As you hunker down to prepare your return, tax expert Jamie Golombek says be sure you're taking full advantage of the myriad tax changes announced last year.
Herewith, a line-by-line guide to the changes on the 2006 form:
Line 117 -- Universal Child Care Benefit If you have young kids, this is likely the most significant benefit announced in 2006 and is equal to $100 per month per child under the age of six, starting from last July. To receive the benefit, you must have applied by completing the Canada Child Tax Benefit (CCTB) application form, unless you are already receiving child tax benefits. The UCCB must be reported on the lower-income spouse's return, regardless of which spouse or partner actually received the payments.
Line 120 --Taxable amount of dividends from taxable Canadian corporations As a result of the new dividend regime for 2006, there are now two types of dividends: "eligible" and "other than eligible" dividends. Your T3 or T5 information slips will clearly indicate the type of dividends you received in 2006. For most investors, eligible dividends consist of public company dividends received from Canadian equity holdings, either held directly or flowed through from a mutual fund. Line 120 reports both types.
Line 180 (an information line) This new line ask you to include only the portion of non-eligible dividends already included in Line 120.
SCHEDULE 1 -- CALCULATION OF FEDERAL TAX
Line 301 - Age Amount The age credit is available to seniors 65 years of age and older. The amount eligible for this credit has been increased by $1,000 to $5,066. However, in 2006, the credit is fully phased out when net income reaches $64,043.
Line 363 - Canada employment amount Canada employment was also introduced last year to give Canadians a break on what it costs to work, recognizing expenses for such things as home computers, uniforms and supplies. No receipts are required to justify employment-related expenses. For 2006, the employment amount is equal to the lesser of $250, or the total employment income reported on lines 101 and 104.
Line 364 - Public transit passes amount The 2006 budget also introduced a new tax credit for public transit. The total cost of all monthly (or longer) public transportation passes purchased and valid for travel on or after July 1, 2006, should be included on this line. Eligible public transit includes: bus, streetcar, subway, commuter train, commuter bus and local ferry. The credit can be claimed by the public-transit user for his or her own costs and for costs of his or her spouse's passes, as well for any children under age 19.
Line 314 - Pension income amount Last year saw the doubling of the pension income credit to $2,000 from $1,000 for "qualified pension income." For those 65 and over, this includes registered pension plan (RPP) income and RRIF payments. For those under 65, this typically only includes RPP payments.
Lines 323 and 324 - Tuition, education and textbook amounts The new textbook amount for students is equal to $65 for each month the student qualifies for the full-time education tax credit amount, or $20 for each month the student qualifies for the part-time education tax credit. As with education and tuition amounts, Line 324 allows any unused textbook amounts transferred from a spouse, common-law partner, parent or grandparent to be claimed.
jamie.golombek@aimtrimark.com