2011 New Personal Tax Credits and Deductions in Canada
Allan Madan, CA
Hi, my name in Allan Madan; I’m a chartered accountant and tax expert in the Toronto, Mississauga and Oakville areas of Ontario, Canada. This article will take you through all you need to know about 2011 New Personal Tax Credits and Deductions Canada.
It is very important that you go through this article so when it comes to preparing your personal tax return you can take 2011 personal tax credits and 2011 personal tax deductions into account; and you’ll definitely save personal taxes
Increases in Existing Tax Credits:
I’ll first take you through the increase in existing tax credits from the 2010 to 2011 taxation year.
1. The first credit is the basic personal amount. It has been increased to $10,527. That means that the first $10,527 of income that you earn is not subject to any income tax whatsoever.
2. The second increase in 2011 personal tax credits is the spousal tax credit to $10,527. If you have a low income spouse or if your spouse is not working, you can take advantage of this credit. Spouse for the purposes of this credit means someone you’re married to or you’re in a common-law relationship with.
3. The third increase in 2011 personal tax credits is the eligible dependant tax credit, which has also increased in value to $10,527. You can take advantage of this credit if you are a single parent, divorced or separated, and are supporting a child that lives with you.
4. The fourth credit is the child tax credit which has increased to $2,131 for each child that resides with you and is under 18 years of age.
5. The fifth credit is the age credit which has gone up in value to $6,537. The age credit is an automatic credit that is given to individuals that are 65 years or older. The age credit is reduced if your income is above a certain amount.
The final credit of the 2011 personal tax credits that have gone up in value is the caregiver credit. This credit has a value of $4,282 and is meant for individuals who are supporting an elderly parent or grandparent.
New 2011 Personal Tax Credits:
So, what are the new credits that have come into play in the 2011 year? Let’s go through them next.
1. The first one that has been widely advertised is the children’s arts credit. This credit is available for monies paid for activity programs such as artistic, cultural and recreational activities for your children who are under 16 years of age. The maximum amount is $500 per child. Examples include music lessons, dancing classes, acting classes, etc.
2. The family caregiver credit is also a new credit that was introduced but it will not start until 2012. So we’re still one year away from benefiting form it. This credit has a value of $2,000 and is meant for individuals that are supporting an infirm dependant (i.e. disabled).
3. Also new for 2011 is the tuition credit for examination fees paid to a professional association or a professional institution. Many of you might have a professional designation and you might have had to write an exam to obtain that designation. Now, the examination fees are eligible for the tuition tax credit.
4. If you study abroad you can claim a tax credit for tuition fees that you incurred while studying aboard. Previously, you would have to study abroad for at least 13 weeks to qualify for this credit. Now, you only have to study abroad for a period of at least three weeks to qualify.
What About Flow-Through Shares?
The CRA has closed a loophole for flow-through shares. They did this because they thought taxpayers were taking advantage of this and it was far too great an incentive. Flow-through shares are special types of shares that are issued by mining and exploration companies. If you purchase a flow-through share you can deduct the full amount of the purchase price, plus, you can receive an investment tax credit.
What individuals were doing was as follows. They bought flow-through shares, got a full write-off on their tax returns, got a lucrative investment tax credit, but then they then donated those flow-through shares to a charity. And guess what, they got a donation tax credit. What really offended the CRA is that there was a loophole that allowed you to donate your flow through shares without having to pay any tax on the gain. So, they’ve closed that particular loophole.
If you own flow-through shares now and donate them to a charity you will still get the donation tax credit but you will have to pay capital gains tax on the gains resulting in the transfer from yourself to the registered charity.
Something else that is new for 2011 is sub-dividing the Canada child tax benefit between both parents in the case of shared custody of a child. Previously, only one parent could receive the Canada child tax benefit in shared custody circumstances.
Disclaimer
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.
ABOUT THE AUTHOR
ALLAN MADAN
CA.CPA.CGA
Allan Madan is a CPA, CA and the founder of Madan Chartered Accountant Professional Corporation. Allan provides valuable tax planning, accounting and income tax preparation services in the Greater Toronto Area.
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Hi Allan,
Just how relevant are these deductions for the 2013 taxation year? Any new tax refunds and changes I should be aware of? thanks.
Hi Charles,
Yes these deductions are still applicable for the 2013 taxation year. One new tax you should be aware about is the first-time donor’s super credit. This tax is meant to supplement the existing charitable donations tax credit by adding 25% to the existing rates for first time donors. As a result, you will be allowed a 40% federal credit for donations of $200 or less, and a 54% federal credit for the portion of donations over $200 but not exceeding $1000.
Please check our youtube channel in the near future as well will have a new video discussing this very topic.
Best Regards,
Allan Madan and Team
Does first-time donor refer specially as ‘first time donor’s or is it dependent on donations within a certain time period? If I donated once 15 years ago, would I still be eligible for this credit?
Hi Thompson,
For the purpose of the Super Credit, a person is a first-time donor if:
1. they have never claimed the charitable tax credit;
2. their spouse has never claimed the charitable tax credit;
3. they have claimed the charitable tax credit, but only in 2007 or before;
4. their spouse has claimed the charitable tax credit, but only in 2007 or before.
So in your case, as long as your spouse has not claimed the charitable tax credit then you will be eligible since you have donated prior to 2007.
Best Regards,
Allan Madan and Team
What if my wife had claimed the CDTC within this period but now we are legally separated, would I still be eligible in this situation?
Hi Cruz,
This tax credit is aimed at limiting one per household, since your wife is no longer legally part of the household then her usage would have no bearing on your eligibility.
Best Regards,
Allan Madan and Team
Hi Allan, I am an international student and therefore a non-resident of Canada. Since I pay taxes, would I be able to claim the textbook and tuition credit?
Hi J.J,
If you have paid tuition and school related fees, and you file a personal tax return, you should be eligible for those credits.
Best Regards,
Allan Madan and Team
If I don’t use all of my education and tuition deductions, can I transfer them to my parents?
Hi Mahmoud,
Yes you can transfer any unused amount once your tax payable is reduced to zero to your parents, grandparents, and spouse. You can transfer up to $5,000 federally, and an additional $5,000 provincially ($5,914 for Ontario residents) to one person.
Best Regards,
Allan Madan and Team
Are refugee families with children eligible for child benefits and credits?
Hi Timothy,
Yes, sponsored refugee families with children are eligible for a child tax benefit when they get to Canada. Refugees should apply as soon as they arrive in Canada. It may take up to two months to process the application.
Best Regards,
Allan Madan and Team
My university asked me to pay a fee for my Sociology exam because I deferred it. Can I claim that?
Hello Jenna,
Thank you for your question.
As an university student you can claim your tuition, costs of living if relevant to your education and textbooks. However, you cannot claim a specific exam fee during university. You can only claim exam fees if there is a designation involved. Hope that helps!
Best Regards,
Mandanca Team