Wow – another 3 month (and 5 day) push on behalf of the CRA, with more to come when all of the corporate and trust tax returns have to be filed! So, were there any special changes or affects this year – yes indeed? I have exposure to tax returns from several other countries and it is interesting to compare the results (financially) between countries for the same personal and family situations.
I have come the conclusion that while the Canadian Tax System is clearly the most complex, cumbersome and frustrating for taxpayers to use and complete on their own, ours seems to offer the fairest outcome (i.e. lowest taxes) than either the US, Australia or the UK – good for us! On the flip side we kill way more trees – the average Canadian paper-filed return seems to require upwards of 20 pieces of paper, the US version requires 6 – federal and state, combined. This is not trying to say that more complex makes for lower taxes but the time and expertise needed is much lower.
So what did I see this year?
A) Medical expenses that people wanted claimed for the Medical Expense Tax Credit:
a. sorry, Aspirin, Tylenol, Ibuprofen, pain liniment, wrist and knee braces and elective dental and medical surgeries (to make us all bootiful (sic)) aren’t eligible expenses even if your doctor gives you a prescription for an over-the-counter drug – nope;
b. teeth whitening treatments (chemical or laser or both), aren’t eligible and neither are braces for purely cosmetic purposes, nor implants;
c. naturopathic “prescriptions” with no proven and accepted medical efficacy are likewise not claimable – the same applies to herbal remedies from various cultures;
d. healing lodges and residence therein, are not on the list and neither are alternative treatments such as chelation therapy or other type of experimental, non-approved approaches;
e. non-medically approved vitamins and potions, regardless of whether or not you have a prescription or who tells you to take or use them – no again;
f. the same applies for “misracle treatments” performed outside Canada – you can take them all you like, but Canadian Provincial and Territorial plans will not cover them, nor will your group plans and neither will they be permitted as eligible medical expenses; and
g. before you embark on such plans, check with your Provincial and group carriers, along with CRA so you know which costs are all yours!
B) On the flip sides, things that are eligible but were missed included:
a. Incontinency supplies;
b. Batteries for hearing aids and other medically prescribed devices;
c. Crutches, walkers, scooters and wheelchairs when medical prescribed and required – including rental fees and outright purchase in some circumstances plus repairs; and
d. Prosthetic devices – mechanical and otherwise, including hairpieces for cancer patients and breast prostheses.
C) Lots of confusion about the recently announced Family Tax Savings plan, most people thought it meant they would average both their incomes and shift as much as $50,000 into the name of the other spouse and were quite disappointed when they learned that their utopic view had no connection to reality.
D) The Pension Income Splitting opportunity under the tax act is still perceived as more confusing each year. Even when clearly explained, people ask how can adding more money to my spouses’ taxable income, reduce the amount payable? But it does!
E) The Charitable Donation Tax Credit continues to amaze me and frustrate clients. Pledges made are not claimable, only actual donations made and if you have received an approved receipt from an approved organisation (www.cra.gc.ca/charities) . Local fund raisers, regardless of the worthiness of the cause, are not claimable.
F) The Family Care Giver Credit is often missed – and the person for whom you are providing care does not necessarily have to be personally eligible for the Disability Tax Credit.
G) Miscellaneous credits such as the Public Transit Credit, Adoption Expense Credit, Children’s Fitness and Arts Credits and the Home Buyers Tax Credit (not to be confused with the Home Buyers Plan for temporarily withdrawing funds from your RRSP to purchase a first home).
Plan now for 2015. Start a file or envelope into which you put every possible receipt that could entitle you to increased expense or tax credit claims. In early 2016, set aside an hour or so and sort all of them into categories, then let a qualified tax-preparer help you get everything you deserve!