Entrepreneurs : It’s high time to think about your 2016 tax return!
The deadline for submitting is April 30, 2017 ; and since it is a Sunday, your statement will be considered ” received on time »If received or bearing the postmarked date from the 1st May 2017.
If you have a balance owing for 2016, you must also pay it later April 30, 2017.
Do you know what expenses you can deduct from your return ?
The list of eligible expenses is long, however, for each expense, make sure you can justify it in the event of an audit by a tax official.
BUSINESS FEES:
The costs of your office:
If your office is in a house or apartment that you rent and live in, you can deduct the portion of your rent and maintenance costs that correspond to the use of the space for your office.
Expenses related to your workspace are also deductible such as the costs of electricity, heat, maintenance, property taxes and home insurance premiums associated with maintaining your office.
However, you you can not deduct mortgage interest, nor claim federal building capital cost allowance.
Link : http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/229/cmmssn/hm-eng.html
Telecommunications costs :
You can include in your expenses the costs of using an Internet line, a telephone line or a cell phone connected to your professional activity.
Training costs :
Most training is tax deductible (seminars, exhibitions, evening classes, purchase of documentation) when these costs are to maintain, update or enhance professional skills.
The fees:
You can deduct the fees paid to outside firms for advice, services and consultations (tax preparer, accountant, graphic designer, lawyer…).
Link : http://www.revenuquebec.ca/fr/entreprises/taxes/tpstvhtvq/ctirti/depensesadmissibles/default.aspx
TRAVELLING EXPENSES :
You can claim an amount for expenses paid for 2016 for expenses related to the use of your business vehicle such as gasoline, insurance premiums, parking and tolls. If you use the public transport, taxi, train or even the plane you can also deduct these trips from your taxes.
You can claim the cost of public transit passes for yourself, your spouse or common-law partner, as well as your children or those of your spouse or common-law partner. done, under the age of from 19 years the 31 December 2016.
Link : http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns360-390/364/lgblty-eng.html
REPRESENTATION FEES :
All the charges such as business meals, gifts to customers (theater tickets, shows, sports), accommodation (hotels) and public transport costs are eligible.
In general, the deductibility of entertainment expenses is limited to 50%. All related expenses such as taxes, tips and entrance fees are subject to this limit, with the exception of the expense of transportation to get to an entertainment activity, which remains fully deductible.
RRSP FEES (Registered retirement savings plan) :
The deductible contributions to an RRSP can be used to get a tax credit.
Any income accrued in the plan is usually tax-free during the period the funds remain in the plan. However, you generally have to pay tax when you receive money from the plan.
Link : http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/rrsps-eng.html
REAL ESTATE COSTS :
Purchase :
You can request an amount of 5 000 $ for the purchase of a qualifying home you acquired in 2016 if the of them following conditions apply :
- You or your spouse or common-law partner purchased a qualifying home
- You did not live, during the year of the acquisition or the four preceding years, in another dwelling that you or your spouse or common-law partner owned (first-time home buyer).
Link : http://www.cra-arc.gc.ca/ciaph/
Sale :
Until 2015, you did not have to provide information on your federal income tax return in the event of the sale of your home, nor did you have to report a capital gain.
You must now complete the appendix 3, even if your home was your primary residence for all the years you owned it.
This declaration is required for sales made from 2016.
If you forget this declaration, you risk a penalty which could reach 8000 $.
Rénovert tax credit :
This tax credit is deductible from your gross taxable income.
Recognized eco-responsible renovation work must have been carried out by a qualified entrepreneur under an agreement entered into after March 17, 2016 and before the 1st April 2017 provided that the expenses are paid before October 1, 2017. The qualified contractor must complete the Certificate of compliance of goods with eco-responsible standards.
The maximum amount of the tax credit that you can claim regarding your qualifying home (This link will open a new window) is of 10 000 $. It corresponds to 20% of the portion of eligible expenses that exceeds 2 500 $ than you will have paid after the March 17, 2016 and before 1st October 2017.
Note that the eligibility period for the RénoVert tax credit is extended until 31 March 2018 for all eligible work. For more information on the specifics of this extension, see the new tax : Extension of the RénoVert tax credit until 2018 .
You are eligible for the new municipal tax subsidy (shown on your municipal tax bill) if you were at least 65 years old in 2015, you have owned your home for at least 15 years and your family income does not exceed $ 50,000.
FAMILY EXPENSES :
Your children’s activity costs :
You can claim a refundable tax credit for for the activities of your children (artistic, cultural, recreational or development).
