Fuel Tax Rebates for Persons with Disabilities - Federal and BC

If you have a disability or have a family member with a disability, you may be entitled to a rebate of gas taxes you pay. 

If you have a permanent mobility impairment and cannot safely use public transportation, you can ask for a refund of part of the federal excise tax on the gasoline you buy. You may also be entitled to a provincial fuel tax rebate from the province where you live. We have provided the information for British Columbia here.

You may qualify for the federal excise tax and fuel tax refund programs if you:

• Suffer loss of a limb
• Are permanently dependent on a wheelchair
• Have complete and permanent functional loss of the lower limbs
• Have a permanent impairment of movement to the extent that it would be hazardous for you to use public transit (whether or not it’s available)
• Have a permanent mental disability to the extent that it would be hazardous for you to use public transit (whether or not it’s available)
• Have a permanent sight impairment to the extent that you are not eligible to hold a driver’s license
• Receive a 100% veteran disability pension through active service in any war while in Her Majesty’s forces

In British Columbia, you can additionally qualify if you:

• Receive disability assistance or a disability supplement from the Ministry of Social Development and Poverty Reduction (PWD Benefits)

In order to apply, you must save all your gas receipts and submit them for the rebate. 

Usually, it is recommended that you submit them once per year. In the first year that you are approved for the British Columbia rebate, if you do not have the original receipts, you can send other evidence like credit card receipts or a notarized statement to support your claim.

Free Elton John Ticket Give Away

Win 2 Free Floor Seat Tickets to see Elton John from Pain Free Tax & Bookkeeping 

2 Free Tickets to Elton John

Come in and enter our draw at Pain Free Tax & Bookkeeping Service Ltd. for your chance to win these two free floor seat tickets tickets to see Elton John perform live at Save on Foods Memorial Centre on March 12, 2017.

Elton John Tickets Courtesy of www.PainFreeTaxes.ca

Clients who pay their service invoice at either of our locations at 306-830 Shamrock Street or 103-2220 Sooke Road will be entitled to an entry into the draw as well as the alternate methods of entry as listed on our Pain Free Tax blog.

There are 3 ways to enter the draw:

• Any client who pays an invoice issued during the contest period by Pain Free Tax & Bookkeeping Service Ltd. will automatically be entitled to one free entry into the draw per unique invoice paid in full during the contest period. 

• Any individual who newly "Likes" our Facebook page between January 6, 2017 and March 3, 2017 will receive a ballot entered into the draw.

• Any individual over 19 years of age may receive and enter a ballot (a maximum of one "in person ballot" per individual) during the contest period by attending in person at our office at 306-830 Shamrock Street on a weekday between 11am-5pm. 

The "contest period" for entering into this Elton John concert ticket draw will be  January 2, 2017 to March 3, 2017. No purchase is required to enter under the methods listed. The prize to be awarded is the 2 tickets pictured valued at $445 Canadian Dollars (including taxes and service charges) to be awarded to the winner of the draw to be held on March 4, 2017. 

Due to the time sensitive nature of the prize offered, the selected winner must arrange to pick up their prize in person as awarded from 306-830 Shamrock Street (during business hours) within 48 hours of being initially contacted by Pain Free Tax & Bookkeeping Service Ltd. or the prize will be forfeited and awarded to another individual (alternate winner) to be drawn and contacted prior to March 11, 2017 or if the alternate winner cannot be contacted or pick up their prize (within 48 hours of the attempted contact) by the Concert Date the tickets will given away by any other method of our choosing to any individual who was entered in the draw. Winners will be contacted by phone or e-mail using the information provided at the time of the ballot entry.

The winner of the prize agrees to be tagged on Facebook and/or have their name published in connection with announcing the winner and subsequently receiving the prize as awarded by Pain Free Tax & Bookkeeping Service Ltd.

Seniors Tax Credits

With all the talk of the Family Tax Cut announced for people with children under 18, a lot of seniors have been asking... "What about us?"



Find Tax Savings for Seniors

It seems like a good time to go over some of the most common Tax Credits and benefits relating to seniors and how we can help to make sure you are getting your best advantage.

Age Amount (Transferable between spouses if not used)
The age amount is a credit of up to $6,916 for people over 65 if their income was under $34,873. If you earned over this, the credit is reduced based on income up to an income of $80,980.

Pension Income Amount
If you are reporting eligible pension income, you are entitled to claim a credit of $2000. If your pension is eligible for Pension Splitting then you can also transfer a minimum of $2000 to your a spouse who doesn't have a pension of their own (even if they have income of other types and are not a senior themselves) in order to cancel out $2000 of the Pension income from your tax return.

Pension Splitting
The Elected Split-Pension Amount allows you and your spouse to agree to transfer up to 50% of your eligible pension income to your spouse in order to take advantage of lower tax brackets and other benefits that may relate to a lower net or taxable income. Sometimes pension splits are done in order to access benefits such as subsidized nursing home fees even if the taxes are not affected or should be avoided if raising a persons income would reduce their subsidy.

RRIF and RRSP Annuities
Some people only withdraw the minimum required from these Plans in order to keep their taxable income lower, but if benefits like the Guaranteed Income Benefit aren't being received, then you may be able to increase your annual income to fully use all your tax deductions without actually paying any tax.

