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by Janet Doyle
Taxes are the largest bill Canadians pay each year and it’s not uncommon for people to become overwhelmed with filing their claims to Canada Revenue Agency (CRA). In 2017, the Financial Post reported Canadians being taxed at a rate of 42.5% of their income meaning Canadians spend more on all taxes than any other household expense, taxes both visible and hidden that we pay throughout the year to federal, provincial and municipal governments including sales taxes, property taxes, fuel taxes, carbon taxes, import taxes, alcohol taxes and much more. All these taxes add up and make our overall tax bill expensive. This means that come income tax time, every deduction counts.
1. Working Income Tax Benefit
A refundable tax credit that gives relief to low-income individuals; the maximum amounts have been increased to $1,355 for individuals and $2,335 for families. To qualify, you must be at least 19 and have working income of at least $3000 during the year. This credit is not available to full-time students, those who have spent 90 days or more in jail, or representatives of other countries. To see if you can claim it, check the Schedule 6, Working Income Tax Benefit.
2. Ontario Trillium Benefit
Low-income families in Ontario may qualify for credits from the Ontario Trillium Benefit, a refundable tax-credit designed to ease the burden of energy costs, sales and property tax. See if you qualify with the online tax credit calculator.
3. Climate Action Incentive
A new tax credit only offered in Ontario, Saskatchewan, Manitoba, and New Brunswick; this credit will offset the increase in prices for gas and oil. For the average family of 4 in Ontario, the incentive will add up to $307 and be 10% higher for those located in rural areas. To learn what amount you’re entitled to, the CRA provides a table to find out how much you can claim for your household.
4. Post Secondary
Students in Ontario and Saskatchewan are no longer eligible to receive provincial tax credits for tuition.
5. Small Business
A number of changes are coming to small business taxation, including:
- The federal small business tax rate has been lowered to 9%, down from 10.5% in 2017.
- Another change for small businesses is accelerated capital cost allowances, providing the opportunity to claim deductions for purchases sooner than before, allowing for 150% of the normal rate.
- Income splitting rules have changed requiring business owners to prove the contribution of family members within the last 5 years.
6. Free Tax Clinics
If you need help with your tax return you may qualify for a free tax clinic where volunteers help you file your return if you have a modest income and simple tax situation. Learn more about free tax clinics and find one in your area on the CRA website.
7. Tax Debt
If you have outstanding tax returns you’ll want to act sooner than later; unlike other creditors CRA can garnish your wages, freeze your bank account, or apply a lien to your home. If you experienced special circumstances like a job loss, natural disaster, or serious illness you may qualify for interest relief or penalty reductions. While this may provide immediate support, there is a limited timeline to pay the debt off completely and the clock is ticking.
If your income tax debt is too high, the CRA offers a debt relief program to reduce the interest and penalties you owe, it is difficult to qualify for and sometimes the arrangement isn’t in your best interest. You can sink further into debt, wasting thousands of dollars on a debt you’ll never be able to pay off.
If you have a large amount of tax debt owing and are struggling with making payments you can talk to a Licensed Insolvency Trustee to learn the options available for your unique situation. Doyle Salewski is located locally in Ottawa, throughout Eastern Ontario and Western Quebec. and have dealt with the collection agents at CRA for over 20 years; we likely know what they will accept and what they won’t and can help you stop actions taken by Canada Revenue Agency.
Contact us today to book your free consultation.