By Ron Coleman
In part one of this article (P&HVAC, Jan/Feb 2020) we focused on tax issues for the corporation and for employees. We also clarified the difference between an employee and a subcontractor/independent contractor.
In this issue, we will take a look at more things an individual or the employer and employee can take advantage of. It behooves every employer to ensure their employees are aware of these things. The employee will keep more money in their pockets and will appreciate it.
One thing that is new for 2020 is the Canada Training Credit. An eligible individual will be able to accumulate $250 in each year (provided the individual satisfies certain conditions), up to a maximum of $5,000 in a lifetime, for courses taken in 2020 and subsequent tax years. The Canada training credit limit for a year is equal to their Canada training credit limit for the previous year, minus any Canada training credit claimed in the previous year plus the annual accumulation of $250.
Incentives for apprentices
Governments at both the federal and provincial levels are offering numerous incentives for apprentices in an effort to address this country’s skilled trades shortage.
Information on these two programs can be found on the website www.canada.ca/apprentice. Also, on this website is information on tax-free loans of up to $4,000 for Red Seal apprentices who may also be eligible for EI while unemployed and attending courses when pursuing an apprenticeship.
In addition, the Apprenticeship Incentive Grant (AIG) is a $1,000 taxable cash grant is available to apprentices registered in one of the designated Red Seal trades who complete their first or second year/level of an apprenticeship program, to a maximum of $2,000. The AIG for women is up to a maximum of $6,000, in an effort to get more females into the trades.
The Apprenticeship Completion Grant (ACG) is a $2,000 taxable cash grant available to apprentices who complete their apprenticeship program and receive their journeyperson certification in a designated Red Seal trade.
Canada Apprentice Loan: The Government of Canada offers apprentices registered in a Red Seal Trade apprenticeship program up to $4,000 per period of technical training. You can get Canada Apprentice Loans for up to five periods of technical training. Your loan will be interest-free for up to six years as long as you are confirmed as being registered in a Red Seal Trade apprenticeship program. You do not have to make any loan payments if your loan is in interest-free status.
Many provinces also have apprenticeship grants for Red Seal and non-Red Seal programs.
Training and tool deductions
The Tradesperson’s Tools Deduction provides employed tradespersons with an annual deduction of up to $500 to help cover the cost of new tools. It applies to the total cost of eligible tools that exceeds $1,195. Check the calculation that would apply to you on the above website.
Tuition Tax Credit and licensing examination fees: If you have eligible tuition fees, as well as certain licensing examination fees, you may be able to claim them on your income tax and benefits return.
Education amount: if you have received a tax certificate from your educational institution, you may be able to claim the education amount. (T2202 form).
Textbook amount: If you qualify for either the full-time or part-time education amounts, you may also be able to claim the textbook tax credit.
Childcare expenses: If you spend money on childcare to enable you to work, carry on a business, or to attend school, you may be able to get a tax deduction for the cost of child-care.
The Declaration of Conditions of Employment (T2200) form was covered off in part 1 of this article. Now that more companies are using cell phones for tracking employee payroll, as an employee you may be entitled to some write-off on your cell phone costs if you are using yours and not getting compensated by the company. The write-off is likely limited to some airtime usage that is in excess of your plan. Check with your accountant. Your home internet costs will not be deductible under a T2200.
Gifts and awards
A company may provide gifts and awards (not cash or near cash) of up to $500 per employee per year without it being a taxable benefit to them. A second amount of up to $500 can be given for long service awards. For the full details go to www.cra-arc.gc.ca and search for gifts and awards. You will also find information on non-taxable meal allowances to employees under certain circumstances.
General tax tips
Following are a few general tax tips that you may be able to take advantage of:
Check with Service Canada to determine exactly which family members should and should not be paying EI Premiums. Many family members may not be eligible to claim EI benefits and if so, then why should they pay the premiums?
The Disability Tax Credit Certificate (T2201 form) is an allowance to be claimed on a personal tax return. If you or a family member is disabled for 12 months or more, there is a non-refundable tax credit available. In 2013 the federal amount was $7,697.
Each province has a provincial amount also. You can make retroactive claims. You can go back up to 10 years to make a claim. I have used this for clients where a parent, who had been ill, died during the year. The form must be completed by a medical practitioner. Full details are available at http://www.cra-arc.gc.ca and search for T2201.
Ontario seniors are eligible for the Ontario Senior Homeowners’ Property Tax Grant. They must apply each year. It is for low income seniors. There is also the Ontario Trillium Benefit and Ontario Senior Homeowners’ Property Tax Grant.
Seniors in B.C. are eligible for the Seniors’ Renovation tax credit, where they can get 10 percent or up to $1,000 back on $10,000 of renovations for each of those years. This is also available to people with disabilities. Contractors need to ensure their customers are aware of this.
Other provinces offer similar programs for seniors, which may help make the sale when plumbing or HVAC repairs are required.
Before implementing these strategies review them with your accountants. We take no responsibility for your use of the items raised in this article as we are not aware of your specific circumstances. Make sure you seek your own professional advice.