Tax breaks clients might not know about

Helping clients save tax is part of your job. And while some tax credits may seem obvious, there are others you may not know about. Here, we list a few.

Claim service dog costs

How much is available: Service dog expenses, such as training, medical, equipment and food, are tax-deductible to the maximum allowed for each individual.

Eligibility: Anyone who has a service dog that was provided by an organization registered to train and provide service animals can claim the deduction. In addition, a valid Disability Tax Credit Form T2201 must be approved and on file with CRA.

Cost to apply:

No direct cost, but there may be fees for completing the medical forms for the T2201. If clients file retroactive claims, costs for an accountant to prepare the adjustments can be significant.

7

Degree of difficulty

7 out of 10.

Advisor commitment: Minimal.

For clients, completing the necessary documentation for the Disability Tax Credit can be time-consuming and challenging. Detailed medical information is required and must be completed by a healthcare professional. In addition, certification from the service dog organization may be required.

To obtain a Disability Tax Credit, clients must submit Form T2201 to CRA for consideration. It must be completed by a healthcare professional and include detailed medical information about the applicant’s diagnosis, extent of impairment and the expected duration of impairment. CRA will then approve or deny the request. Approved clients must keep all receipts. If they have more than one pet in the house, they will have to differentiate which costs applied to the service dog.

Clients may need help completing the T2201, and you’ll have to explain what costs are covered. Here are some examples:

• cost of training, including reasonable travel and accommodation to attend training (certification from the service dog organization may be required);
• food, leashes, harnesses; and
• veterinary bills.

As of Budget 2013, clients with Type 1 diabetes have been eligible to make a retroactive claim from the date the service dog was acquired. So if the service dog was obtained in 2013, these clients could make a retroactive claim for any associated costs from 2013 onward.

Where to apply: Complete and file the T2201 with CRA (see cra-arc.gc.ca/disability). Once approved, the costs are claimed as an eligible medical expense on a client’s income tax.

For a list of service dog agencies, check the Canadian Association of Guide and Assistance Dog Schools at cagads.com/programs.html.

Additional details: Not all service dogs qualify for the disability benefit. For example, Career Change dogs (former guide dogs) don’t pass the program requirements.

Manitoba Tuition Fee Income Tax Rebate

How much is available: Sixty percent of tuition fees paid, to a maximum of $25,000, can be claimed as a non-refundable tax credit. The amount can be carried forward up to 20 years from date of graduation. The annual rebate will be the least of:

• 10% of the total tuition; or
• Manitoba tax payable; or
• $2,500.

6

Degree of difficulty

6 out of 10.

Eligibility: Anyone who graduated from a post-secondary education institution after 2007, and now resides and works in Manitoba, can get the rebate. Post-secondary degrees earned outside of Manitoba are eligible as long as the applicant now resides and works in Manitoba.

Cost to apply:

None, but a client may have to pay an accountant for help.

Advisor commitment: Moderate.

Tuition that is eligible for the federal non-refundable tuition credit is eligible for the Manitoba credit. The applicant must complete Form T1005, and be prepared to show proof of tuition costs, such as CRA Form T2202a, along with proof of graduation, such as a diploma, degree or certificate.

Tracking the carry-forward amount will require detailed accounting from the advisor.

Where to apply: Claim it using Form T1005.

Additional details: Learn more at gov.mb.ca/tuition/index.html

Public transit deduction

How much is available: Clients may claim the full cost of a public transit pass as a non-refundable tax credit to reduce federal income tax owing. The actual amount depends on the municipality. For example, a monthly Toronto Metropass costs $141.50. Clients can claim the full $1,698 annual cost. A monthly pass in Calgary costs $99 ($103 for January 2016 only), and the full $1,188 is deductible.

Eligibility: The client, client’s spouse or common-law partner, as well as dependent children under the age of 19, can claim the deduction.

Cost to apply:

None.

1

Degree of difficulty

1 out of 10.

Advisor commitment: Minimal.

Clients must keep receipts that show the name of the transit company, the date of payment, the validity period, the cost of the pass and the rider’s name or unique identifier, and proof of payment such as receipts or cancelled cheques.

Where to apply: Clients claim the deduction on line 364 of their federal income tax returns.

Additional details: Day passes do not qualify. See CRA’s website for more information.

Lisa MacColl is an Ontario-based financial writer.