Donations and Political Contributions
Because donations can be used for up to 6 years they can be combined together to use in one year, or keep any unused donations to use in a future year, depending on what is most beneficial. Also donations made "in kind" to certain organizations could be made when downsizing and disposing of personal items (such as Habitat for Humanity taking household and construction items or donating art or collections as Cultural Gifts).

Disability Tax Credit
If you or a family member are restricted in the "Activities of Daily Living" you may be entitled to this credit. A form T2201 has to be filled out by your doctor describing your limitations so that CRA can determine if you are eligible, but many seniors who use a walker for example would qualify. The credit can be applied for retroactively and returns amended up to 10 years.

Medical Expenses
While medical expenses have to be reduced by 3% of your income, seniors often have a larger amount of expenses than other individuals. Medical expenses can be combined for a couple (and dependants if you are also paying them for a family member) in order to get a better benefit. Medical expenses can also be used for 12 consecutive months that end in the current tax year, and not necessarily a Calendar year.

Many types of expenses are often overlooked as being eligible medical expenses. While not an exhaustive list this may give an idea of the most commonly forgotten expenses.

• Prescriptions (most pharmacies will provide an annual statement on request instead of keeping and totalling each receipt but make sure to get a breakdown of details as well as the total as the government will request it in a review).
• Health and Dental Plan Premiums (but not provincial plans), especially those deducted from your Pension or Pay Cheque. While these sometimes show on your tax slip this is relatively new and not done by most pension providers.
• Emergency Medical Travel plans, if you pay for medical insurance to cover you while traveling.
• Physiotherapy, Massage Therapy, Chiropractic, and  most other therapies
• Medical Travel, when travelling outside the area of your home (minimum 40km for travel or 80km for travel and accommodations) for medical treatment or assessment.
• Assistive Devices, hearing aids, walkers, crutches, wheelchairs, lift chairs, medical beds, rentals of devices, etc. Plus batteries or maintenance or repairs to those devices.
• Notes from doctors or reports written about you for medical purposes.
• Glasses and eye exams, plus contact lenses. Laser eye surgery to correct vision.
• Dental, Dental Implants, Orthodontics, Dentures, etc . While cosmetic procedures are no longer allowed, most dental procedures are not considered cosmetic.
• Household Renovations meant to accommodate a person with a disability (or in BC a Senior) with adaptations to a residence to better meet their needs.
• Nursing Home Fees, or Attendant Care (such as Home Care). A portion of costs associated with a Retirement residence may be considered Attendant Care, check if your residence issues you a receipt that relates to the portion for assistance provided by the employees for Preparation of Meals and Laundry, etc.
• Bathroom Aids or Supplies such as Depends
• other medical supplies if dispensed by a Pharmacist
• Naturopath Visits (not vitamins)

Capital Gains Exemption for Principal Residence Change of Use
If downsizing or moving into independent living and renting out your family home, you may not be required to convert the property to an "Income Property" for the purposes of paying Capital Gains tax and keep your exemptions. This is done by filing an Election with Canada Revenue Agency to keep the home as your Principal Residence even though you no longer live in it.

Family Caregiver Amount
If you care for a spouse or family member who has a low income, you may be able to claim this $2000 credit if their income was below $11,138.

BC Seniors Renovation Tax Credit
If adapting a home for a Senior in BC that owns or is resident in the home, the expenses can be claimed up to $10,000.

Low Income Benefits (most of these apply to BC)
For seniors who have low income there may also be some programs you could be missing out on which we have helped many of our clients apply for:

• Guaranteed Income Supplement (GIS) is added to OAS for low income seniors
• BC Bus Pass Program (40 dollars a year for a bus pass if you receive GIS or PWD Benefits)
• Medical Services Plan Premium Assistance, if your family "adjusted" net income is under $30,000 you can have your premiums reduced or eliminated. Adjusted means you also get to add another $3000 for each of the following, a spouse, each child, you are over 65, your spouse is over age 65, you or a family member have a disability tax credit. Once these are added together that is the income you can have to qualify for the reduced rates. If you qualified and never applied you can do so retroactively up to 5 years to receive a refund of premiums.
• Fair Pharmacare, if you haven't registered it may be a good idea. After you reach your annual deductible for prescriptions Fair Pharmacare will pay 70%-100% of your prescription costs. If the annual deductible is too high you can phone them and request it be split evenly over each month.
• L.I.F.E. Pass or reduced cost pass at your local recreation centre such as the YMCA. To promote inclusion individuals and families who have a certain income can receive free or significantly reduced passes to access recreation and swimming facilities and registered programs such as Yoga or other fitness and social programs. Those who need support can often also access a companion pass for free (In Victoria contact Recreation Integration).

Check our website for additional programs or contact us to help point you in the right direction. Pain Free Tax & Bookkeeping Service Ltd provides mobile tax service in Victoria, BC and the surrounding area to accommodate clients who prefer or need service in their own homes. We also can do onsite booking for our Mobile Tax Clinic to serve organizations or facilities.

 

Tax Changes for Families

Changes Proposed for 2014 Mean Tax Benefits for Families

NEW TAX CHANGES 

BENEFITING FAMILIES

Earlier this month there were a number of changes proposed expected to take effect in 2015 for the benefit of families. Two-thirds of the families benefiting these changes will be low and middle-income earning families.

