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. 

Cash-strapped? The tax return is a great place to look for new cash. Many taxpayers miss lucrative deductions and credits each year and can file an adjustment to their returns to reap their just rewards. To do so complete Form T1ADJ. One of the most commonly missed tax deductions is the GST Rebate, claimed by individual taxpayers on Form GST370. Tax advisors should ask new clients if they qualified for it in any of the past 10 years. If it was missed, the rebate is recoverable. Here are some quick tax facts about making a claim: Employees who claim employment expenses on Line 229 of their T1 return and are not in receipt of a reasonable allowance for those expenses may apply for a cash rebate of any GST or HST paid on these expenses on Line 457. Expenses eligible for the rebate include: office expenses, travel expenses, entertainment expenses, meals and lodging, motor vehicle expenses, leasing costs, parking cost; miscellaneous supplies (e.g. street maps, stamps, pens, pencils, and paper clips), and capital cost allowance on motor vehicles, aircraft, and musical instruments acquired after 1990 tradesperson's tools apprentice vehicle mechanic's tools With the GST rate reduction as of January 1, 2008, the rebates are 5/105 and 13/113 for expenses on which GST and HST is paid. Prior Filing GST Rebate Omissions Taxpayers who have failed to claim the GST/HST rebate in prior years may file adjustments to recover this credit for the prior ten year period.

Many frenzied parents find the "back to school" rush a financial burden.  Besides clothing, school supplies, transit passes and books, there is tuition for university students, a rising cost across the country.  Last week we covered the rules behind tax relief for tuition fees.  This week, consider the monthly credits earned by post-secondary students, which will turn into cash at tax time for students or their supporting parents, grandparents or spouses.  No receipts are necessary to benefit from this lucrative credit, but Form T2202A must be received from the university or designated educational institute. Advisors and clients should check the points below for a better understanding of qualifying criteria. EDUCATION AMOUNT Full Time Students. The credit for full-time students is $400 per month. A full-time education amount may be claimed for each whole or part month in the year that the student was enrolled in a qualifying educational program at a designated educational institution and the student: was enrolled full time, was enrolled part time and qualified for the disability amount, or was enrolled part time because of a mental or physical impairment. Qualifying educational programs (FULLTIME): a program that lasts at least 3 consecutive weeks and requires a minimum of 10 hours of instruction or work in the program each week (not including study time). Instruction or work includes lectures, practical training, and laboratory work. It also includes research time spent on a post-graduate thesis. After 2003, a program taken by the student in connection with the student's employment duties, even if that student receives income from that employment, will however qualify, provided only that the employer does not reimburse the tuition cost. Prior to 2004, the opposite was the case: such programs did not qualify, whether the employer reimbursed the student or not. Non-qualifying educational programs: Students who receive, from a person with whom he or she deals at arm's length, a grant, reimbursement, benefit, or allowance for that program do not qualify. However, receipt of a scholarship, fellowship, bursary, or prize received, or any benefit received under the Canada Student Loans Act, Canada Student Financial Assistance Act, or the Act respecting financial assistance for education expenses of the Province of Quebec does not disqualify the education program. Part Time Students. The credit is $120 per month. These may be claimed for each whole or part month in the year that the student was enrolled in a specified educational program at a designated educational institution. A specified educational program is a program that lasts at least 3 consecutive weeks and requires at least 12 hours of instruction each month. NOTE: KNOWLEDGE BUREAU SELF STUDY COURSES QUALIFY! Only one education amount may be claimed for each month ó the full-time amount or the part-time amount. Designated educational institutions include: Canadian universities, colleges, and other educational institutions providing courses at a post-secondary school level, Canadian educational institutions certified by the Minister of Human Resources Development as offering non-credit courses that develop or improve skills in an occupation, universities outside Canada where a Canadian student is enrolled in a course that lasts at least 13 consecutive weeks and leads to a degree, and universities, colleges, or other educational institutions in the United States that give courses at the post-secondary school level if the student is living in Canada (near the border) throughout the year and commutes to that institution. Age limitation for education credit. Students who are under 16 at the end of the year, may claim the education amount only for courses taken at the post-secondary level. Ineligible Amounts. Students may not claim the education amount if they: received a grant or were reimbursed for the cost of courses, other than by award money received, received a benefit as part of a program (such as free meals and lodging from a nursing school), received a salary or wages while taking a course related to their job, or received an allowance for a program such as a training allowance.   Join us in the coming weeks to hear about other FAMILY TAX PROVISIONS: Public Transit Passes Children's Fitness Credit Medical Expenses

