What’s new for 2018 tax-filing season?

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The federal government is ending four child tax credits this year: arts, fitness, education and textbooks. Tuition will continue to be a tax credit. So make sure you get Form T2202A from your or your kid’s college or university (or Form TL11 in case you studied overseas).

Also, for 2017 and subsequent taxation years, the budget proposes to consolidate the infirm dependant credit, the caregiver credit and the family caregiver credit, as part of the new Canada caregiver credit (CCC).

The Canada caregiver credit is available in respect of an individual’s spouse or common-law partner, minor child or eligible relative who is dependent on the individual because of a mental or physical infirmity at any time in the year.

According to the CRA, an “infirm dependant” is a person who has “an impairment of physical or mental functions”. Currently, the CRA does not have any specific documentation requirements, but may ask your medical practitioner to provide some verification. You can always check the CRA’s website for more information.

The new CCC will be based on two amounts:

  • A “high” maximum amount of $6,883 can be claimed by a caregiver for each eligible infirm dependant. This amount will be reduced dollar-for-dollar by the amount of the dependant’s net income over $16,163 (all amount are for 2017, and will be indexed for inflation after 2017). Note that this part of the CCC is similar to the old “caregiver credit”, with one notable exception: the new CCC will not be available for non-infirm parents or grandparents over age 65 living with their adult child. But the dependant will NOT be required to reside with the caregiver in the same premises.
  • A “low” maximum amount of $2,150 for infirm dependants will remain as part of the following amounts: the maximum spouse or common-law amount, the maximum amount for an eligible dependant, and the amount for infirm children under 18. Again, you can see the detailed calculations on the CRA’s website.

These calculations might seem a little mind boggling, and they really are. The good news is your tax preparation software will do those calculations for you. The only thing you should remember is that the new CCC does not lower or restricts your similar old credits from 2016. Actually, there is one new restriction that we mentioned earlier: unless your parents or grandparents over 65 are infirm, you will not be able to claim a CCC for them.

Tax brackets for 2017

For 2017, we have five federal tax brackets:

  1. zero to $45,916 (15 per cent),
  2. $45,916 to $91,831 (20.5 per cent),
  3. $91,831 to $142,353 (26 per cent),
  4. $142,353 to $202,800 (29 per cent),
  5. with anything above that being taxed at 33 per cent.

The new high-income bracket introduced by the government in 2016.

Each province also has its own set of provincial tax brackets, most of which have also been indexed to inflation, but using the appropriate provincial indexation factors.

Basic personal amount

The federal basic personal amount for 2017 is $11,635. This amount, along with all other amounts, is eligible for a non-refundable tax credit

2017 RRSP Limit

Your 2017 RRSP limit is based on 18 per cent of your 2016 earned income, up to a maximum of $26,010 (up from $25,370 in 2016), less any pension adjustment. To hit the maximum RRSP contribution for 2017, you would have had to have earned income in 2016 of at least $144,500.