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Canadian Tax Highlights and Changes

Highlights of recent tax-related events from Canada Revenue Agency, along with major tax changes for the 2010 tax year.

Highlights

Tax cuts for businesses and individuals

You might benefit from the numerous credits, benefits, and tax cuts outlined here.

TFSA returns

In June 2010 Canada Revenue Agency sent out a letter accompanied by a TFSA return to over 72,000 Canadians who may have over contributed to their Tax-Free Savings Account (TFSA). CRA explains what to do here.

Major Tax Changes for 2010

...including tax changes announced but not law at this time. If signed into law as proposed, such changes will be effective for 2010 or the dates indicated.

Universal Child Care Benefits (UCCB)

If you were a single parent on December 31, 2010, you can choose to include all UCCB amounts you received in 2010 in the income of a dependant. For more information, see line 117 - Universal Child Care Benefit (UCCB).

Election to defer security option benefits

If you exercised an option and bought eligible securities after 4:00 p.m. EST on March 4, 2010, the election to defer the security option benefits will no longer be available for those securities. For more information about security option benefits, see line 101 - Security option benefits.

Special relief for tax deferral elections on security option benefits

You may elect for special relief in respect of gains from a disposition of eligible securities on which you elected in a previous year to defer the security option benefits. For more information, see Form RC310, Election for Special Relief for Tax Deferral Election on Employee Security Options, or Guide T4037, Capital Gains.

Scholarship exemption and Education amount

Post-secondary programs consisting mainly of research are eligible for the scholarship exemption and the education amount only if they lead to a college or CEGEP diploma, or a bachelor, masters, or doctoral (or equivalent) degree. Post-doctoral fellowships are taxable. For more information, see Pamphlet P105, Students and Income Tax.

For a scholarship, fellowship, or bursary received in connection with a part-time program for which you can claim the part-time education amount in respect of that program, the scholarship exemption is equal to the amount of tuition paid for the program plus the costs of program-related materials. For more information, go to Students, or see Pamphlet P105.

U.S. Social Security benefits

If you received U.S. Social Security benefits in 2010, you may be eligible to claim a deduction of 50% of the benefits received. For more information, see line 256 - Exempt foreign income.

Employment Insurance premiums on self-employment and other eligible earnings

You may be able to enter into an agreement with the Canada Employment Insurance Commission through Service Canada to participate in the new Employment Insurance (EI) Measure for Self-Employed People. For information on how to calculate your premiums, see line 317 - Employment Insurance premiums on self-employment and other eligible earnings and line 430 - Employment Insurance premiums payable on self-employment and other eligible earnings. For more information about this measure, contact Service Canada.

Medical expenses

Cosmetic procedures and related expenses qualify as a medical expense when incurred after March 4, 2010, only if they are required for medical or reconstructive purposes. For more information, see Guide RC4064, Medical and Disability-Related Information.

Investment tax credit

Eligibility for the mineral exploration tax credit has been extended to flow-through share agreements entered into before April 1, 2011. For more information, see line 412 - Investment tax credit.

Rollover of RRSP proceeds to a registered disability savings plan (RDSP)

As of July 1, 2011, for deaths occurring after March 3, 2010, the existing RRSP rollover rules will be extended to allow a rollover of a deceased individual's RRSP proceeds to the RDSP of the deceased individual's financially dependent infirm child or grandchild. These rules will also apply to amounts transferred to an RDSP from registered retirement income fund (RRIF) proceeds and certain lump-sum amounts paid from registered pension plans (RPP). In addition, where the death of an RRSP annuitant occurs after 2007 and before 2011, special transitional rules will allow a contribution to be made to the RDSP of a financially dependent infirm child or grandchild of the annuitant that will provide a similar result to these measures.

To be eligible, the contribution to an RDSP can only be made after June 30, 2011, and, when the death of the annuitant occurs after 2007 and before 2011, the contribution must be made before 2012. This means individuals will have six months in which to make the contribution to an RDSP. For updated information on these changes, go to RDSP.

Related Websites

Canada Revenue Agency's What's New page provides links to news releases, updates on programs and services, and upcoming events.


The information on this website is provided without warranty of any kind. Income tax rules change every year and some information may be out of date. All readers wishing to take advantage of the information offered here should consult a qualified income tax preparer. In no event will Brad Howland, Howland Tax Services, or this website be liable for any damages, including lost profits, arising out of the information offered on this website. All material on this website Copyright © 2001-2014 by Howland Tax Services. Please contact us for permission to use this material in any form. Website designed and maintained by Brad Howland.