Claiming Medical Expenses: Free Healthcare?

Free Health Care? Did you know that Canadians spend on average more than $1,000 on medical expenses each year? It’s estimated that government programs, via our taxes, cover about 72% of medical expenses, which means that we pay for the rest. Your clients may be over-paying on their taxes because they don’t know about medical expense deductions. 

The 2009 Newfoundland and Labrador budget was delivered on March 26, 2009. Low income earners and small businesses were the main beneficiaries of the NL Budget released for 2009. Low-Income Reduction Program The budget announced income threshold amounts under the Low-Income Reduction program, introduced in 2005, has been increased for both individuals and families. For individuals the income threshold was increased to $15,911 and for families the threshold increased to $26,625. Dividend Tax Credit The dividend tax credit rate on eligible dividends was increased to 9.75% from 6.65% to keep the rate in line with that of other provinces. LSVCC Effective April 1, 2009, the provincial tax credit rate for an investment in a registered LSVCC will be increased from 15% to 20% of the amount invested, subject to a maximum annual investment limit of $10,000 (previous limit $5,000). This would be in addition to the 15% Federal income tax credit. Small Business Threshold and Rate Effective January 1, 2009 the small business threshold has been increased to $500,000 from $400,000, and the small business tax rate is 5% to this limit.    

The 2009 Quebec budget was tabled on March 19, 2009. New Stock Saving Plan SSP IIQuebec taxpayers who purchase shares in an eligible Quebec corporation (maximum $200 million assets) and hold the shares for a minimum of 2 years will be eligible for a tax deduction of: 150% for investments before December 31,2010 and 100% for investments after December 31, 2010 and before January 1, 2015. Sales TaxThe QST will be increased from 7.5% to 8.5% as of January 1, 2011. To offset this increase for low-income Quebecers, the refundable Quebec sales tax credit will be increased by $125 for singles and $150 for couples beginning in 2011. Child Care ExpensesThe maximum expenses eligible for the child care credit are increased from $7,000 to $9,000 for children under 7. The credit rate is also increased for families with income over $85,000. RRSP/RRIF losses after DeathMirroring the federal changes, losses on RRSP and RRIF assets after death will be deductible on the Quebec return. Capital Cost AllowanceThe 50% accelerated depreciation for manufacturing and processing equipment is extended until the end of 2011. Computer equipment acquired before February 2011 will be eligible of 100% accelerated depreciation. (matches the federal budget change). Small Business DeductionThe small business deduction is increased for $400,000 to $500,000 beginning March 20, 2009. (matches federal budget changes) Income Tax HolidayBusinesses dedicated to the commercialization of intellectual property that are incorporated in Canada after the budget and before April 1, 2014 will be eligible for a ten-year income tax holiday (starting at the date of incorporation).

