Federal budget 2017 – personal tax credit changes

Pavlo Fedorchuk • March 23, 2017

The March 22, 2017 Federal Budget announced several proposed changes to personal tax credits. Here is an overview of a few of the proposed changes that may be of interest:

Public Transit Tax Credit

Currently, there is a 15% non-refundable tax credit available to individuals, based on the cost of eligible public transit passes, including weekly/monthly/annual passes and electronic fare cards, like PRESTO, that are used on a regular basis. The Federal Budget proposes to eliminate this tax credit effective July 1, 2017, which means that the costs of public transit passes and electronic fare cards will no longer be eligible for the credit, after June 30, 2017.

Tuition Tax Credit

Tuition fees paid to eligible educational institutions and licensing examination fees paid to be able to practice a profession or trade in Canada are currently eligible for a 15% non-refundable tax credit. Eligible educational institutions includes universities, colleges and other post-secondary institutions and certified institutions providing occupational skill courses at a post-secondary level. The Federal Budget proposes to extend the eligibility for tuition tax credits to tuition fees paid for occupational skills courses that are offered through post-secondary institutions which are not at a post-secondary level. To be eligible, such courses must provide individuals with skills necessary for an occupation, and an individual enrolled in a course must be at least 16 years of age before the end of the taxation year. Under the Budget proposal, such individuals will be included in a definition of the “qualifying student” for the purpose of determining whether scholarship/bursary income received by an individual is tax-exempt.

These changes would take effect for all courses starting on January 1, 2017 or later.

Mineral Exploration Tax Credit for Flow-Through Share Investors

Flow-through shares allow companies in the resource sector to transfer various expenses associated with their exploration activities in Canada to investors. This results in a company losing its ability to claim such expenses for tax purposes, however, investors can deduct such expenses in calculating their own taxable income. Currently, investors in flow-through shares are able to claim a 15% mineral exploration tax credit with respect to specified mineral exploration expenses that were incurred in Canada by a resource company and were subsequently renounced in favour of investors, in addition to getting a deduction for such expenses. The Federal Budget proposes to extend the eligibility for the mineral exploration tax credit to flow-through share agreements entered into on or before March 31, 2018. Eligible exploration expenses must be incurred by a resource company issuing flow-through shares before the end of 2019.

Contact us today for more information on how these proposed changes to personal tax credits may affect you.


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