The Federal Consumer Agency of Canada (FCAC), recently announced that a new web portal containing information regarding the management of money aimed at young Canadians is being launched. The Money Belt (located at themoneybelt.gc.ca) contains various interactive tools and modules that provide our youth with a fun and interesting method of learning about managing their money (or ours), now and into the future. FCAC Commissioner Ursual Menke states "in a world where today's youth quickly develop a keen interest in money, it is important that they acquire strong financial skills early so they can avoid making costly mistakes." The website features various tools and tips for young Canadians (the site is aimed at those in the 15 to 29 age group) to become financially savvy about credit cards and banking options. Here is an example of the information contained on the site: Always pay your credit card bills on time! You'll establish a history of good credit use, which can help you obtain loans and other credit products more easily in the future. If you have spare money, put it into an RRSP. It's never too early to start saving for retirement! Know your credit history. You can order your credit report by contacting one of the three credit reporting agencies in Canada ó Equifax, TransUnion or Northern Credit Bureaus Inc. Check your credit card receipts against your monthly statement. Mistakes do happen ó act immediately by notifying your card issuer if you spot an error or fraud. To save on ABM fees, avoid using white-label ABMs (operated by private companies) or an ABM belonging to a bank other than your own. As financial advisors are aware, it is never too early to start educating people around money and the issues that surround it. Check out The Money Belt website today for ideas for you, your clients and their children.

The boomer generation is pioneering ëwomen's retirement'. This is the first generation where many women will retire from long term careers with their own pensions, investment portfolios and their own views on what retirement should be. For more and more couples decision making about retirement considerations will become much more complex. For the first time advisors are now having to incorporate two retirements into the planning process, not just one. Are you ready to assist your clients to effectively balance the goals and desires of two individuals in a plan that works for both? If you don't have the specific knowledge skills and processes, all the planning in the world will not achieve what your clients desire. Men and women are now approaching retirement in different ways. One individual's retirement date will likely not coincide with the other's. Retirement may mean something different for each person. For one, it may mean slowing down, working part time, before leaving the work force completely. For the other partner, it may mean retiring at a later date than the other. Their wishes and concerns may be very different as well. The best way for the wealth advisor to work with these boomers is to adopt a strategic approach that begins with proactivity. It is important to put the framework in place for a discussion about lifestyle before building a wealth management and retirement income plan. The discussion must take place with both individuals in order to uncover and fully understand each person's priorities and to help them understand each other's wishes and concerns. A strategic approach provides the process and structure to listen deeply and only then take action affirmatively to get better results, simplify efforts and realize after-tax income your clients need to transition into economic inactivity in the ways they want. The Strategic Plan for Transitioning to Retirement, as taught in the Tax Efficient Retirement Income Planning course, a self study course offered by The Knowledge Bureau, provides a single or a multi-generational vision for the future based on: Values and definitive statements around productivity, participation, dependency and legacy Life and time milestones, involving the identification of stakeholders who will be part of the ìretirement teamî and precise definitions of needs and wants. An understanding of lifestyle funding capacity. Boomers want to know whether they can afford the retirement they envision while at the same time understanding how to continue to build and grow their capital throughout retirement. Only once this process has been completed can the wealth manager move to the next steps in building an action plan for tax efficient retirement income planning. Managing Real Wealth requires a focus on capital preservation by understanding client needs and wants in relation to their grasp of risk and return and the effects of interest rates and inflation on capital markets. Build your skills, learn the processes to develop as a Real Wealth Manager. Register for the Tax Efficient Retirement Income Planning course, one of six courses in the Retirement Income Specialist program, leading to the Master Financial Advisor designation.

