2016 Taxes: What’s New and What’s Gone

tax-man

As the holidays are over and the reality of work and finances strikes, everybody is starting to gather their receipts and slips and prepare for filing the 2016 taxes.

We at Softron Tax are excited as ever too to help our clients save tax dollars. The government pushed an agenda to reduce taxes for the middle class. Today we discuss the changes below and you can decide whether the middle class is better off or not.

What’s In

Crediting the Teachers – School Supply Tax Credit

Starting 2016, qualified teachers which means teachers who have teacher’s certificate or early childhood educators can claim up to $1,000 for school supply expenses. So, make sure you bring all the receipts to your Softron tax expert when you file taxes this year.

• Canada Child Benefit

Although you have been receiving Canada Child Benefit since July 2016, you will be happy to know that all the payments are non-taxable. So, that will result in some tax savings as the only taxable benefits that you will need to report on your tax return will be Universal Child Care Benefit payments received from January 2016 to June 2016.

• Lower Middle Class Tax Bracket

The federal tax bracket for income between $45,282 to $90,563 has been reduced from 22% to 20.5%. This change also comes with a change in tax bracket for income more than $200,000 which has been increased from 29% to 33%. So, if an individual makes higher than $45,282 but less than $200,000, he will benefit from these changes

What’s Out


• Income Splitting

Families with children will no longer be allowed Income splitting on their tax returns. Earlier if one spouse was earing a higher tax bracket income than the other spouse, the couple could save up to $2,000 in taxes with income splitting.

• Children’s Art and Fitness Amounts

The children’s art and fitness amounts have been cut into half for the year 2016 and will be eliminated for the year 2017. The maximum amount that could be claimed for fitness is $500 and $250 for arts activities for the year 2016
So, families that were benefitting from income splitting may pay more in taxes this year and individuals who made less than $45,282 will not see any benefit of middle-class tax cuts.
On the hand, most families are enjoying higher Canada Child Benefit payments and the icing on the cake is that these payments are non-taxable as opposed to the old Universal Child Care Benefit payments.

So gear up and come to Softron Tax and we will find you the biggest tax refund this year too !!

Filing Taxes for the Deceased

The passing away of a loved one brings immense emotional stress and taxes are the last thing on the minds of family and friends at such a time. However, taxes for the deceased individuals have to be filed and depending on the estate plan of the deceased individual, filing taxes can be a simple matter or a very complicated one.

First Step:

In an event of death, the first step is to report the death to Canada Revenue Agency, Service Canada for discontinuing pensions and all financial institutions. The executor should obtain the copy of Last Will. A death certificate should be obtained from the Funeral Director and sent to the Canada Revenue Agency.

Filing the Final Tax Return:

The assets of an individual are deemed disposed at the time of death. This may create large capital gains and therefore huge tax liabilities at death if proper estate planning was not done during the lifetime of the deceased. Also getting the relevant paperwork and T slips to determine the income of the deceased can be tedious in some cases. The best solution to these problems is to get the services of an expert who specializes in estate taxes. Softron tax for example has a great team of experts specializing in this area and also offer a course on estate planning and trust returns.

Estate Taxes

All the assets of a deceased are rolled over into an estate at the time of death until they are distributed to the beneficiaries by the trustee of the estate. The Last Will of the deceased may also instruct to keep some assets in the estate for a long period of time. The whole process takes a long time and any income generated by the estate during this time should be reported by filing Trust Returns. Trust Returns are way more sophisticated than normal taxes and efficient tax planning can save a lot of tax dollars for the family of deceased.

Plan today to Avoid Tax troubles in the future

Tax Experts at Softron Tax are capable of handling the most complicated estate returns but what we do even better is guiding are clients to develop an efficient estate plan. If you have a well designed Last Will, it will be the biggest gift that you can leave for your family and friends. The legal procedures are getting complicated by the day and it is critical for all Canadian taxpayers to have a Will in place.  

You can visit a Softron location today to file taxes for your loved ones who passed away and also discuss an estate plan with us that will suit you best.

RRSPs – A friend or a foe ?

The RRSP  season is in its prime and the deadline for RRSP contributions for the 2015 Tax Year is February 29th, 2016. It’s a leap year and the first 60 days of the year end on Feb 29th.

Every year thousands of people invest in RSSP’s and a lot of them just do it because they have been advised by their friends or sales managers selling RSSPs.

So is RRSP your friend or foe?

RRSP as the name suggests can be an exceptional retirement saving tool for but only for people who need it. One man’s garbage can be another man’s treasure.

RRSP is not a tax free or a tax saving scheme. It is a tax deferral plan in which you save on taxes when you contribute and you end up paying taxes at a later date when you withdraw money from the RRSP accounts. Ideally an individual should be having a higher taxable income and should fall in higher tax bracket during the contributing(working) years and the individual should be in a lower tax bracket during the withdrawal(retirement) years. Lets solve this puzzle.

RRSP is your friend if:

  • You make more than $44,000 Approx. (Lowest Tax Bracket) in Ontario and there will be a time in future (Retirement Years) when you will be making less than $44,000 annually.
  • You have no pension plan from your employer and you want/have to save something for the retirement years. These savings will be strictly for retirement purposes.