These fees give entitlement to a federal and provincial tax credit.
Note that next year this tax credit will no longer exist.
So we take advantage of it even if we note this last year a drop in eligible federal expenses. The maximum amount eligible for the children’s fitness tax credit has been lowered to 500 $ per child.
This tax credit is equal to 20 % of the amount of registration or membership fees giving entitlement to this credit. The maximum amount of these fees is 400 $ per child for a maximum tax credit of 80 $ per child.
If the child has a severe and prolonged impairment in mental or physical functions and the registration or membership fees paid for that child are at least 100 $, you can add 400 $ in the amount of these charges. Note that the total of these two amounts (i.e. 400 $ and the amount of registration or membership fees) cannot exceed 800 $ for a maximum tax credit of 160 $.
Link : http://www.revenuquebec.ca/fr/citoyen/situation/parent/autres_infos/creditactivitesenfant.aspx
Childcare costs :
Childcare costs for children 16 and under give the right to a provincial tax credit (except daycare costs at $ 7) and a federal deduction. You will receive more than last year, but on the other hand, there is no indexation until 2020.
The maximum benefit reaches 6400 $ for children under 6 years and 5400 $ for those aged 6 to 17 years.
A first reduction applies if the net family income (after deductions) exceeds 30 000 $, then a second beyond 65 000 $.
This year again, the UCCB affected during the first six months of 2016 will have to be declared.
In fact, the new Canada Child Benefit (CCB) is not taxable.
Link : http://www.revenuquebec.ca/fr/citoyen/situation/parent/autres_infos/credit_enfant/conditions.aspx
Medical costs :
You can claim the deduction of medical expenses (prescription drugs, glasses, dentist, acupuncturist, chiropractor, shrink, orthodontist …).
The health contribution is halved this year for people with an income below 41 265 $ ($ 50 instead of $ 100) and it goes from $ 200 to $ 175 for higher incomes.
Note that the health contribution will no longer exist in 2017.
Link : http://www.cra-arc.gc.ca/medicale/
CHARITABLE DONATIONS :
You have five years to report your charitable donations and claim your tax credits when you file your tax return. By combining the donations of the spouses on the same return, you will reach the threshold more quickly from which the credit becomes more profitable.
Link : http://www.cra-arc.gc.ca/chrts-gvng/dnrs/svngs/menu-eng.html
WORKER 64 YEARS OLD OR OVER :
If you had 65 and over in 2017 and that you live in Quebec, you can claim a tax credit. For the years 2016 to 2018, these changes raise the age of eligibility for the tax credit from 65 to 62 and gradually increase the eligible income threshold to $ 10,000 for all workers.
This credit is reduced by 5 % of income that exceeds 33 505 $.
Link : http://www.revenuquebec.ca/fr/citoyen/credits/travailleur_aine/default.aspx
REIMBURSEMENT OF SALARY OR SALARY INSURANCE BENEFITS:
You can deduct the amounts included in your income from a previous year if you fill out both following conditions:
- you received these sums for a period when you were not performing the duties related to your job
- you had to reimburse them in 2016 to your employer or your former employer, or to your salary insurance plan insurer in accordance with an agreement
UNION, PROFESSIONAL OR OTHER DUES:
You can claim a 20% tax credit if you have paid, in the context of a job that you held during a year, a contribution
- to a union
- to the Commission of construction in Quebec
- to the Professional Association of Quebec Taxi Drivers
- to a recognized artistic association or to a professional association in order to maintain a professional status recognized by law
- to a joint or advisory committee, or a similar group
- at the Office des professions du Québec
- to an association of employees recognized by the Minister of Revenue
Certain contributions made during a year for a job you held the previous year may also entitle you to a non-refundable tax credit.
Link : http://www.revenuquebec.ca/fr/citoyen/situation/artiste/credit_cotisations.aspx
It is not always easy to understand the tax rules, moreover governments are constantly changing the Laws. That is why you should never trust your statements from past years.
Above all, do not neglect to do your declaration. Respect the April 30 deadline and use electronic transmission for faster and more secure reimbursement.
In the event of negligence, you would be assessed on the basis of an estimate which could prove to be incorrect. When you know how complicated it is to get a correction …
And, although there are various software to guide you in your tax return, be aware that these tools remain limited for the specific tax aspects of Quebec.
In certain situations it would therefore be much more advisable to employ a tax accountant to file your tax return.
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