Income Splitting Will be Available for Families

The new Family Tax Cut will allow income splitting for families as of the 2014 tax year, when previously this has only been available for seniors. This will allow a higher-income spouse to transfer up to $50,000 of taxable income to a spouse in a lower tax bracket. For example for a family that has a stay at home parent or one who works part time, and allowing them to divide the income for tax purposes. The credit will provide up to $2,000 of tax savings for couples with children under the age of 18, effective for the 2014 tax year.

Enhanced Universal Child Care Benefit replaces the Child Tax Credit and Increases UCCB

The Child Tax Credit is a $2000 tax credit applied to line 367 for a parent with a child 17 or under. This credit is being eliminated at the time of filing the 2014 tax return and replaced with the new Enhanced Universal Child Care Benefit as of January 2015. The credit being replaced can be worth up to $365 per year for each child to the parent claiming it, but only if their income is taxable. The credit goes to waste for many low income parents or single parents who don’t have enough income to make use of it.

The Enhanced Universal Child Care Benefit would increase the current $100 per month to $160 per month for children under 6 years old and will provide $60 per month for children 6 to 18. This benefit would apply regardless of income. In a year $1920 could be received per child.

While this change to the Universal Child Care Benefit is effective January 1, 2015 it cannot be paid until July 2015 after Royal Assent has been received. Until July 2015 regular payments will apply.

If you have applied for the UCCB or Child Tax Benefit in the past nothing further is required to receive this benefit, however if you have never applied you should submit form RC66.

Fitness Tax Credit Increased

While the Arts Credit remains at $500 per year, per child. The Fitness Tax Credit has increased to a maximum of $1000 for each child up to age 16 per year.

In addition to the increase of the current limit in the 2014 tax year, as of the 2015 tax year, the credit will be changed to a refundable credit. Meaning that the credit will result in a refund of a portion of the amount paid when no tax is owing rather than going to waste if the income is too low to owe any tax.

Increase to Child Care Expense Maximum

The current Child Care Expense limits for every age group will increase by $1000 per year.

Contact us at Pain Free Tax & Bookkeeping Service Ltd. to arrange a free analysis of how these changes may benefit your family. 

Why is the government auditing my tax return? Now what?

April 30th has come and gone and every good Canadian has dutifully sent in their Tax Return. Some still have their fingers crossed and many spent their refund long ago on bills, extravagant dinners, Tim Horton's, a little vacation... but wait, why did I get this letter asking me for more information? The questions that jump to mind are "Why am I being audited?" and "Am I going to owe the government my refund back?"

A Review is Really Just a Spot Check of your Return

Because Canada has a "Self-Reporting" tax system every tax return is pledged with a promise that we have done our best, but could be subject to a random check at a later date. Most of the 25 Million filed returns are submitted electronically or with paper forms that don't require sending most receipts. Instead of burying the government in all those receipts, and leaving them with a serious storage problem, you are supposed to retain proof of your claims for possible future review for 6 years. 

There is also a big difference between being selected for Review (spot checking of your claims for everyone) and an Audit (full scale review of your tax filing/records, normally for businesses). However, nobody likes being scrutinized by the government and it generally leads to nightmares, profuse sweating and severe stomach cramps. And no wonder we are scared with what we see of the American IRS on our mostly american TV programming. So any letter asking for information is often perceived as the ominous and frightening "audit".

In reality, a full Audit is quite rare and the most common thing is for taxpayers to receive one of 4 types of review letters: 

• Pre-assessment Review Program - before they process your tax return
• Processing Review Program - after processing your tax return
• Matching Program - checking your return against T-slips issued to you for missing ones
• Special Assessments Program - targeted reviews of certain types of income/claims, like Tips or employment expenses

Most common is the 2nd and 3rd... and you will receive a letter between May and December to spot check submitted claims or inquire about differences between your income slips reported and slips in their system.

The letter will request supporting documentation for whichever claim is being looked at. And the practice is not to ask for more than 3 years back unless there is real grounds for a more serious look. These are usually a simple look at your receipts, and no government ghoul will ever show up with a warrant... they will just request the appropriate supporting documents to prove your entitlement to the claim, and if for whatever reason the papers aren't acceptable or you have claimed something in error, the worst case scenario is that you pay back the tax owing on that item. 

Why were you chosen? Well its really nothing personal. All returns are scanned by a computer system and the factors are:

• random selection - they will select 150,000 people with a specific claim for example
• comparison of information on returns to information received from third-party sources, such as T4 information slips - so something may not appear to match your slips
• types of deductions or credits claimed and an individual's review history - something that seems out of the ordinary for you or an unusual amount for you that could be an error, like a large claim for Spousal Support deductions, and you were never married... or something that you have had rejected before and claim again

Usually a review gives you 30 days to submit the paperwork, but if you need more time, call and ask for an extension. You can usually be granted one or two extensions with a simple phone request. If you fail to respond, expect a reassessment of your claim and to pay back any related tax owing. There are no penalties for the tax assessed resulting from this, but you will have to pay interest backdated to April 30th.

Keep in mind if you miss the deadline and get Reassessed, or if the government doesn't agree with your receipts its doesn't mean its the end and you have to pay... you can still request an adjustment to put it back in later with the proper paperwork for up to 10 years. Hopefully it won't take that long to find the right receipts wherever you stored them! 

