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Coming Up…
Welcome to a new year with Trowbridge! This month we have more international events planned, for help on many tax issues. We hope all our clients are enjoying a happy start to the new year and accomplishing new goals!
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Upcoming Tax Seminar Events
- Dubai
February 6, 2017
10AM– 12PM and 6-8PM (Hosted by CBC)
Wayne Bewick
Millennium Hotel
- Abu Dhabi
February 8, 2017
10-12 AM and 6-8PM
Wayne Bewick
Intercontinental Hotel
- Bahrain
February 10, 2017
2–4 PM and 6-8PM
Wayne Bewick
Intercontinental Hotel
- Dhahran
February 11, 2017
2–4 PM and 6-8PM
Wayne Bewick
Intercontinental Hotel
- Riyadh
February 12, 2017
6-8PM
Wayne Bewick
Canadian Embassy
- Doha
February 13, 2017
6-8PM
Wayne Bewick
Intercontinental Hotel
To register for any of the above events contact
[email protected]
Please see http://trowbridge.ca/events/ for more details.
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New Rules for CRA Take Effect Now for 2016 Tax Year
Written by: Shailja Patel, CPA (New York)
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A new year means the beginning of a new tax filing season!! We have summarized the highlights of the Personal Tax Changes for the 2016 tax year below:
Canadian Federal Tax Updates
- The federal government announced two tax rate changes for individuals – a reduction (yes!! You are reading right!!) in the federal tax rate for income between $45,283 and 90,563 to 20.5% from 22.5% and an increase of 4 percentage points in the tax rate for income over 200,000 to 33% (from 29%) starting January 1, 2016. Given the new highest individual tax rate percentage, there is a modification to the donation tax credit as well for taxable income over $200,000 – donations made in excess of $200 will receive a 33% credit however, the new credit rate will not apply to any donations carried forward from prior years. As outlined during the Federal election campaign, the Tax Free Savings Account (TFSA) contribution limit was reduced to $5,500 for 2016 as well as 2017 (indexed to inflation).
- For 2016 and subsequent tax years, the government has implemented a new nonrefundable Home Accessibility Credit. The tax credit is available for eligible expenses incurred in making a home more accessible to individuals ages 65 or older or to individuals who are disabled or infirm. The credit can be claimed by either the person who incurred the expense or by the individual for whom the expenses were made. The individual who incurred the expenses can only claim the tax credit to the extent that the expenses were incurred for their spouse or common-law partner, or for disabled or infirm dependents. The maximum amount of eligible expense is $10,000. Expense must be permanent and non-routine renovations to the home allowing the individual for whom the expense was incurred to be more mobile within the home or reduce the risk of harm.
- RESP contributions in 2016 – there is no annual contribution limit however the lifetime contribution limit is $50,000 per beneficiary; and the federal government grant is capped at 20% of the annual RESP contribution of $2,500 (or $500).
- The maximum eligible fees per child qualifying for the refundable federal Children’s Fitness Tax Credit (CFTC) has been reduced to $500 from 1,000 for the 2016 tax year.
- The maximum eligible fees per child for the Children’s Art Tax Credit (CATC) which is a nonrefundable tax credit, has been reduced to $250 for the 2016 tax year.
- Effective January 2017 (for the 2017 tax year), the CFTC and CATC have been eliminated.
- As of July 2016, the Canada Child Benefit (CCB) has replaced the Canada Child Tax Benefit (CCTB), the National Child Benefit Supplement (NCBS), and the Universal Child Care Benefit (UCCB). The CCB is a tax-free monthly payment made to eligible families to help with the cost of raising children under 18 years of age. Maximum monthly benefit amount for children 6 and under is $533.33 ($6,400 annually) and up to $450 ($5,400 annually) for children 6 – 17.
- The maximum amounts deductible for child-care expenses are $11,000 for a disabled child, $8,000 for children under the age of seven, and $5,000 for other eligible children (generally children 16 and under).
- The family tax cut has been eliminated for 2016 and later tax years
- An eligible education can claim up to $1,000 for eligible teaching supplies expenses. This translates to a refundable tax credit of a maximum of $150.
- The rate that applies to “other than eligible dividends” (OTED) has changed for 2016 and later years. The federal dividend tax credit is 10.5217% of the amount of OTED. For 2017, the credit is set at 11.0169%.
- The tax credit for the purchase of shares of provincially or territorially registered laboursponsored venture capital corporations has been restored to 15% for 2016 and later tax years. However, the tax credit for the purchase of shares of federally registered labour-sponsored venture capital corporations has decreased to 5% and will be eliminated for 2017 and later tax years.
- A special tax of 33% applies to split income of a child under 18 to amounts received directly or through a trust (other than a mutual fund trust) or partnership – shareholder benefits relating to shares not listed on a designated stock exchange; and dividends from shares (other than those from a mutual fund corporation or companies listed on a designated stock exchange).
- The sale of principal residence must now be reported on Schedule 3 along with any principal residence designation. The new rules apply for deemed dispositions as well (change of use). CRA will only allow the principal residence designation if reported on the income tax return. Under proposed changes, the CRA will be able to accept a late designation however, a penalty may apply.
- The Overseas Employment Tax Credit (OETC) is completely phased out for the 2016 tax year and going forward unless the employment contract was committed to in writing before March 29, 2012.
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Trowbridge Honoured with Top 50 Award
Recently, Trowbridge was thrilled by the announcement that we were awarded to the Top 50 Cloud Accountants list by Hubdoc! Congratulations to our team members, especially those in our corporate accounting department. Thanks to all of our partners and team members for helping us to continue to strive for excellence.
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US Federal Tax Changes For 2017
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It is a relatively quiet year for US tax changes:
- The failure to file a return penalty has been increased effective for returns required to be filed in calendar years after 2015.
- Prize money for certain athletes (including Olympic and Paralympics medal are excluded from income starting 2016 tax year.
- Under the 21st Century Cures Act, certain small businesses can use qualified small business health reimbursement arrangements without running afoul of penalties for failing to satisfy market reforms under the Affordable Care Act (ACA).
- Inflation adjustment to income thresholds and personal exemption as well as AMT exemptions.
- Lifetime estate exclusion amount is adjusted for inflation to $5.45 million up from $5.43 million.
Last year, 2016 began and ended with the promise of comprehensive tax reform. With the election of Mr. Trump as the 45th President of the Unites States, we are likely to see some major tax changes in 2017 making it a pivotal year for tax planning.
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TROWBRIDGE
Toronto - London, UK - Vancouver
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WANDERTRUST is a newsletter compiled with a digest of some timely and relevant news links or articles selected for the WANDERTRUST newsletter from thousands of sources by an independent newsletter consultant. Trowbridge Professional Corporation or any associated company does not endorse any of the advertised products and services. Opinions expressed in the articles or news links are those of the author and not of Trowbridge/associated company. Trowbridge does contribute an article written by a variety of staff members, but does not provide any tax advice or consulting in these articles. No information contained in any articles, whether sourced or provided by Trowbridge/associated companies, is to be considered tax advice, and we strongly recommend that you consult with a tax professional.
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