“Do you consider yourselves rich and wealthy?” That is a question I have asked many families in the past several weeks since we started filing 2014 tax returns on February 10.
The 2014 tax year is the first time the “Family Tax Cut” became available to families (couples with children under age 18). The tax saving can be up to $2,000. It is most common when couples are in two different tax brackets. I have met many families that have benefited from this tax cut. So I point it out to them and let them know how much this tax cut has saved them. They are impressed and/or surprised. A few had known it was available and wondered if they would get any tax cut.
And then I explain that when the tax cut was introduced last November, the current federal government was criticized for making a tax cut that only benefits the rich and wealthy (assuming those are the only ones that would benefit). So I ask each couple across my desk: “do you consider yourselves rich and wealthy?” And their answer is “of course not” or “not at all”. So there are many families in our part of the province that have a bit more money in their pockets. And the good news is they will likely spend their tax savings in our communities.
There was another tax break announced last year, but I think it has had unintended consequences.
Last year, our provincial government announced it would begin to remove all the school taxes from property taxes for seniors. For 2014, the tax break is up to $235.
Most people would think this is a good tax break. However, it has not helped many seniors who own their own home, that have lower income.
Let me explain. When filing taxes, we include information about the property taxes, including the school tax levy they have paid, as there are up to $400 additional refundable provincial education credits available to low income seniors.
However, if they applied for and received their $235 tax break after they paid their property taxes, the income tax credits available to them are $235 less. Yes, their refund they normally would expect is $235 less than last year. So low income seniors have seen no benefit at all.
I believe that this tax credit sounded good on paper and maybe was good “politics” but it has helped only middle income and high income seniors. Not any of the low income seniors.
Plus it does not help those who are renting or those who own mobile homes on rented land (mobile home parks like Paradise Village near Ste Anne).
I believe that school taxes should be eliminated completely on everyone’s property taxes. The revenue required by the Provincial government to pay for our primary schooling should come from general revenue (yes, personal income taxes). That way those with higher incomes pay more; those with lower incomes pay less (or nothing). This is the most fair way of collecting taxes to pay for schools.
A quick reminder to get your 2014 personal income taxes filed by April 30, 2015. Especially if you owe additional taxes (didn’t have enough deducted from your different sources of taxable income).
If you are expecting a refund, you do have three years to file.
If you are self employed like me, you do have until June 15 to file your taxes without penalty. Keep in mind that the amount owing does attract interest from May 1. So if you know you will owe some taxes, you can still pay some by April 30 to reduce the interest (5%) and still file by June 15 to avoid the penalty.
Anni Markmann is a tax professional working, living, and volunteering in our community. Contact Anni at 204-422-6631 or anni@steannetaxservice.ca or 36 Dawson Road in Ste Anne.