How did your income taxes go this year? Was your refund smaller than normal? Did you end up paying taxes for a change?
There were two changes to the 2021 tax returns that impacted almost everyone.
Climate Action Incentive
First, the federal government announced that the Climate Action Incentive CAI (sometimes referred to as the carbon tax rebate) will no longer be paid as a refundable tax credit (refund). Up until last tax season, the CAI was added to your tax refund, or reduced the amount of tax you had to pay. The amount varied from $360 for an individual taxpayer to $540 for a couple and added another $90 per child under 18. And those of us in the rural received an extra 10%.
When you filed your 2021 tax return, this rebate was not part of your tax refund. Your usual tax refund was likely hundreds of dollars less.
If you already receive GST credits, you are familiar with getting benefits on a quarterly basis. The CAI will be similar.
The CAI payments will be paid at the beginning of each quarter (April-June, July-September, etc). Since CRA needs to develop the new system, the April payment will be added to the July payment so taxpayers will receive two quarters early July 2022.
The Climate Action Incentive, much like the GST credit, will be paid to the spouse whose tax return is assessed first by CRA.
The CAI payment is not income tested like the GST credit is, so everyone (or every family) will receive it. Make sure CRA has your banking info on file so you don’t miss a payment!
MB Education Property Tax Credit
The change in the property tax credit also reduced your refund.
Those taxpayers who rent, noticed a change on their income taxes. The normal $700 refundable credit based on rent paid has decreased to $525. So, your tax refund was smaller by $175; or you may have owed more than you normally do.
Those of us with owned property noticed this when we received our property tax bills during the summer or fall of 2021: the credit was reduced from $700 to $525. But we did receive the Education Property Tax Rebate cheque for 25% of the school tax portion of our property tax bill. So overall our net costs for our property taxes are lower than they were in previous years.
Those living in Paradise Village and other similar mobile home parks did not receive the 25% rebate cheque since they do not own the land. The landowner did receive the rebate and did attend the municipal office to ensure all mobile homeowners did receive their share of the rebate. Those individual homeowners received a credit worth 25% of the school tax portion of the tax bill. You may only see this when you pay next years’ 2022 property taxes.
Changing your tax outcome
If you are unhappy with your outcome, you can make some changes for 2022.
If you want to have a larger refund, or instead of paying you want to have a refund, you can increase the tax deducted on your income.
If you have employment income, you can ask your employer to increase the tax deducted on your income by providing them a new TD1 Personal tax credits.
If you have pension income, you can request more tax be deducted from your monthly income.
This can also work like a “forced” savings plan if you want to save money for yourself next Spring. I have some clients that do this intentionally so they have money each summer for property tax bills or home or auto insurance or vacation.
Too much refund
You can reduce your refund and have more money in your pocket monthly by reducing the tax deducted. This is most common for seniors who have tax deducted on CPP and/or OAS. If you have large refunds every year, you can reduce the tax deducted so you have your money each month instead.
If you use your refund to pay off credit card debt, you should probably change your tax outcome so you have your money each month to pay your debts, instead of paying extra in interest costs.
A reminder that those that have small business income to include on their personal tax returns have until June 15 to file. This applies to their spouses too.
Anni Markmann is a Personal Income Tax Professional and Certified Financial Planner; living, working, and volunteering in our community. Contact Ste Anne Tax Service at 204.422.6631 or 36 Dawson Road in Ste Anne (near Co-op) or email@example.com