It’s starting to be that time to consider your 2010 personal tax returns.
Here are some of the key changes from the 2010 Federal Budget to be on the lookout for when considering your own situation.
- RDSP contributions can now (effective March 4, 2010) be made via a rollover from a deceased contributor’s RRSP account to the beneficiary if they were a financially dependent child or grandchild of the deceased. No matching Canada Disability Savings Grants will be generated by the contribution and it may not exceed the available contribution room of the beneficiary.
- As of 2011 Canada Disability Savings grants and Canada Disability Savings Bonds will be eligible for a 10 year carry-forward for unused contribution years up to an annual grant limit of $10,500. Previously no carry-forward of eligibility was allowed.
- Medical expenses incurred for purely cosmetic purposes will no longer be eligible for medical tax credits if incurred after March 4, 2010 unless required for prescribed or reconstructive purposes. This also applies to related travel expenses.
- Post doctoral fellowships for 2010 and later will now be fully taxable and no longer eligible for the 100% education exemption. This change does not affect scholarships and fellowships received while eligible for education tax credits in pursuit of a College diploma, bachelor’s, masters or doctoral degree.
- US social security payments will only attract tax on 50% of benefits received (down from 85%) if you have been receiving benefits since before January 1, 1996. This applies to benefits received since January 1, 2010.
- The Universal Childcare Benefit may now be taxable in the hands of the child who qualifies for the Eligible Dependent Credit, not the single parent who may otherwise have been claiming this income, effective for the 2010 tax year.
- Shared custody changes are coming for July 2011, in which two individuals will be able to share the Canada Child Tax Benefit and the Universal Childcare Benefit as well as the child component of the HST credit. Currently it has to be agreed that only one of the parents may claim eligibility.
Although the 2010 Federal budget did not contain the type of substantive and far-reaching changes to the Income Tax Act that we have witnessed in the last five years these are some of the highlights that may affect you. If in doubt as to your eligibility consult your tax advisor.