If you are still not sure how to deal with a review or you have had your claim rejected, seek out help. Ignoring the letter or not sending correct documentation will result in a loss of tax credits that you may still be entitled to. 

Pain Free Tax & Bookkeeping handles reviews as part of the cost of doing your taxes, but we also help people who filed their own taxes or at other firms. We are very experienced in handling reviews and successful in getting valid claims reinstated after a rejection. And where the individual really isn't entitled, perhaps the tax return requires other changes because of it - such as changing the best amount for a pension split, medical, RRSP's, etc.

If you haven't yet filed your return, do so now to avoid being cut off of benefits such as Child Tax Benefit or Guaranteed Income Supplement.

What do Day-Camp, Babysitting, Preschool, Summer Camp, Nannies and Boarding School have in common?

Childcare Expenses are Deducted Dollar for Dollar
from your income saving more tax than other expenses.

Besides providing wildly entertaining activities designed to amuse your kids... and give you a moments peace... all of these are types of Childcare that could be valuable Tax Deductions you aren't fully taking advantage of.

Childcare Expenses are deducted off your earned income dollar for dollar for tax purposes, so essentially that income is cancelled out. That is why it's more valuable to you than other types of Tax Credits like Bus Passes or Medical Expenses.

While most people are aware that they can claim Licensed Daycare or After School Care when it comes to some of the other eligible Childcare Expenses it can get confusing. But the rule of thumb is if the activity you have enrolled your child in is allowing you or your partner to go to school or do an income earning activity, in general, it can be claimed. The expenses are eligible where the primary goal is childcare for earning income but if the expenses don't line up with your specific work hours that doesn't mean they aren't eligible... they still allow you to keep your sanity after all. The total expenses for the year are claimed against your annual income, not on a day by day or month by month basis. It is accepted that you may not always be "at work" while your child is in paid care, but being free to do other activities during that time may allow you to work "overall" so CRA doesn't get involved in those personal choices so as long as your are earning eligible income to deduct it from, that is sufficient.

Under CRA's rules, if you are married or common-law, childcare must be claimed by the person who has the lower net income. Except if that person was incarcerated, incapacitated by illness, or in school. If those situations apply then the higher income person can claim those weeks which usually results in a bigger deduction. See form T778.

Eligible Expenses (up to annual combined limit of $4000-$7000 for each child based on age/disability). The age limit for the child being eligible is 16 unless the dependant is disabled.This cannot be money paid to a blood-relative under 18 or a spouse.

• Daycare of After School Care costs, Licensed or not. Individuals must provide their name and SIN if they are not a Daycare Center. If the daycare is a business, no SIN is needed.
• Babysitting costs. You need the individuals name and SIN number (note sometimes people are hesitant to declare the income but for teenagers with no other job, this is unlikely to be enough income to be taxable and exceed their personal exemptions). 
• Nannies. The cost of their Salary, plus taxable benefits and expenses such as CPP/EI.
• Preschool fees, including mandatory registration costs. 
• Summer Camps/Overnight Camps/Overnight Sports Schools. Subject to a weekly limit based on age of $100-$250.
• Day Camps/Day Sports Schools: The most frequently misunderstood and neglected expenses. This is treated as normal daycare, even if its a super fun activity centered camp like golf, laser tag, dancing, sports, etc. If its more than 5 days long, see below.
• Educational Institution Fees, for the part that relates to childcare and not education if you can be provided a receipt that details supervision costs during recess and lunch, etc.
• Advertisement and Placement Agency Fees may also qualify if needed in order to find a suitable childcare provider or nanny for your situation.

A few common pitfalls and tips for Day-Camps and other Childcare:

• If you have no eligible income to use Childcare against (EI or Social Assistance for example) it cannot be carried forward and may be wasted, but consider if it is also eligible for the Fitness or Arts Credits instead or if your situation allows the higher income spouse to claim it instead.
• If the lower income person is non-taxable but has income, it can reduce their income to qualify for more child tax benefit or increase spousal credits for their spouse.
• 5 day camps are also allowed to be claimed as a Fitness or Arts expense when it would be more valuable to claim it as Childcare and not be subject to the respective $500 limits per child for those Tax Credits. Sometimes the issuer will "helpfully" stamp it as being an eligible fitness credit, but won't mention it may be more beneficial to claim it as childcare.
• Claiming Day Camps as "Camps". Sleep away/Summer camps and Boarding School costs are limited to a weekly Maximum in order to exclude all the other components that aren't eligible, but Day Camps are not. This is a most common error when using software where people enter the expense as a Camp instead of Daycare, which adds the limitation. This limitation does not apply to Day Camp activities you enroll your children in and should be claimed in FULL.
• If you have reached your maximum for Childcare, consider 5 day camps as Fitness Expenses instead of allowing them to be wasted, for example if you have a nanny as well.
• If you have reached your childcare limit on other expenses and have your child in preschool, consider using the preschool expense as the Arts Credit instead rather than wasting it.
• If you have a child with a disability, and do not have other Arts and Fitness Credits over $100 each but also have a 5 day camp that could also qualify, use one worth at least $100 to receive the "bonus" supplemental $500 increase to your expense for fitness or arts to $600 or more. This is the one exception where it can be more than valuable than Childcare if you have income.

