Tax Relief for Armed Forces: Were Claims Filed Correctly?

Members of the Canadian Armed Forces (CAF) received $85 Million in extra tax relief in the 2017 tax year, but some may have missed the opportunity when filing. As part of year-end tax planning communications, professionals working with CAF clients may wish to revisit any recent claims for the deductions available to police and Canadian Forces personnel.

The deduction was noted on box 43 of all T4 slips, but there were some changes in 2017. This tax deduction was automatically given to all CAF members and police officers for any period in which they were deployed on an international operational mission. In the past, the mission had to have a particular risk score in order for the taxpayer to qualify for the deduction. This risk rating requirement was removed in 2017.

Also, the maximum amount that could be deducted was changed to the highest level of pay earned by a Lieutenant-Colonel of the CAF. In the past, the maximum amount deductible could not exceed the highest level of pay earned by a non-commissioned member of the CAF.

If Box 43 was entered on the correct line of a tax software program, the correct deduction would automatically have been taken. However, if the box was missed, the taxpayer’s refund would have been understated, in some cases significantly.

Good news: it’s possible to correct any errors or oversights with an adjustment to the 2017 tax return to claim the full deduction. Doing so now would likely enable receipt of the outstanding refund before Christmas.

Evelyn Jacks is Canada’s most trusted educator in the tax and financial services. Founder and President of Knowledge Bureau and developer of the Real Wealth Management discipline, she is also the author of 53 books.

Additional educational resources: Learn how to better help clients and be proactive in addressing the unique deductions and claims available to them by enrolling in the DFA – Tax Services Specialist designation. Start with a free trial of courses that contribute to this accreditation.

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