RRSP is your foe if:

  • Your income is less than $12,000 dollars and you are just trying to save some money.
  • You have generous pension plans (Unionized Workers) and chances are that your tax bracket will not change when you retire.
  • You have an investment portfolio otherwise which will generate income in your retirement years and as a result your tax bracket will not change
  • You are trying to save money for an emergency fund and you may need this money any time in the future.  A TFSA account should be used for savings and investments that are not long term and not for the purpose of retirement.

Retirement Planning is very important and a general habit of saving money goes a long way in life but RRSP may or may not be the answer. We at Softron Tax  always tailor our advise according to the needs of the client. One size fits all policy does not work well with personal finances.

So visit the nearest Softron Location today and we will help you decide whether RRSP is your friend or a foe.

Tax season is back! Are you Ready?

The tax season is back and like every year in the past, Softron tax is ready to serve you and get you the biggest refunds.

So are you ready?

Each year taxpayers miss out on a lot of money that they could have received through their tax refund. This happens because taxpayers miss out on claiming important credits that they are eligible for. Today we discuss the credits that every taxpayer in Canada can claim irrespective of his/her marital status, number of dependents or age.

Following are the credits that every taxpayer maybe eligible for:

  • Public Transit passes: Every taxpayer can claim their public transit passes and receive additional tax refund. The only check in the case of public transit passes is that the taxpayer must have either monthly passes or three consecutive weekly passes or presto usage report. It is not possible to claim just a few tokens or randomly bought tickets.
  • Donations: Every taxpayer can claim the donations they make to eligible charitable organizations in Canada. All you need is a donation receipt. That’s not all. If you have missed claiming your donations in the past 5 years, you can claim them altogether in the present tax year and this will only increase your donation credit. So help yourself while you are trying to help others.
  • Political Contributions: 2015 was the election year and a lot of you will be surprised to know that you can claim the political contributions you made during the year. Political contributions can be either federal or provincial and this is important as contributions made to a provincial political party qualify for a refundable tax credit while the contributions made to a federal political party qualify for non-refundable tax credit.
  • Medical Expenses: If you have had any major medical expenses (dental, eye surgery, prescriptions) where you had to pay a lot out of your pocket, you can claim those medical expenses and reduce your tax payable. The medical expenses have to be more than 3% of your income.
  • Rent: While the rent has no impact on an individual’s taxes, rent can be claimed for availing Ontario’s Rent and Property Tax Grant which is part of Ontario’s Trillium Benefit. There can be cases where the taxpayer will not benefit from the rent because the income he made during the year is above the threshold limit but it is important that the rent is discussed with the tax preparer and it is ensured that maximum benefit is claimed.

The professionals at Softron Tax are very competent to get you all the tax credits that you are eligible for but more importantly, we at Softron have a work ethic and an attitude to use all our competence and ability to get the maximum benefit for our customers.

So visit your nearest Softron Tax location and get the tax credits you deserve!

Canadian Taxes for Families – File Together and Win!

A family that prays together stays together but if a family wants to stay ahead financially, they need to file their taxes together too. The Canadian government has tailored tax benefits that would cater to families with young children, families having senior parents living with them or families with children in college/ university. In order to reap the maximum benefit, it is extremely important that families plan and file their taxes together.

Following are the benefits of filing your taxes together:

  • Family Tax Cut: If you are married with a child under 18 years of age, you may be able to save up to $2000 in taxes by splitting income with the spouse
  • If you are a couple where one spouse goes to school while other earns taxable income, you can transfer up to $5000 of tuition tax credit to the spouse that earns and save hundreds of dollars in taxes
  • If your spouse is not working, you can claim a spousal amount deduction of up to $11,138
  • If you are paying for the college / university tuition of your child, he/she can designate up to $5000 of tuition tax credit to you and help you reduce your taxes
  • The donations and transit passes can be combined and claimed on the higher income spouse to get maximum benefit
  • The medical expenses can be clubbed and claimed on the lower income spouse in order to have the highest tax credit
  • If you have your senior parents living with you, you can claim caregiver amounts for them, single taxpayers may be able to claim them as eligible dependents and some home renovations for seniors are tax deductible too!

All of the above is only possible if families file their taxes together, put together all the information and use it to their advantage. As all of this information might seem overwhelming and tax professionals like Softron Tax can help you file your taxes efficiently and accurately.

While there are huge benefits in filing taxes together, there can be negative consequences for not filing together. The GST credit, the Ontario Trillium Benefit and the Child Tax Benefit are all calculated on the basis of family net income. In order to accurately estimate these benefits, the returns should be prepared together. Any mistake in reporting family income may cause a loss of benefits and unnecessarily attract reassessments and audits by the Canada Revenue Agency

Let me share a real life example to put the theory in perspective. Brad and Christie are my clients for past few years. They used to come together every year and file their taxes until this year when Brad’s buddy at work filed his taxes at work and Christie came to my office alone. They missed taking advantage of the Family Tax Cut and Christie brought $1000 worth of donation receipts with her which I could not use as she did not have any taxable income. As Christie was also going to part time school, Brad’s buddy did not claim any spousal tuition tax credit on his return. They were set to lose about $3500 due to all this and it was tedious work to file for all the adjustments and get the taxes done right. Needless to say, it got highly stressful for Brad and Christie. It is therefore recommended that families should file their taxes together and professional advice should be sought to ensure that taxes are filed efficiently and accurately.

Let’s do it together, let’s do it right!!!