Income Tax

Income Tax 2016 - Last chance to claim education and textbook credits transferred from your children

       If you are a post-secondary student or you have a child in university or college be aware that Education and textbook credits are eliminated as of January 1, 2017.

       Unused credit amounts carried forward from years prior to 2017 will remain available to be claimed in 2017 and subsequent years, but only by the student. 2016 is the last year when a spouse, parent or grandparent can claim education and textbook credits transferred from their relative student.

Transfer of tuition, education and textbook credits
If a student is unable to use all or a portion of these credits, the student can transfer up to $5,000 to an eligible person. That translates into a $750 federal tax credit. Transfer to an eligible person is available only for credits earned in the current year.
 
What are education and textbook credits? 
In addition to the actual amount of tuition paid for post-secondary studies, students (and parents/spouses by way of transfer) have been allowed to claim additional credits based upon the number of months they attended college or university during the tax year. Both full-time and part-time studies are eligible as long as certain conditions are met. The university/college indicates the number of months to claim on the T2202A slip along with the eligible tuition amount.

What’s changing? 
Beginning January 1, 2017, education and textbook credits will sadly both end. Any prior unused amounts will still be available for future years until they have been depleted. Only the student may claim these carried-forward amounts – not parents, grandparents, or spouses.
Provincial education/textbook credits are not eliminated yet. Every province will decide individually about the future of this provincial credit. Tuition tax credit stays in place and will follow the existing rules regarding transfers to family members.

How does this change affect my 2016 return? 
If you’re a student, this change doesn’t affect your return. However, if you are a parent, you may consider a transfer this year when your child still has these extra credits. You may not be able to perform a transfer in coming years depending on your child’s income, especially if your child’s tuition isn’t overly high.
If you haven’t done a transfer in past years, consider it for 2016.

Other considerations
Consider updating your TD1 if you claimed education/textbook credits (TD1 is the form filled out for payroll that ensures the proper amount of tax is deducted from your salary).


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Tax calendar

• 2016-12-31 Deadline for RESP contributions for the year
• 2016-12-31 Deadline for Donations for 2016 Tax Year
• Set up CRA My Account access; can take more thank 2 weeks to set up access
• Enrol for direct deposit using My Account or fill out the direct deposit form and mail it
• Update the address on file if it changed lately
• You cannot change your address when you file your taxes, your Notice of Assessment and your refund cheque will be mailed to your old address
• 2017-02-20 Netfile opens, you can now file your taxes using Netfile
• 2017-03-01 RRSP deadline - make last minute contributions to a RRSP
• 2017-03-01 You can use Auto-Fill option to file your tax return (to pull your T4, T3, T5, etc and RRSP information from your CRA My Account)
• 2017-05-01 Deadline to file your taxes. All taxes payable are due today.
• If you are Self Employed you can file your taxes by June 15 but taxes owed are still due today.

Donations - In any one year, you may claim:

• donations made by December 31 of the applicable tax year;
• any unclaimed donations made in the previous five years; and
• any unclaimed donations made by your spouse or common law partner in the year or in the previous five years.
• You can claim eligible amounts of gifts to a limit of 75% of your net income.