The Manitoba Provincial Budget, announced on March 25, 2009, largely confirmed last year's tax initiatives, but little else new, as outlined by Knowledge Bureau President Evelyn Jacks in her report from yesterday's Budget Lockup, commentary on province-wide CJOB radio and the Mapping Manitoba Post-Budget budget analysis: TAX PROVISIONS IN THE BUDGET - By Evelyn Jacks Good for Business, Ignores Storm Clouds The very best that can be said about this year's Manitoba provincial budget is its continued support of lower tax rates for Manitoba businesses; the worst that it continues to subject individual taxpayers to bracket creep, a high tax rate on incomes over $67,000 and a tax free zone that continues to tax non-discretionary income for the working poor at a time when an economic stimulus is desired for all. Details follow: Personal Tax Brackets and Rates (Line 428 on the Federal Return): For individuals there are no new changes over those announced last year. Noteworthy is that by 2010 the lowest provincial tax rate will be 10.70% and by 2011-10.50%. But it is in the failure to move on the indexation of tax brackets that Manitobans really lose out, a situation that can worsen if we are subjected to higher inflation rates in the future. This is, in fact, a hidden tax on the poor and in a time when economic stimulus is desired to aid ailing economies, counter-productive. Here's how Manitoba compares with other provinces: Provincial Tax Brackets and Rates for 2009 Province Tax Brackets Rate Surtax British Columbia $0 to $35,716$35,717 to $71,433$71,434 to $82,014$82,015 to $99,588Over $99,588 5.06%7.70%10.5%12.29%14.7% Alberta Flat tax of 10%   Saskatchewan Up to $40,113$40,114 to $114,610Over $114,610 11.0%13.0%15.0% Manitoba $0 to $31,000$31,001 to $67,000Over $67,000 10.8%12.75%17.4% Ontario $0 to $36,848$36,849 to $73,698Over $73,698 6.05%9.15%11.16% 20% > $4,25736% > $5,370 Lagging Tax Free Zones. As mentioned, Manitoba continues to tax non-discretionary income of the working poor sooner than any province in Canada, as demonstrated below. The zero provincial tax rate represents the maximum income with no provincial tax for a single person, and includes all refundable and non-refundable credits that don't rely on other actions ñ like rent or property taxes, etc. Province Basic Personal Amount Income for Zero Provincial Tax BC $ 9,373.00 $17,200 AB $16,775.00 $16,775 SK $13,269.00 $13,269 MB $ 8,134.00 $10,020 ON $ 8,881.00 $12,010 NB $ 8,605.00 $14,020 NS $ 7,981.00 $11,150 PE $ 7,708.00 $10,260 NL $ 7,778.00 $12,450 YT $10,100.00 $10,100 NT $12,664.00 $12,664 NU $11,644.00 $11,644 Refundable Tax Credits (Line 479 on the Federal Return): Following the comments above, Manitoba's refundable tax credit system has featured a series of refundable tax credits that are income tested; now a new one will be added and it will not be income tested. The Primary Caregiver Tax Credit will take effect in 2009 and provide volunteer primary caregivers, who are in that role for more than three consecutive months, will receive a refundable credit of $85 a month to a maximum of $1,020 for the year. The credit may be earned for no more than three qualifying dependants in the year. Qualifying dependants are a spouse, other relative, neighbour or friend who qualifies for Manitoba Home Care. Only one person may be the primary caregiver at any one time. Other refundable Tax Credits. The following modest increases were announced to take effect in 2009, and in the only significant personal tax change over last year's announcements, the Education Property Tax Credit is increased from $600 in 2008 to $650 in 2009: Provision 2008 2009 Basic Personal Credit for Self or Spouse $190 $195 Age Credit for Self or Spouse $110 $113 Disability Credit for self, spouse or dependant $110 $113 Disability Credit for Dependants $60 $62 Credit for Dependent Children $25 $26 Education Property Tax Credit $600 $650 Good News for Business. For Corporations, the general corporate tax rate will fall from 14% to 13% on July 1, 2008 and again to 12% on July 1, 2009. The goal is to drop the rate to 11% sometime after this, but that was not confirmed in this budget. The Small Business Rate charged on taxable income under $400,000 will be reduced from 3% to 2% in 2008 and then to 1% in 2009, falling to 0% in 2010. In addition the following provisions were announced: Interactive Digital Media Tax Credit. This new credit, announced in 2008, is available to corporations which produce interactive digital media projects in Manitoba, including videos and games and educational media/webcasts. The maximum credit on an eligible project is $500,000 and it is calculated as 40% of the remuneration paid to Manitobans on eligible projects as approved by Manitoba Science, Technology, Energy & Mines. Book Publishing Tax Credit, also introduced in 2008, will provide 40% of eligible Manitoba labour costs including non-refundable author advances, salaries for editing, design and project management, fees paid to freelances for editing, design, research, artwork and development of prototypes. A maximum of $100,000 credit is available and at least 2 books must be published after April 9, 2008 and before 2012. When paper with a 30% recycled content is used a further 10% of Manitoba printing costs qualifies for the credit. This budget confirmed that books published in the time period April 9, 2008 to 2012 will qualify as well as those for which agreements had been entered into in this period. Co-Op Education and Apprenticeship Tax Credits. A journeypersons Hiring Incentive became available last year for hirings after April 9, 2008 amounting to 5% of wages and salaries paid up to $2500. A Certificate of Qualification must have been received after this date and the employee must have been hired within 18 months of certification. A new component called the Advanced-Level Apprentices Hiring Incentive was introduced in December 2008 to ease bottlenecks in high demand trades. To be eligible the employer must hire an apprentice enrolling at an advanced level on January 1, 2009 or later and before the end of 2011. This is a fully refundable credit. Film and Video Production Tax Credit. After 2007 a 5% Producer bonus is introduced as well as a Frequent Filming bonus. Eligible salaries paid to non-residents for work in Manitoba is increased from 20% to 30%. Manufacturing Investment Tax Credit. A generous increase from 35% to 70% comes into effect retroactively on January 1, 2008 and this credit will be available until December 31, 2011. The Community Enterprise Investment and Development Tax Credits. The se credits have been enhanced based on their fully subscribed status last year. The Community Enterprise Investment Tax Credit is a non-refundable one equal to 30% on a maximum $450,000 investment in equity capital, available to both individual and corporate investors who acquire equity capital in emerging enterprises after 2007 and 2011. The maximum annual approval limit for this program has been doubled to $33,000,000 starting in 2009. The value of issuable shares that a business can apply for under the Community Enterprise Development Tax Credit has doubled from $500,000 to $1 Million, starting in 2009. This is a non-refundable personal income tax credit equal to 30% on a maximum $30,000 investment. Other significant provisions: The Home Buyer's Plan withdrawal limit from RRSPs will increase to $25,000 to mirror the federal tax changes. CCA Rate On Manufacturing And Processing Machinery And Equipment is written off on a 50% straight line basis if acquired after March 18, 2007 and this rate change will continue as per the federal budget changes, on acquisitions before 2012. CCA on computer hardware and systems software acquired in 2009 and 2010 will qualify for 100% CCA rates. Corporation Capital Tax for manufacturing and processing companies will be eliminated effective July 1, 2008. There are phased in reductions in the tax from 2009 to December 31, 2010 when the tax will be eliminated for those corporations as well. Retail sales tax exemptions: Service to direct agents (manufacturing process), welding tips & nozzles, rolls used in pulp and paper industries. Starting May 1, 2009 the sales tax exemption for books is expanded to include educational workbooks. Tax on Coal Emissions: will be effective July 1, 2011. Fuel Tax Changes; Effective July 1, 2009 the aviation fuel tax rate for domestic cargo flights will be reduced from 3.2 cents to 0.5 cents per litre and the fuel tax exemption for international flights is expanded to include direct and indirect cargo flights to and from the US, staring July 1, 2009. The fuel tax exemption for forestry companies is expanded effective May 1, 2009 to include fuel used for forest renewal. Next time: Some Future Budget Considerations