Pain Free Tax is a BBB A+ Company that offers free reviews of your tax returns to see if you might be eligible for adjustments to anything you may have missed on your last 10 tax returns. Contact us at service@painfreetaxes.ca for help. We offer mobile service and helpful advice.

$4638 Recaptured by Claiming Selling Costs of House

We recently helped a couple who moved from Nanaimo to Victoria in 2011 and rented the house out. In 2013 they sold the home after waiting for market conditions to improve a bit.

We advised these clients they should be claiming the selling costs as a Moving Expense and the adjustment request we submitted for them resulted in a reassessment and saved them $4638 of tax they otherwise would not have received.

Often moving expenses are not all incurred in the same year, and some of the costs eligible to be claimed are not as obvious as others, such as Realty Commissions, Legal Fees, and Land Transfer Tax. If they cannot be applied in the year that you moved, as there was no income earned in the new location yet (or you haven't found the job yet), then you can apply them in a future year.

The expenses must be reported on the tax return in the year they are incurred. So in this case there were expenses in 2011 and 2013 from the same move.

Keep in mind if you move again and haven't claimed them in the location of where you moved, they will be cancelled at that point.

Single Parents with Children Under 6 - The UCCB can be claimed on your child

One of the most frequently overlooked tax savings available to a Single Parent for the past few years is the ability to claim the UCCB Benefit ($100 per month for each child under 6) as the income of an eligible child rather than including it in their own income.

If the parent is claiming an Amount for an Eligible Dependant (claiming the Child for additional credits instead of a spouse), the UCCB income has to be used for that specific child and their credit reduced by the income.

If the parent is not claiming the Amount for Eligible Dependant, the income can be claimed as the income of the child for whom you are receiving the benefit instead.

The child does NOT need to a file a tax return to take advantage of this option.

Either way, taking advantage of this reduces the taxable income of the parent and in most cases results in some tax savings even if the Amount for Eligible Dependant is reduced. In some provinces it makes more difference than others because of the provincial tax calculations.

For example, with a single parent in BC with a taxable income of $60,000 it can mean a savings of an approximately $180.

To do this, instead of reporting the UCCB on line 117 of your tax return, report it on line 185.If you haven't been taking advantage of this, it's not too late. You can go back and adjust your tax returns for the last 10 years using form T1 Adj.

Feel free to contact us at service@painfreetaxes.ca or 1-844-EZ-TAXES for a free consultation about this or other potential missed credits.

Another $5000 Back in Our Clients Hands

Today we got confirmation of a combined $5000 that was put in the hands of some of our new clients by adjusting tax returns for them for 2011 and 2012 where credits were missed by other tax firms.

In one case, they paid an extremely low fee to have their taxes done but it cost them nearly $3,000 in lost refund due to missed credits and poor advice... and this also led to problems with Canada Revenue Agency that are still being worked out and being appealed.

In another case, they paid $300 for a couple to have their taxes prepared and items were missed, costing them $1,200 as well as incorrect advice about another credit they could have claimed.

We review prior year returns at no charge to look for any missed credits. We only charge for the work required to help you get back money you are entitled to.

Commonly Missed Tax Credits for Families

T4's are due out by the end of February and as "Tax Time" gets rolling it seems like a suitable time to review the most commonly missed Tax Credits for families:

Childcare

More than "Daycare" counts as Childcare. Don't forget preschool, babysitters, day camps, overnight camp, boarding school, or Nannies. Some receipts for Arts or Fitness could also qualify as Childcare, which is worth more.

If your child has just started Kindergarten, don't forget to request receipts from January to September.

The lower income spouse normally must claim the childcare, but there are exceptions, so check before letting it go to waste.

The Family Caregiver Amount

If your child or spouse is Infirm or Disabled, you may be entitled to this new credit. If there is a Disability Tax Credit in place, go ahead and make the claim, otherwise you may need a doctors note. For a Child they must need more support than another child the same age and be likely to continue going forward, but it is not required that they have the Disability Credit.

Caregiver, Infirm Amounts and Disability Transfers

If you help with the Activities of Daily Livings for an Elderly, Infirm (Physical or Mental Challenges) or Disabled Relative over 18 you may qualify to claim their Disability Tax Credit, the Caregiver Amount if they Live with you, or the Infirm Amount if they don't.

Fitness and Arts Credits

If your child is in a Sports/Fitness program or in any Arts/Tutoring program for at least 8 continuous weeks or a camp for 5 consecutive days then you can claim up to $500 for each of these categories, plus additional Provincial Credits in many provinces. If your child has a Disability Tax Credit, you get up to $1000 for each because you get an extra $500 credit for any fees over $100.

Transit Passes for Unlimited Bus, Ferry or Trains

Weekly (5 day min), Monthly or Annual Bus Passes (and Discounted Student Bus Passes through BC Transit) can be used for a Transit credit. Often Post Secondary Students assume their passes are included in their Tuition receipt but you must print the school fees breakdown to get their Transit and Medical Insurance Amounts.

