Yahoo Finance 7 changes for the 2012 tax year
Filing your tax return may seem like the same tedious task every year, but it's a good idea to check whether there have been any changes to the rules governing deductions and credits or any budgetary measures that might affect your personal situation.
Here are seven tax changes taking effect in the 2012 tax year that you should be aware of:
As of January 1, 2012, you now have to pay CPP premiums if you are between the ages of 60 and 65 and begin drawing Canada Pension Plan or Quebec Pension Plan benefits while you are still working. For those 65 and older but under 70, the CPP contributions are voluntary. This rule applies to both employees and the self-employed unless you are working in Quebec or are self-employed and a resident of Quebec or your income is not subject to CPP. The contribution you make is paid out the following year in the form of a post-retirement benefit, which is a fully indexed lifetime benefit separate from the regular CPP and QPP benefit. This year is the first year that this new benefit will be paid out.
You may be able to claim up to an additional $2,000 in tax credits if you have a dependent with a physical or mental impairment, including, under certain conditions, a spouse or common-law partner.
People who need anti-coagulation therapy and have been prescribed blood coagulation monitors can now deduct those expenses.
You may have to pay a new tax if you are a so-called specified employee and contributions that your employer made to an employee profit-sharing plan after March 28, 2012, and allocated to you for the year are more than the threshold. The Canada Revenue Agency defines a specified employee as someone who has a significant equity interest in their employer or does not deal at arm's length with their employer.
If you have an investment in a mining operation that allocates certain exploration expenditures to you, the eligibility for the mineral exploration tax credit has been extended to flow-through share agreements entered into before April 1, 2013.
The Canada Revenue Agency (CRA) has discontinued its Telefile service for filing by phone in order to encourage more people to file online, which reduces the costs of processing paperwork.
When you do file online, you will no longer need an individual access code. Instead, you will use your social insurance number and birth date.
The Canada Revenue Agency is also offering more options for logging in to My Account, My Business Account and Represent a Client online services. In addition to the CRA user ID and password, you may now also be able to use your online banking information to log in to these services if you bank with TD Bank Group, Scotiabank or BMO Financial Group. That means one less username and password to remember.
The federal tax brackets in the 2012 tax year have changed to reflect inflation (see table).
As of Jan. 1, 2013, Canadians can contribute up to $5,500 annually to a tax-free savings account, an increase of $500 over last year. That means if you've never contributed since the accounts were first introduced in 2009, your total cumulative contribution room is $25,500.
Such federal tax credits as the basic personal and eligible dependent amounts on 2012 income have been increased by 2.8 per cent from the previous year to $10,822 for each. The pension income amount is unchanged at $2,000, and the age amount has also increased by 2.8 per cent to $6,720.
