Budget 2017: Personal Income Tax Updates

Minister of Finance, the Honourable William Francis Morneau presented Budget 2017 on March 22, 2017. The theme of this budget is building a strong middle class. In this regard, Budget 2017 committed to include methods to close tax loopholes, provide tax relief to middle class, crack down on tax evasion, and to fix tax system which benefits the wealthy and high income individuals.

Following are the important personal income tax updates announced in Budget 2017:

Canada Caregiver Credit:

For the year 2017, Caregiver Credit, Infirm Dependent Credit, and Family Caregiver Tax Credits are eliminated and replaced with Canada Caregiver Credit. Elimination of these federal tax credits also eliminates Ontario provincial tax credits and consolidated them into Ontario Caregiver Tax Credit, as Ontario legislation depends on Federal Legislation.

Up to 2016, an amount of $4,668 could be claimed for Infirm Dependent Credit or $ 4,667 for Caregiver Credit. Beginning 2017 and later years, Family Caregiver Credit will be 15% non-refundable tax credit up to $ 6,883, which is increase by $2,121. This tax credit will start to reduce where dependent’s net income exceeds $16,163.

Definition of Dependent – Must be dependent due to physical or mental infirmity.

Other parents and grandparents over the age of 65 are not qualified for this credit.


Tuition Tax Credit:

Budget 2017 increases the range of educational courses that are qualified for Tuition Tax Credits. In addition to post-secondary level courses, occupational skill level courses taken at university or college in Canada and full amount of bursaries received for such occupational courses will be eligible for tuition tax credit.


Medical Expense Tax Credit:

Medical expense incurred to conceive a child are eligible to claim tax credit if the person was unable to conceive because of medical conditions.

This rule will apply effective 2017 and subsequent years.

Budget 2017 also included nurse practitioners to the list of medical practitioners who can certify eligibility for disability tax credit certificates.


Home Relocation Loan Deduction:

Taxable benefit created due to home relocation loan reduces taxable income. Budget 2017 excludes this deduction form Jan 01, 2018 and subsequent years. Government thinks this credit benefits wealthy and does not help middle class.


Work in progress based Tax Accounting:

Income Tac Act (ITA) allows certain professionals like medical doctors, lawyers, accountants, veterinarians, dentists, and Chiropractors to exclude work in progress (WIP) in calculating their taxable income. This helps them to defer tax.

This deferral is not allowed to taxation years commencing on or after Mar 22, 2017.

Transitional rules are introduced to include WIP in taxable income by including 50% of lower of cost and FMV of WIP in first year. For second and subsequent years full amount of lower of cost or FMV will be included in income.


Eliminating Inefficient Tax Measures:

Public Transit Tax Credit will be discontinued to use from July 01, 2017. Proration for 6 months is allowed.

First-Time Donor’s Super credit will expire on Dec 31, 2017






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Zakria Mirza