Medical Expenses

Often people are under the impression they don't have enough medical to make a claim because you have to subtract 3% of your income. They forget items like Extended Health and Dental Plans deducted from their pay, or don't think about other types of medical claims besides Prescriptions (such as Glasses, Chiropractors, Naturopaths, Braces, Medical Travel, Out of Province/Country Health Insurance for Vacations, etc). Even if you don't have enough to make a claim, you can save them for next year because you can claim the best 12 consecutive months ending in the current tax year. Also, the 12 months selected can be different for each family member. If you lost them, you can usually get Summaries for the entire year from your Health Practitioner or Pharmacy.

Medical Expense Supplement

Often the medical claim itself makes no difference to a person with low income, however there is also a Medical Expenses Supplement which gives back 25% of the Medical Expenses paid to low income taxpayers as a Refund.

Charitable Donations

Many people don't realize they can claim a donation receipt up to 6 years. This means you can save up all your small donation receipts because you get more credit for amounts over $200 total, or keep them if they make no difference this year for the future. Also if you forgot to claim them in the past, you can gather them up and use them for the current year.

For 2013 there is also a new “First Time Donor's Super Credit” allowing individuals who have never claimed donations before to get extra value for Donations from 2013.

If you think you have missed any of these credits on past returns contact a Tax Professional for Advice. Our company will assist with a free review to help you decide if you could be getting money back by making adjustments.

Do You Know the Difference Between Camp and Daycamp Expenses? - Frequently Missed Child Expenses

In the midst of a proposed school strike, people are signing their children up for Day-camps at local Recreation Centres. Also a co-worker was doing early registration for her child's summer camp. It's come up quite a bit that these ARE considered valid Childcare Expenses and are frequently overlooked.

Because of the word "Camp" people often doing think of these as "Daycare" but as far as your taxes are concerned, they still are valid expenses for Childcare.

Even though both use the word "Camp" they are treated differently for your taxes.

A DAY camp is no different than any other daycare expenses. You can claim the full amount subject to the same rules as any other Childcare expenses (as far as maximum claim amounts and the lower income parent has to claim it unless they are a student or have an illness).

A SUMMER or "OVERNIGHT" Camp is subject to a weekly maximum limit of between $100, $175 or $275 depending on the ages of the child and whether or not they have a disability.

If you child was in a "camp" in 2013, don't forget to claim this expense. If you missed claiming this expense in the past, your tax returns can be adjusted for up to 10 years. Most facilities can easily provide replacement receipts on request.

If you use software to prepare your tax return, keep this distinction in mind when preparing your tax return about the word "camp". If you mark the expense as a Camp in the software, it will apply the weekly limits. But unless it was an OVERNIGHT camp you should NOT do this. Any camps that don't have an overnight portion, are not really considered a camp. They are just considered ordinary day care.

Also keep in mind that if your child is in a sports camp, make sure to include this as DAYCARE and NOT as a Fitness expense.


Pain Free Tax & Bookkeeping Service provides free reviews and advice for tax questions about adjustments. If you have any question please contact us at service@painfreetaxes.ca

Why First Time Home Buyers should Leverage their RRSP and the Home Buyer Plan

I often hear from people that they want to save for a down payment before they think about buying their first home, but in the meantime prices are going up on values faster than they can save.

I always recommend getting an RRSP and using the Home Buyer Plan (HBP) to them, but not just strictly as a saving tool. There are a lot of ways that this can be beneficial.

While people often say they don't have the money to save for their RRSP or down payment, consider making automatic deductions. Each payday pay your RRSP $25 or $50 or try doing direct transfers from your bank account by "rounding off" your bank balance a few dollars each week. You will be surprised how fast it adds up and how little you miss it. You can also ask your employer to offset this by lowering your tax deductions at source to account for the higher refund you will receive, so often this works out to the same or similar "take home" amount.

Firstly, the contributions to the RRSP are tax deductible. So while you are saving up for your own home, you will get a tax break in the form of a higher refund or lower tax bill. This can be from 20% up to 40% of what you are putting into the RRSP coming back as a tax refund. Often the strategy ends here, once enough is saved the RRSP holder takes the money (up to $25,000 per spouse) out under the Home Buyer Plan and uses it as their down payment. Under the HBP you can take out money out of the RRSP without it being considered income or losing your tax breaks so long as you put it back in an RRSP over 15 years.

However, there are other ways to leverage that RRSP to help you buy your first home. The money can be used for anything, not just a down payment. The only requirements for taking it out are that you:
- are purchasing a home you intend to live in within a year of purchase
- you haven't owned another home in the past 5 years or have a balance owing to the HBP already
- The money has to be in for at least 90 days before the withdrawal
- you must make the withdrawal within 30 days of the purchase and if multiple withdrawals, they have to be in the same year
- you agree to repay the withdrawal over 15 years (with a 2 year reprieve before you starts) into your own RRSP, but if you can't make that payment you pay tax on the payment you should have made to offset the original tax break you received. (Note: in a year you have little or no income, you can basically skip it with no tax consequences).

Sometimes, using the HBP money in other ways can help make the purchase a reality, for instance letting your mortgage broker know you will use the withdrawal to pay down existing debts, instead of entirely as a down payment, may help you qualify for a mortgage or higher amount that you may not have qualified for due to "Debt Service Ratios" as these are used to determine how much of your income goes to debt. Even if you have only a few payments left to go paying down a debt, this can be held against you in qualifying for a mortgage. One client did this as we suggested and qualified for a mortgage of $80,000 higher. Making it possible to find a home available in the approved range that wouldn't have been previously possible. Often people take all the cash they have to pay down debt to try and improve debt service ratios, but recycling it through the RRSP first gets them the tax refund and the money to pay down debt in order to make that money go much further.

