(Photo: 123RF)
GUEST EXPERT. The arrival of spring means it’s time to think about filing your tax returns! Let’s see some news and reminders about certain credits to consider when preparing to do your taxes.
• Credit for the purchase of a first home
Due to the significant increase in real estate market prices in recent years, the federal government has doubled the amount of this credit as of the 2022 tax year. It may represent a reduction in the tax bill for Quebec taxpayers. up to $1,252.50. At the provincial level, Quebec has aligned its position with that of its federal counterpart by also doubling its credit for the purchase of a home, which represents a reduction of up to $1,500. Eligibility criteria are similar to those for the Home Buyers’ Plan (HBP) and the new Tax-Free Savings Account for First Time Home Buyers (TFSA), i.e. say that you have to be considered a first-time home buyer.
Note that on January 1, 2023, a new measure was introduced to counter sale-purchase real estate transactions (real estate flips). The profit on the sale of residential real estate held for less than 365 days will be taxed as business income and not as a capital gain. Certain exceptions are admissible, for example in the event of separation, illness, death or a change of employment which allows you to be at least 40 km closer to the new place of work.
• Disability Credit (DTC)
The name of this credit suggests that the eligibility criteria are quite restrictive, which could discourage many. It should be noted that the T2201 form has undergone an overhaul and that the updated version has been available on the Canada Revenue Agency (CRA) website since last June. An expansion in the conditions of mental functions necessary for daily living activities has been added, which could make new people eligible. Also, the eligibility criteria for essential therapeutic care, such as dialysis or physiotherapy, have been relaxed with a reduction in the number of sessions required. People with type 1 diabetes are now automatically eligible.
Form T2201 can also be used with Revenu Québec (RQ) to claim the credit for the amount for severe and prolonged impairment in mental or physical functions. However, for the credit for time spent on therapeutic care or to claim the refundable credit for caregivers, you must complete form TP-752.0.14. For your information, this last credit can also be claimed for assistance provided to a person aged 70 or over, other than a spouse, with whom you cohabit.
• Credit for home accessibility
This credit is only available at the federal level and to be able to claim it, you must be eligible for the DTC or be 65 years of age or older. It allows you to claim an amount for renovation work to improve the accessibility of the residence of the person concerned. The amount of the eligible credit has been doubled for 2022, so it can go up to $20,000, which can represent a tax saving of up to $2,505 for Quebec taxpayers. Expenses incurred could also be subject to a double claim if they are also eligible for the credit for medical expenses.
• Credit for medical expenses
Although there are as many at the federal level as with Revenu Québec, the fact remains that the eligibility criteria for the credit for medical expenses are different for the two levels of government. The CRA makes available online the list of health professionals it recognizes by province for this credit. There are indeed disparities between provinces. For example, naturopaths, osteopaths and homeopaths are not recognized by the ARC. However, the fees paid to these specialists are allowed as medical expenses in Quebec.
Finally, it is important to remember that non-refundable tax credits reduce or cancel the tax you must pay, whereas refundable tax credits are paid to you even if you have no tax to pay. All credits mentioned in this article (except the caregiver credit) are non-refundable. However, the credit for medical expenses will also be subject to a refundable portion for low-income workers.
Happy tax season!
Pierre-Marc Fontaine, M. Fisc., CPA, Pl. Fin., CIM