PART 1: TUITION EDUCATION AND TEXT BOOK CREDITS In the next week or so, as the children head back to school, we should give some thought to how to claim all those tuition fees that are being paid out to various educational institutes. A review of the basic definitions for non-refundable credits and what qualifies for the tuition credit and education amounts is discussed below: DEFINITIONS IN BRIEF: Non-refundable tax credits available to post-secondary students and their supporting individuals include the following: Amounts for Tuition: Post-secondary students may claim the tuition amount under S.118.5 of the Income Tax Act. Amounts for Education Costs: A monthly education amount available under S.118.6 Amounts for Textbooks: A monthly credit for such costs is specified under S. 118.6(2.1). Transfers to Supporting Individuals: Students must claim the above amounts first on their return. If the student is not taxable, the claim for the tuition, textbook and education amounts may be transferred from a student to the supporting individual under S.118.81 or may be carried forward to future years for use by the student. TUITION FEES Students may claim the fees paid for courses taken in the tax year. To qualify, each tuition fee must be more than $100. Eligible fees include tuition fees: Fees paid for courses at a post-secondary school level paid to a university, college, or other educational institution in Canada, Fees paid to an educational institution in Canada certified by the Minister of Human Resources Development for courses (if the student was 16 or older in the year) to develop or improve skills in an occupation, Fees paid for courses at a post-secondary school level paid to a university, college, or other educational institution in the United States if the student lived in Canada near the border throughout the year and commuted to the school, and Fees paid if the student was in full-time attendance at a university outside Canada, for courses that were at least 13 consecutive weeks long, and that will lead to a degree. Eligible tuition fees include: admission fees, charges for the use of library or laboratory facilities, examination fees, application fees (but only if the student later enrolls in the institution), charges for a certificate, diploma, or degree, mandatory computer service fees, academic fees, the cost of any books that are included in the total fees for a correspondence course, and fees, such as athletic and health services fees, paid to a university, college, or other educational institution in addition to tuition for post-secondary courses, when such fees are required to be paid by all students. If not all students are required to pay them, then amounts eligible are limited to $250. Non-qualifying tuition fees include: Costs for secondary education at a private school or for private music, dance or other such lessons, do not qualify. students' association fees, medical care, transportation and parking, meals and lodging, goods of lasting value that you will keep, such as a computer, microscope, uniform, or an academic gown, and initiation or entrance fees to a professional organization Also, fees cannot be claimed if: they are paid or reimbursed by an employer, where the amount is not included in the employee's income, paid by a federal, provincial, or territorial job training program where the amount is not included in income, or the fees were paid (or are eligible to be paid) under a federal program to help athletes, where the payment or reimbursement has not been included in income. NOTE: KNOWLEDGE BUREAU SELF STUDY COURSES QUALIFY! Next time: Education Amounts COMING IN SEPTEMBER: OTHER FAMILY TAX PROVISIONS Public Transit Passes Children's Fitness Credit Medical Expenses

The CRA has issued a tax altert advising taxpayers that a letter has been circulating that is identified as coming from the CRA, when in reality it isn't.   The letter advises the taxpayer that there is insufficient information to process the individual's tax return, and requests personal information be provided on a form and sent back via fax or e-mail. The information requested includes bank account and passport information. The letter requesting this information is not from the CRA and the information should not be provided to the sender.   The CRA has notified the proper agencies of the fraudulent letter and advise all taxpayers to be vigilant about providing personal and confidential information to third parties.   Tax preparers will want to warn their clients about this scam so that private information isn't released to the wrong people. CRA has provided a copy of the letter that has been circulating, to view, click here.