Another idea is that if you have a lump sum you are planning to use for your down payment or can "borrow" for 90 days somehow, put in the RRSP before using it to buy the property. This will allow you to get both a tax break and a nice size tax refund as well. Therefore getting more "bang for your buck" with the same money. Putting your down payment fund in the RRSP first may give you enough money to qualify for a larger mortgage, or provide you with money for closing costs, moving expenses, and incidentals like renovations or furniture.

Sometimes using this strategy makes the difference between making it work to buy your home or not. People are frequently disappointed that they can't qualify for quite enough money, when doing this can make it work. Mortgage brokers try to be helpful but aren't always knowledgeable about RRSP's options that might help or that sometimes less down payment and paying down the debts can be the key, even if they are small ones.

Keep in mind that as a first time home buyer you will also qualify for the First Time Home Buyer Credit which gives taxpayers a $5000 non-refundable tax credit in the year they buy their first home. This translates into a $750 extra refund.

Feel free to contact us at service@painfreetaxes.ca for free tax planning around buying your new home or leveraging your down payment in the best possible way. You might be surprised how using these strategies can make your dream of owning your own home a reality faster, or leave you with a little less cash crunch in the process.

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CRA Reviews and getting supporting documentation. We do this for no extra charge, and sometimes its a lot of work.

I frequently end up helping clients to support a review of their tax deductions with Canada Revenue Agency.

This is a normal part of the self-assessment process we have in Canada in particular since returns are usually electronically filed without documentation. It is not what you would call an audit and it isn't usually triggered by anything considered suspicious or fraudulent on your tax return.

It is important however to provide the correct information in the requested amount of time for your review to avoid having your expenses reversed. Otherwise you may owe CRA back some money.

This is something that I help my clients with as part of my service in order to save them headaches.

If for some reason CRA rejects your expenses during a review, that doesn't mean they can't be reinstated. Often they just need more documentation.

In one case I had a client with $18,000 worth of medical that was rejected partly because insufficient information was provided and partly because CRA had misinterpreted some of the information. The client thought CRA was refusing to allow the claims unfairly, and he was right. In this case, because it was complicated, I opted to file a Notice of Objection on his behalf and formally request a formal review of this decision. I also submitted the correct information that hadn't been submitted originally by his prior service provider. In this case, almost all the claims were reinstated except for a couple of things we had advised him were not going to be accepted already.

This case took a lot of work and follow up and quite a bit of effort to make a clear picture for CRA to understand, in part because there were complex Medical Travel circumstances and some documentation was difficult to obtain.

However, in the end we were very successful, because we cared enough to help. And it didn't cost the client anything extra.

If you have had deductions rejected by Canada Revenue Agency (CRA) you should talk to us for free. Maybe they can be reinstated, if we can help you through the process.

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service@painfreetaxes.ca

Extended Health Benefits Frequently Not Included as a Deduction. Leaving hundreds of your refund unclaimed.

I spend a lot of time educating my clients about what is a Medical Expense that they can use that they haven't thought of. The most frequently overlooked is the Extended Health & Dental plans. SOMETIMES these show up on your T4, but more often than not the employer/payroll deducted plans only show on your paystubs.

There is a common misperception that if your Health Plan comes off your payroll it is not deductible, but the employee paid portion is. Companies sometimes will issue a letter stating the amount paid but that is rare, normally all you will receive is your paystubs and we can use either each paystub or the final one from the year to determine the total paid for the year. Often retirees get this type of expense deducted off a pension cheque and get a letter once a year that contains the amounts for their plans.

In many cases their former tax professional has not mentioned this to them, even though the health plan was obvious from their medical receipts or statements.

For many families this is the most common medical expense and can make the difference between having enough to claim and not (because 3% of your income is subtracted from your expenses like a deductible).

I have done adjustments for at least 6 clients recently for clients to claim this type of expense that has been overlooked for years. The average refund for these adjustments is at least $900-$1200 per family. Sometimes more if many years have gone by.

Adjustments can be made for up to 10 years. Contact us for a free review of your return. service@painfreetaxes.ca

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Accountant told his client he couldn't claim his move to Ontario and back... We fixed it, and got a new client.

One of our clients had moved to Ontario and after about a year decided to move back to BC. Their accountant told them repeatedly that they could not claim the moving expenses for either move. The accountant was wrong and would have cost them thousands they were entitled to. Fortunately, we were able to set this right.

Moving expenses can only be claimed against earnings in the new location. Because they never really earned much income in Ontario, most of the expenses for the move to Ontario were lost, however the move back to resume working in BC was completely legitimate. CRA did review the claims and accepted them.

Not only did our advice save these clients thousands in this case, they also have told us that while our fees are much more reasonable than his former accountant, we have provided more tax saving advice than they ever did for triple the fees.

Moving expenses are a commonly missed expense due to misperceptions about the requirements to make the claim or whether it is worthwhile.

For free advice or a review of your moving expenses give us a call or email us.

www.painfreetaxes.ca or service@painfreetaxes.ca

Did you have childcare expenses that went to waste?

