2017 Budget Overview: Tax Changes for Families

Review tax changes for families announced by the Government in the 2017 Federal Budget.

HOME RELOCATION LOAN DEDUCTION – The value of a benefit that occurs when an employer provides to an employer a low interest loan to assist in a move to a new employment location is has previously been offset through a home relocation deduction from taxable income.  The value of the deduction was limited to the annual benefit arising on loans up to $25,000 if the employee moved at least 40 kilometers closer to a new work location.  This deduction will be eliminated for the 2018 and subsequent years.   Existing home relocation loans will continue to have the taxable benefit but will not be eligible for the deduction.

DISABILITY TAX CREDITS –To provide time relief to the medical practitioners who are able to certify eligibility for the disability tax credit, nurse practitioners will be added to the list of qualified professionals who may certify the T2201 Disability Tax Credit form effective March 22, 2017.

This is 15% federal non-refundable tax credit which offsets the financial impact of medical conditions that markedly restrict daily living activities.  It is a base credit of $8,113 in 2017 which translates to a federal real dollar amount of $1,217.  Currently eligible practitioners are identified as:

Source: Budget documents

MEDICAL EXPENSES – Couples experiencing medical infertility issues have previously been allowed to claim prescribed fertility medication and in-vitro fertilization procedures and their associated costs as a medical expense under the medical expense tax credit.  This is a non-refundable amount in which qualifying expenses in excess of the lesser or $2,268 and 3% of net income can be claimed for the patient and/or family members.

For 2017 and subsequent tax years, taxpayers may elect to claim the costs of reproductive technologies even where the treatment is not medically indicated because of a medical infertility condition.  In addition, the taxpayer may elect to apply the expenses in any of the immediately preceding ten tax years.

CANADA CAREGIVER TAX CREDIT - CONSOLIDATION OF CAREGIVER TAX CREDITS – currently three tax credits cover the economic costs of caregiving in the tax system:

• The Infirm Dependant Credit for Adults other than a Spouse – There is no requirement to live with the supporting individual.  The maximum claim is $6,883 and it is reduced by net income over $6,902; with a complete phase out at income of $13,785.
• The Caregiver Credit – Family members who give care in their home to parents or grandparents (age 65 or older) or those dependent by way of infirmity could make this claim.  The credit is $4,732 when there is no infirmity (age eligibility at 65) or $6,882 where there is infirmity.  The credit is clawed back when income is above $16,165 and completely phased out when net income is over $20,895 or $23,045 for an infirm person. 
• Family Caregiver Tax Credit.  This is a non-refundable tax credit of $2,150 as well.  It is a top up of other credits when a family member has a mental or physical infirmity.  The additional amount is added to the spousal amount, caregiver amount, infirm adult amount.  It is the only credit available for minor children.  (Those who have minor children who are not infirm receive no additional credit and are compensated through the tax system with the Canada Child Benefit).   There is no clawback based on income in this case.

A new Canada Caregiver Credit will replace these credits in the 2017 tax year.  Notably it will not be extended to those who give care in their home for parents age 65 or older who are healthy, and there will no longer be a requirement for the infirm person to live with the supporting person in order to make this claim.

The amounts to be claimed are as follows:

• $6883 for infirm parents, grandparents, siblings, aunts, uncles, nieces, nephews, adult children of the claimant of the claimant’s spouse/common law partner.
• $2150 for infirm spouse or common law partner for whom a spousal amount is claimed, a dependant claimed for the eligible dependant amount, or an infirm minor child.
• The amount will be reduced dollar for dollar when net income is above $16,163.

The person who claims the spouse or eligible dependent cannot share the new Canada Caregiver Amount with another taxpayer; otherwise the new amount will be shareable with multiple caregivers as long as the total claim does not exceed the maximum annual amount.    No claim is allowed by a spouse claiming deductible spousal support.

STUDENTS – TUITION FEE AMOUNT - The tuition fee amount is being extended to include fees paid to organizations that provide occupational skills courses that are not at a post-secondary level provided that the courses are taken for the purposes of providing skills or improving skills in an occupation.  The student must also be at least 16 years of age.  This measure will apply to 2017 and future years.

NEW VETERANS EDUCATION AND TRAINING BENEFIT - Starting in April 2018, veterans who are honorably discharged will qualify for a $40,000 benefit if they have 6 years of eligible service and $80,000 if there is 12 years of eligible services.    The budget does not indicate whether this is tax free.

NEW CAREGIVER RECOGNITION BENEFIT FOR VETERANS – Replacing the Family Caregiver Relief Benefit, a non-taxable $1000 monthly benefit will be paid directly to informal caregivers including family members.

PUBLIC TRANSIT TAX CREDIT - This credit is eliminated as of July 1, 2017.

NATIONAL CHILD BENEFIT SUPPLEMENT - To accommodate the need for provinces to calculate their social assistance and child benefit programs, the National Child Benefit supplement calculations will be retained until July 1, 2018 – they were set to expire in July 2017.  This will have no affect on the calculation of the federal Canada child Benefit.

DONATIONS PENALTY - Certified gifts of ecologically sensitive land are eligible for a donation calculated as 100% of net income in a year and may be carried forward for ten years.  Taxpayers who have benefited from this provision and then use the land for another purpose or dispose of it, will attract a tax of 50% of the fair market value of the land.   This penalty will now also apply to the recipient of such properties that are subsequently transferred.

The current 50% tax on the unapproved change of use of donated ecologically sensitive land will persist even if the land is transferred to another organization.  The minister of Environment and Climate Change Canada (ECCC) is responsible for determining if the change in use would degrade conservation protections.  The ECCC must also approve recipients of such gifts.  Effective immediately, the approval requirement will be extended to include municipalities and municipal and public bodies performing the function of government.  Previously such recipients were automatically approved.

In addition, effective immediately, private foundations will no longer be eligible to receive ecological gifts.  For donors in Quebec, personal servitudes will also be qualify as ecological gifts, so long as the servitude will run for a minimum of 100 years.

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