Here is a synopsis of the Saskatchewan provincial budget that was tabled on March 18, 2009: The budget contained little in the way of income tax changes. Federal LSVCCEffective for the 2009 taxation year, the LSVCC tax credit for an investment in a nationally-registered LSVCC will be increased from 15% to 20% of the amount invested, subject to a maximum annual investment limit of $5,000 (previous limit $3,500). Dividend Tax CreditAs a result of the proposed change in the gross-up of dividends beginning in 2010, the provincial DTC rate will be maintained at 11% of the actual amount by changing the legislation to calculate the credit at 36% of the gross-up for 2010, 37.83% for 2011, and 39.95% for 2012. Saskatchewan R&D Tax CreditThe existing non-refundable R&D Tax Credit will become refundable for qualifying expenditures occurring after March 19, 2009.

Let The Knowledge Bureau's Breaking Tax and Investment News be your go-to resource for provincial budget information over the next few weeks.  The schedule of budget releases is as follows:   March 18, 2009 ñ Saskatchewan Budget - see synopsis in this week's BIN March 19, 2009 ñ Quebec Budget - see synopsis in this week's BIN March 25, 2009 ñ Manitoba Budget - see synopsis on this week's BIN March 26, 2009 ñ Ontario Budget March 26, 2009 ñ Newfoundland and Labrador Budget April 7, 2009 ñ Alberta Budget Stay current and up-to-date on provincial tax changes by reading Breaking Tax and Investment News every week.  

The 2009 NB budget was tabled March 17, 2009. Personal Brackets and Rates The budget introduced a plan to change from four provincial tax brackets to two by 2012 with rates of 9% for income below $37,893 and 12% for income above $37,873. For 2009 the provincial rates are reduced as shown in the following table: 2008 Bracket 2008 Rate 2009 Bracket 2009 Rate $0 to $34,835 10.12% $0 to $35,706 9.65% $34,836 to $69,672 15.48% $35,707 to $71,414 14.50% $69,673 to $113,273 16.80% $71,415 to $116,105 16.00% Over $113,273 17.95% Over $116,105 17.00% The phase-out rate for the low-income tax reduction is also reduced from 5% to 4% for 2009 and will be reduced to 3% for 2010 and subsequent years. NB Tuition Rebate The benefits available under the NB Tuition Rebate program will be doubled beginning in 2009. The annual limit will be increased from $2,000 to $4,000 and the lifetime limit will be increased from $10,000 to $20,000. Low-Income Seniors' Benefit The low-income seniors benefit will increase from $200 to $300 for 2009 and to $400 for 2010. NB Labour-Sponsored Venture Capital Tax Credit For shares purchased after March 17, 2009, the maximum qualifying investment will increase from $5,000 to $10,000 and the credit rate will be increased from 15% to 20% NB Small Business Investor Tax Credit For investments made after March 17, 2009, the annual maximum investment eligible for the credit will increase from $80,000 to $250,000. Corporate Tax Rates The general corporate income tax rate will be reduced from 13% to 12% effective July 1, 2009 and to 11% effective July 1, 2010, 10% effective July 1, 2011 and 8% effective July 1, 2012. The small business limit will be increased from $400,000 to $500,000, effective January 1, 2009.