Childcare expenses like daycare or day camps usually have to be claimed by the lower income spouse, so if that person doesn't have any income sometimes the expense goes to waste.

However sometimes the tax preparer (or tax software) hasn't asked a few questions like:
- was the lower income earner a student during the year?
- was the lower income person infirm (ill) for more than 2 weeks?
- was the lower income person in prison during the year?

We have made many corrections for people in this situation who were told that they couldn't claim their childcare or the tax software simply omitted it. Depending on the amount of the expense and the higher income earner's income, this change could get you back 25-40% of the value of the childcare expense.

Also, if in fact it can't be used as childcare, perhaps the expense would also qualify as an Arts Credit or Fitness Credit depending on the activity. In some cases when the expense isn't beneficial for one credit, it may qualify for the other.

Feel free to contact us to review your prior returns if you aren't sure if you have lost out on claiming childcare you thought you could claim.

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Getting a Disability Tax Credit Approved is Only the First Step. One client missed claiming $9600 of credits.

Time after time I have helped clients get credits that were missed relating to a Disability Tax Credit, the unusual thing is they are people who already had the credit approved and thought they had received the benefit from it already.

People apply for the credit and then once approved, don't make all the adjustments needed to get everything they are entitled to.

In this case, the clients received a credit for their child, backdated to when his ADHD became severe enough to qualify. Once processed, CRA automatically sent them a revised Child Tax Benefit based on the qualification and after receiving this large sum of money the client assumed that was all there was to it.

However, I discovered while helping them with a review of their medical expenses that they had not in fact claimed the actual credit and revised their returns going back for several years.

Initially they didn't believe me, but I guaranteed them that if they didn't receive this money I would refund all the fees for the related work to do the adjustments.

This got them back $9600 plus interest just in time for Christmas. Turns out the timing was perfect for them and they really needed the money when it arrived.

If you think you might qualify for the Disability Tax Credit, or aren't sure having one has benefited you, contact us at service@painfreetaxes.ca and we can look into it for you at no charge.

Our company provides mobile service in Victoria, BC and remote service Canada Wide through the internet, phone and fax.

Can't Figure Out WHY you Owe on Your Taxes? This client overpaid more than $22,000 plus penalties.

We had a client who was very behind on his taxes because every time he filed he ended up owing, a lot. So he avoided it like the plague.

We took a close look at his return, and he was right, it didn't make any sense... he shouldn't owe. But he was missing information and his previous (Major Tax Firm) hadn't noticed. All he was filing with was a T4, and owing $5000 each year. Obviously something was seriously wrong, especially since he worked at a bank. This should have been noticed by anyone doing his tax return and he shouldn't have been left wondering why.

It turned out his employer had a generous RRSP plan through payroll, and he was getting a LOT of RRSP's held back off his pay and matched, but never bringing in the receipts with his taxes when it was time to file.

We helped him obtain those missing receipts and got him back over $22,000 from previous returns and reversed all his prior late filing penalties of $10,000 (because if you don't really owe, you don't pay penalties). As well as refunds in all the years we were filing that he thought he was going to owe again.

Also, because he hadn't been using his RRSP receipts, his Home Buyer Plan repayment was being added to income, which we also had corrected.

In addition, because his RRSP's were so large, he was over-contributing and about to be penalized on his oversize RRSP (by a 1% penalty per month). But we eliminated that overpayment by adjusting his returns so that his Home Buyer Plan was paid out early and advised him to stop contributing so much to the RRSP. This out of the box strategy saved him a lot in penalties as well.

We also helped him claim a lot of medical and dental items he didn't know he was missing.

Contact us to look over your old returns at service@painfreetaxes.ca

Voluntary Discolure saved our client $10,000

We recently assisted a self-employed client who was filing from 2010-2012, and had received a demand to file the 2011 Tax Return. It turned out they also had to file GST/HST returns from 2009-2012 but had not received any demands about this yet - but we knew filing the tax returns would trigger this.

We advised our client and filed the outstanding 2011-2012 tax returns, and then we filed all the 2010 return and all the GST/HST Returns for 2009-2012 with a Voluntary Disclosure Request as they were all late filed. Immediately upon receiving the 2011/2012 tax returns CRA demanded the GST/HST returns, however we had already submitted them with Voluntary Disclosure which were acknowledged only 3 days before they issued the demand.

CRA accepted the Voluntary Disclosure for our client, and having proceeded this way has saved the client at least $10,000 in penalties. CRA could have refused to accept this, however it was worth the effort to try, and in this case it paid off in a big way for our client.

RRSP Pitfalls - Being Thorough Brings Extra Tax Savings

New clients came to us that hadn't filed for several years and on review we discovered some information didn't make sense.

The couple had RRSP withdrawals but no evidence they had ever put money in RRSP's in all the years we were preparing. We looked into it further by contacting CRA and discovered over $2000 of RRSP contributions were never deducted, mainly from 2003-2004. The result of fixing this was additional tax savings of over $500.

They would have been double taxed on this money, first when they earned it, and again when they took it out of the RRSP; because they never got a tax break when they put it the RRSP to remove it from income when it was earned.

Adjustments can be made to filed tax returns for up to 10 years. Contact us for a free consultation if you aren't sure about your RRSP deductions or withdrawals at service@painfreetaxes.ca we serve clients worldwide with Canadian Personal Income Tax Returns.