It’s that time of year again when paying taxes weighs heavily on all our minds. Whether you’re an individual taxpayer with a filing deadline of April 30th or a self-employed taxpayer with a deadline of June 15th, undoubtedly you’ll be trying to find ways to minimize your tax burden.
We have compiled a list of tax changes announced in 2006, as well as reminders of some existing tax deductions and credits that can help greenhouse owners and their families reduce the tax they pay.
Donations of Publicly Listed Securities
Since May 2006, gains on the transfer of publicly listed securities, such as stocks and mutual funds, will no longer be taxed when they are donated to a registered charity. However, you will still be eligible for the donation credit for full value of the security given even though no gain is realized. So, if you are planning to donate to your church or a charity, and you own securities, you should talk to your investment advisor about donating these securities rather than cash.
The RRSP limit is $18,000 for 2006 and $19,000 for 2007. To maximize your contribution limit for 2008 ($20,000), you will need to have earnings of $111,111 or more.
Where you use your car in the course of your employment at the greenhouse and you are not given a per kilometre allowance, you are entitled to deduct car expenses. Eligible car expenses include gas, repairs, insurance, auto club, interest and tax depreciation, or lease payments. To claim car expenses, it is important to have your employer sign a Form T2200 and you should keep a mileage log.
The pension credit has been increased from $1,000 to $2,000 in 2006. Pensioners over the age of 65 can only claim this credit to the extent they have pension income. In addition to employers’ pension plans, pension income also includes annuity payments from an RRSP or an RRIF.
For families with children in college or university, you will be pleased to know, starting in 2006, they will no longer have to pay income tax on scholarship or bursary income, as long as they are enrolled in a qualified university or college.
Textbook and Education Amount Tax Credit
Students are entitled to an education amount tax credit based on the number of months they attend a college or university. This credit is in addition to the credit available for the cost of tuition. In 2006, the education amount tax credit has been increased to help defray the cost of textbooks. To the extent that your child cannot use the credit themselves, a portion of the credit can be used by you.
You may be eligible for a credit if you have provided care for a parent or grandparent over the age of 65 in your home during the year, or have provided care for another relative in your home that is dependent upon you for care.
Disability Tax Credit
If you or someone you care for has a mental or physical disability that restricts their daily activities, you may be eligible for a disability tax credit. Since the rules regarding what disabilities qualify for this tax credit are expanding each year, you should contact your doctor or accountant to get the most recent information as this credit is substantial.
Children’s Fitness Tax Credit
For 2007, if you enrol your children under the age of 16 in a physical fitness program, you may be eligible for a tax credit of up to $500 per child. The government is currently determining what types of programs will qualify for this credit. In the meantime, you should keep receipts for all sporting activities in which your kids are involved.
This is by no means a comprehensive list of all the credits and deductions for which a greenhouse owner may qualify. You should contact a tax practitioner if you think you may qualify for any of these deductions or tax credits.
Mike Veldhuizen is a tax manager with the Niagara office of Deloitte. • 905-323-6015,
‘IT’S TAX TIME: DO YOU KNOW WHERE YOUR DEDUCTIONS ARE?’
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