Credit for Digital Subscriptions

A new non-refundable federal tax credit has been introduced for individuals who purchase digital news subscriptions.

The maximum amount of the credit is $500 per year. It is limited to the cost of the standalone digital subscription if the individual purchases a combined digital and newsprint subscription.

To qualify for the credit the amount must be paid after 2019 and prior to 2025. An eligible subscription must be purchased from a qualified Canadian journalism organization that is primarily engaged in the production of written content. If the subscription is with a broadcasting entity, it will not qualify for the credit.

BC Child Opportunity Benefit

Starting this October, the provincial Early Childhood Tax Benefit is changing to the BC Child Opportunity Benefit.

The maximum annual benefit will be $1,600 for a family’s first child, $1,000 for the second, and $800 for each additional child. The children must be under the age of 18 to qualify.

If a family’s net income is under $25,000, they will qualify for the full benefit. If their net income is between $25,000 and $80,000, the benefit will be reduced by 4% of the balance over $25,000, to a minimum of $700 for the first child, $680 for the second child, and $660 for all other children.

If a family’s net income is over $80,000, the benefit is reduced by 4% of the excess until it is totally phased out.

In a scenario of a family with two children, the benefit will be totally phased out at $114,500 of income.

TFSA LIMIT LIKELY TO INCREASE

The 2019 contribution limit for Tax Free Savings Accounts (TFSA) is expected to grow to $6,000. The contribution limit is calculated using an indexing mechanism, in which the base amount compounds annually by the Consumer Price Index, and is then adjusted to the nearest $500.

In 2009, when the TFSA was first introduced, the base amount was established at $5,000. The accumulation of annual increases will bring this amount above $5,750 in 2019. When this number is rounded to the nearest $500, it becomes $6,000.

This increase will bring the total contribution room since inception to $63,500. If a taxpayer has missed contributing in any year, the room for that year remains available for contribution in a later year.

It is important to remember that if a taxpayer transfers investments into a TFSA, they may have to pay tax on the amount that is transferred into the TFSA.

For instance, if an investment has gone up in value by $4,000 when it is transferred into the TFSA, the taxpayer will have to pay tax on that gain. It only holds its tax free status once it goes into the account.

CERTAIN EXPENSES CAN REDUCE TAXES

Various deductions and credits can help to reduce the amount of taxes payable to the Canada Revenue Agency (CRA) each year. Please take a few moments to review the following items, to ensure you do not miss out on any eligible expenses for you and your household. Please feel free to contact your Kemp Harvey Group office if you have any questions or concerns about whether you would qualify for any of these deductions and credits.