is available for partial changes in use occurring on or after March 19, 2019.
- NEW – Depreciation of Zero-Emission Vehicles: Zero-emission vehicles will now qualify for depreciation in either one of two newly introduced CCA class, 54 or 55 (depending on its use) and will have a $55,000 limit, plus sales tax. Only new vehicles will qualify and they must be fully electric, a plug-in hybrid with a battery capacity of at least 15 kWh or fully powered by hydrogen. As zero-emission vehicles are more expense than conventional vehicles, the government will review the $55,000 limit annually to see if it needs to be increased as car prices go up. Individuals will be able claim 100% of the CCA on zero-emission vehicles from the March 19, 2019 until the end of 2023. For acquisitions in 2024 and 2025, the first-year enhanced allowance will decline to 75%, with a further decline to 55% for 2026 and 2027. From 2028 onward, enhanced allowances will no longer be allowed, and the vehicle will be subject to the conventional CCA deduction.
2020 CHANGES AND NEW ADDITIONS:
- Employee Stock Options: For What’s New Page: Budget 2019 announced the Canadian Government’s intention to limit the use of current employee stock option regime by applying an annual cap of $200,000 on employee stock option grants that would qualify for the stock options deduction. Any employee that is granted stock options with their employer on or after January 1, 2020 will be subject to the above new rule. Any options exercised in excess of the $200,000 cap would not be qualify for the stock option deduction. This new rule applies to employers that are corporation or mutual fund trusts. Employers that are CCPCs will not be subject to the new rules.
- Estate Administration Tax: Budget 2019 has eliminated the Estate Administration Tax for taxable estates with assets of $50,000 or less.
- NEW – Canada Training Credit: This new refundable tax credit was proposed in Budget 2019 and it aims at providing financial support to help cover up to half of eligible tuition and fees associated with training. Starting in 2019, an eligible individual will be able to accumulate $250 each year (with a lifetime limit of $5,000) in a notional account; this would be called the Canada training credit limit. The tax credit itself will be calculated by taking the lessor of (1) half of the eligible tuition and fees paid in respect of the year, and (2) the individual’s Canada training limit for the taxation year. The credit will first be available for expenses incurred in 2020.The portion of the tuition fees refunded through the Canada Training Credit will not qualify as eligible expenses under the Tuition Tax Credit.
- Sale of Principal Residence: If you sold your home on or after January 1, 2016, for which you want to claim the principal residence exemption, you are required to report the disposition on your income tax return. While CRA does accept late filed designations, penalties do apply. Failure to report the sale on your tax return may result in a penalty up to $2,500.
- Specified Foreign Property: Individuals have to file Form T1135 with CRA for every year they held foreign property with a cost exceeding $100,000. Please inform us if this requirement applies to you so we can advise on next steps. Failure to file this form along with your tax return may result in a penalty up to $2,500.
- Keeping Track of All Tax Related Documents: We encourage you to take advantage of our new client portal to upload documents as you receive them. It will help you stay organized, and keep track of all your income slips and other receipts together, in a secure environment throughout the year. You can create your own subfolders within the taxation year, which you can easily review when you are ready to prepare your tax return.