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Tax Changes You Should Know About

Not only are death and taxes a sure thing, there are almost always tax changes and new benefits every year.

Here’s a rundown of what’s new and what’s changed:

Medical expense tax credit for service animals—Before you think you can write off the cost of owning a dog, it has to be a service animal that’s trained to perform tasks for a patient with a severe mental impairment. Some of the eligible expenses include the cost of the animal, food and veterinary care, and reasonable travel expenses for the patient to attend the institution that trains these animals. You’ll need to provide paperwork to show what medical care is required as well as proof that the service animal is trained to help you cope with your symptoms.

The Climate Action Incentive payment—Residents of Manitoba, New Brunswick, Ontario, and Saskatchewan will be able to claim this tax credit to offset the cost of the federal carbon tax that went into effect at the beginning of April. Residents in other provinces won’t be able to claim this credit either because their province already has a carbon tax or will implement one in the future. The amount of the credit varies by province and the number of people in your household. People living in rural or small communities will get 10% more because they don’t have as many alternative transportation options and their energy needs are higher than people living in cities.

Lower tax rate for small businesses—If you happen to own a small business, your tax rate dropped to 10% in 2018 from 10.5% in 2017. There’s more good news: the rate for 2019 is now just 9%.

Accelerated capital cost allowance (CCA) rates—People who are self-employed or small business owners will benefit from this change. If you purchased anything for your business (such as a computer) on or after Nov. 21, 2018, you will get a bigger tax break. The so-called Accelerated Investment Initiative allows businesses to deduct the cost of their business investments at a much higher rate than before.

First-time donor’s super credit (FDSC)—Unfortunately, 2017 was the last tax year you could claim this credit, which gave qualifying taxpayers an extra tax credit on their charitable donations. However, regular charitable donation tax credits are still available for all taxpayers.

Public transit tax credit—Sadly, 2017 was also the final year you could take advantage of this tax credit as it’s no longer available.

Canada Pension Plan (CPP) contribution increase—Since 2003, the employee and employer CPP contribution rate has stayed at 4.95%. With the CPP enhancement, it rose to 5.1% this year and will gradually rise to 5.95% by 2023. If you’re self-employed, your contribution rate has increased to 10.2% in 2019 from 9.9% last year.

RRSP contribution limit increase—The RRSP contribution limit is still 18% of your income for the previous year. If you happen to make an annual salary of $147,222.23 or more, you can now contribute as much as $26,500 in 2019. That’s up from a limit of $26,230 in 2018.

TFSA contribution limit increase—The TFSA contribution limit has risen to $6,000 in 2019, compared to $5,500 in 2018. If you’ve never contributed to a TFSA, were 18 or older in 2009, and were a Canadian citizen at that time, you now have total contribution room of $63,500.

Photo by Helloquence on Unsplash