"The hardest thing in the world to understand is the income tax."

Albert Einstein

Canadian Tax Highlights and Changes

Major tax changes for the 2011 tax year, from the General Income Tax and Benefit Guide, including those that have been announced but are not yet law (if they become law as proposed, they will be effective as of the dates given).

Highlights

Volunteer Firefighters' Amount
As a volunteer firefighter, you may be able to claim an amount of $3,000. For more information, see Line 362.

Children's Arts Amount
You can claim an amount for eligible expenses paid for the registration or membership of your child in a prescribed program of artistic, cultural, recreational, or developmental activity. For more information, see Line 370.

Canada Pension Plan (CPP) Contributions
As of January 1, 2012, the rules for contributing to the CPP changed. The changes apply to you if you are an employee or self-employed, you are 60 to 70 years of age, and you are receiving a CPP or Quebec Pension Plan (QPP) retirement pension. For more information, go to CRA's Changes to the Canada Pension Plan (CPP) page. To find out how the changes may affect your CPP benefits, go to Service Canada, Changes to the Canada Pension Plan (CPP).

Other Tax Changes for 2011

Split Income of a Child Under 18
A child under 18 may be subject to the tax on split income in respect of dividends on shares of a corporation. After March 21, 2011, any capital gain from the disposition of those shares to a person who does not deal at arm's length with the child, will be deemed to be a dividend. This deemed dividend is subject to the tax on split income and is considered to be an other than eligible dividend for the purposes of the dividend tax credit. For more information, see split income of a child under 18.

Saskatchewan Pension Plan (spp) Income
SPP income is eligible for the pension amount and you and your spouse or common-law partner may be able to split the income from the plan. Report your SPP income on line 115. For more information, see lines 115, 210, and 314. You can also visit Saskatchewan Pension Plan for more information about the SPP.

SPP Contributions
For 2010 and later tax years, SPP contributions are generally subject to the same rules as registered retirement savings plan (RRSP) contributions. The annual contribution limit to the SPP has increased to $2,500 from $600. Contributions to an SPP are limited by your RRSP contribution room for the calendar year. Claim your SPP contributions on line 208.

Taxable Capital Gains
Donations of certain flow-through share properties may give rise to a deemed capital gain that is subject to an inclusion rate of 50%. For more information, see Pamphlet P113, Gifts and Income Tax.

Exploration and Development Expenses
The cost of acquiring oil sands leases and other oil sands or shale resource property after March 21, 2011, will generally be treated as a Canadian oil and gas property expense, which is deductible at the rate of 10% per year on a declining balance basis.

Development expenses incurred for the purpose of bringing in new oil sands or shale mines will be treated as a Canadian development expense, and will be deductible at the rate of 30% per year on a declining balance basis. This measure will be phased in for expenses incurred after March 21, 2011 (certain exceptions apply).

For more information, see Form T1229, Statement of Resource Expenses and Depletion Allowance.

Allowable Amount of Medical Expenses for Other Dependants
The maximum $10,000 limit per eligible dependant has been removed. For more information, see Line 331.

Investment Tax Credit
Eligibility for the mineral exploration tax credit has been extended to flow-through share agreements entered into before April 1, 2012. For more information, see Investment tax credit.

Canada Child Tax Benefit (CCTB)
If you are eligible to receive CCTB payments, you must notify Canada Revenue Agency of any change to your marital status by the end of the month following the month in which your status changes. However, in the case of separation, do not notify CRA until you have been separated for more than 90 consecutive days. For more information, go to CRA's Canada Child Tax Benefit (CCTB) page.

Beginning July 2011, each eligible parent in a shared custody situation will get half of the child benefit and credit payments for that child every month that they qualify. For more information, see Booklet T4114, Canada Child Benefits.

Students
More examination fees now qualify for the tuition amount. In addition, the minimum duration of courses taken at a university outside Canada has been reduced to three consecutive weeks for amounts claimed on line 323. For more information, see Pamphlet P105, Students and Income Tax.

Disclaimer

This information is provided without warranty of any kind. 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.