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Some Thoughts Before April

With April soon approaching, many taxpayers have begun to think about their tax returns. What will we find new in the 2015 tax return? Besides investing in an RRSP, are there any other last minute planning opportunities?

Childcare Expenses

One change that will increase many people's tax burdens is the new calculation for daily childcare expenses.

For families with a household income below $50,000, the rate will remain $7.30 per day.

For families with income between $50,000 and $75,000 will pay a supplementary fee of $0.70 through their tax return for each day of childcare after April 21, 2015.

For families who are a little more affluent, the additional amount will be determined using this formula:

[(Household income in 2014 – $75,000) * 3.9%)] / 260

For example, for a family with a household income of $100,000, the additional contribution will be $3.75 per day.

This calculation uses family income from 2014. As it was impossible to plan for this change, and this amount is due on April 30, one would have to estimate the amount due and try to save it in the coming weeks.

Parents using private childcares do not have to pay this additional expense, as only those with children who are in public daycare are subject to it.

Finally, this additional contribution will add to the costs of childcare. At the federal level, it will be possible to deduct the additional contribution from 2015 returns if paid by April 30. On the provincial side, the additional contribution will only be considered for 2016 tax returns.

The additional contribution will be calculated on Schedule I of the return and according to the information that will appear on the Relevé 30 (RL-30) slip issued by daycares in February.

Reimbursement of RRIF Withdrawals

At the federal level in the last budget, the table of mandatory withdrawals was updated to reflect the life expectancy of taxpayers. Withdrawal requirements have consequently been reduced.

Furthermore, a taxpayer is allowed to repay any excess amounts received in 2015 using the old tables, to benefit from the new withdrawal rates. In order to be entitled to a deduction in 2015, funds must be repaid to the RRIF before February 29.

Some may have an interest in doing this, particularly those for whom part of their old age pension will be repaid because of total earned revenues.

Splitting Family Income

The new government said it would abolish income splitting for families with dependent children as of 2016. Therefore, 2015 will be the last year that it will be possible for taxpayers to claim this credit, which can reach a maximum of $2,000. The calculation is very technical but some taxpayers will want to check it in order to maximize this benefit.

Solidarity Tax Credit

Some taxpayers will receive a Relevé 31 in the coming days. Starting in 2016 and going forward, the solidarity tax credit will be calculated based on the taxpayer's situation at December 31. Thus, as of July 1, taxpayers will no longer be obliged to notify Revenu Québec of changes in their situation for each month.

Rate Increase for Some Taxpayers

Some taxpayers who earn more than $200,000 might find it beneficial to accelerate their taxable revenues to 2015, or to carry forward or defer some expenses. The new government announced that taxpayers earning more than $200,000 will see their tax burden increased by 3.34% as of 2016. Therefore there are still a few weeks for some taxpayers to properly plan their revenues and expenses to maximize their benefits before reporting their 2015 tax returns.

Conclusions

The foregoing is only a summary of the many changes that will be included in 2015 tax returns. Taxpayers who complete their own returns would benefit greatly by reading the various guides published by the tax authorities.

The author

Patric Saint-Onge

Patric Saint-Onge

CPA, CA, LL.M.Fisc., TEP, Tax Specialist.
Patric Saint-Onge has been a tax specialist for over 15 years. In 2002, he co-founded the firm Corriveau Saint-Onge Inc. which specializes in Canadian taxation.

Mr. Saint-Onge has worked on major tax cases, applying complex fiscal concepts throughout his career.

He has also been a speaker on numerous occasions for both industry professionals as well as the general public. Among others, the Institute of Chartered Accountants of Quebec has requested his services as a speaker. He has also been invited as an expert in taxation on several television and radio shows, and frequently collaborates with journalists covering the economy to help with articles on various topics.