Medical Expense

Last Saturday, I volunteered at Immigrant Services Calgary helping low income families and new immigrants prepare their income tax returns.  To my surprise, the most common question they ask was not child tax benefit, RRSP, or RESP, the question that almost every family asked me was if they could claim medical expenses on their returns.  Here are some Q&A’s related to medical expenses:
Q: Can I claim medical expenses if I had no income?
A: If you have no earned income, you cannot claim medical expenses on your return. However, if you have a spouse or common-law partner who had income, he or she can claim your medical expenses on his or her return.

Q: Is there a minimum amount of expenses required before I can claim them?
A: Your medical expenses must be more than 3% of your net income to be of benefit. For example, if your net income was $14,000, your medical expenses would have to be more than $420 before they would lower your tax. If you are married or living common-law, you can combine your medical expenses with those of your spouse to reach the 3% threshold.

Q: Can I carry medical expenses forward?
A: Medical expenses must fall within a 12-month claim period that ends in 2010 (the current tax year). You can carry forward unclaimed medical expenses only if they occur within a 12-month claim period that ends in the tax year in which you claim them.

Example – expense from two years ago

You have a medical expense from December 2008 that you did not claim on your 2009 tax return. You cannot claim it this year, because the earliest 12-month period that ends in the current tax year is January 2, 2009 to January 1, 2010. The receipt does not fall in that claim period.

Education, Tuition, and Textbook Credits

In order to start a new life in Canada, a lot of immigrants choose to go back school to get a local degree. Do you know that as a student, no matter you are part-time or full-time student, part of the tuition and book costs can be used as a non-refundable credit.

Generally, you can claim tuition fees if you paid more than $100 for a course taken at the post-secondary level or for a course that develops or improves skills in an occupation and the educational institution.
Education amount:

• If you were enrolled full-time, you can claim $400 per month
• If you were enrolled part-time, you can claim $120 per month.

Textbook amount:
You can claim this amount only if you are entitled to claim the education amount. The amount is:

• $65 for each month you qualify for the full-time education amount; and
• $20 for each month you qualify for the part-time education amount

Most new immigrants don’t have much income the first few years after they move to Canada. As such, the tax payable would be quite low and could not fully utilize all the non-refundable credits (tuition/books is one of the non-refundable credits).
However, different from other non-refundable credits, you can carry forward unused tuition and education amounts until you have enough income to use them all up. Each year, you first apply the amounts that you have carried forward from last year. Then, if you still have taxable income, you apply whatever portion of current year tuition, education, and textbook amounts that you need to reduce your taxable income to zero. Any amounts that still remain can be carried forward to next year, or transferred to an eligible person.

儿童税务福利金小贴士

最近我帮助了不少家里有小孩的客户，很多家庭都在2010年收到了加拿大儿童税务福利金（CCTB）。如果家庭收入不错，每个月并不着急使用这笔钱，我给他们的建议是，可以给自己的孩子在银行开一个账户，并将收到的这笔儿童税务福利金存入该帐户。那么这笔钱和产生的利息将会作为孩子的收入。每年报税的时候，父母可以填写表格8814（用来给儿童报税）。国税局对待成人和儿童税的税收方式是不同的。一般情况下儿童税务福利金的额度是不会产生税的。但如果不存入孩子的账户，那么这笔收入就要算入父母的收入，并根据父母的税率来纳税。