Tax Tips: New credits and deductions

There are several changes and updates to the tax code that your clients should be made aware of before they file their 2011 tax returns.

Read: Time to talk tax

The CRA is urging tax-filers to you make sure they’re aware of the new incentives or changes to existing credits, deductions, benefits, and services.

New Credits

Children’s arts tax credit: Parents can save up to $75 at tax time when they claim an amount for eligible expenses paid for the registration or membership in a prescribed program of artistic, cultural, recreational, or developmental activities for their children.

Volunteer firefighters tax credit: Volunteer firefighters may be able to reduce their tax bill by as much as $450 if they have completed at least 200 hours of eligible volunteer time.

Taxable capital gains: Donations of certain flow-through share properties made to a qualified recipient after March 21, 2011 may give rise to a deemed capital gain, which is subject to an inclusion rate of 50%.

Changes and deductions

Canada child tax benefit: Parents must now notify the CRA of any changes to their marital status by the end of the month that follows the month in which the status has changed.

Since 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 they qualify.

Allowable medical expenses for dependants: The $10,000 limit per eligible dependant has been removed.

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.

Read: Tax tips for students

Canada Pension Plan (CPP) contribution: As of January 1, 2012, the rules for contributing to the CPP changed. The changes apply if you are an employee or self-employed, you are 60 to 70 years old, and you receive a CPP or Quebec Pension Plan retirement pension.

Saskatchewan pension plan (SPP): The annual contribution limit to the SPP has increased to $2,500 from $600. For 2012 and later tax years, SPP contributions are subject to the same rules as RRSP contributions.