Today’s tax tip focuses on seniors.   There are credits, benefits, and deductions to which you may be entitled.   Some of these are:

• Age amount: If you were 65 years old or older on December 31, 2009, and your net income was less than $75,032, you may be able to claim this non-refundable tax credit.
• Pension income amount: If you reported eligible pension, superannuation, or annuity payments on your return, you may be able to claim this non-refundable tax credit.
• Pension income splitting: If you and your spouse or common-law partner split your pension income by completing Form T1032, Joint Election to Split Pension Income, you (the pensioner) can claim a deduction for the elected split-pension amount.
• Registered retirement savings plan (RRSP): You may be able to deduct your RRSP contributions.
• Medical expenses: You may be able to claim a non-refundable tax credit based on the cost of medical expenses for any 12-month period ending in 2009.
• Goods and services tax / harmonized sales tax (GST/HST) credit: Low- and modest-income individuals and families may apply for this quarterly payment by completing the application on the first page of their 2009 income tax and benefit return.
• Disability amount: If you had a severe and prolonged impairment in physical or mental functions in 2009 and meet certain conditions, you may be able to claim this non-refundable tax credit.
• Public transit tax credit: If you use public transit and have bought certain transit passes or electronic payment cards, you may be able to claim this non-refundable tax credit.
• Home Renovation Tax Credit: If you are a homeowner, you may be able to claim a non-refundable tax credit, based on eligible expenses incurred for work performed or goods acquired after January 27, 2009, and before February 1, 2010, in respect of a renovation or alteration to an eligible dwelling.

In addition to these, other credits, deductions, and benefits may be available to you. For more information, go to Canada Revenue Agency website.

Pay tax by instalments

If you receive income that has no tax withheld or does not have enough tax withheld for more than one year, you may have to pay tax by instalments. This can happen if you receive rental, investment, or self-employment income, certain pension payments, or income from more than one job. For more information, please visit  Canada Revenue Agency website.

Interest rates for April 1, 2010 to June 30, 2010

• 5% on taxes you owe to the ministry.
• 0% on taxes you overpaid.
• 2% on taxes or refunds you are eligible for as a result of a successful appeal or objection.
• 3% on late International Fuel Tax Agreement payments.
• 3% on International Fuel Tax Agreement refunds the ministry has not paid you within 90 days.

For more information visit: Ministry of Revenue

2010 Personal Tax Checklist

The maximum dollar amount you may claim for a child under the age of 7 is $7,000. This is reduced to $4,000 for children between the ages of 7 and 16.   The maximum amount you may claim for a disabled child is $10,000,   regardless of age.   These childcare expenses are claimed as a deduction from your income and therefore your taxes payable at your marginal tax rate.

Deductible childcare expenses include:

• Costs related to  nursery schools, day cares and babysitting services
• Private Schools (the portion of tuition attributable to child care services)
• Overnight camps and boarding schools
• generally, childcare payments made to any person who is a deemed resident in Canada except:   the father or mother of the child,   a person under the age of 18 who is related to a parent of the child (for example, a sibling) or   a supporting person who either claims a dependant deduction for the child or deducts   the child care expenses of the child

For more information, please go to Canada Revenue Agency

Consider starting a registered education savings plan because the government will match part of your contributions with a Canadian Education Savings Grant. The amount the government contributes annually depends on your net family income. And the earlier you start, the more time you have for the money to compound.

For more information, please visit CanLearn

However, there are cases where a severance package will include a portion that can be directly transferred into an RRSP or registered pension plan.   For each year of service before 1989, you can contribute $3,500 to your RRSP.   For the years 1989 to 1995 inclusive, you can contribute $2000 per year. From 1996 onward, there is no eligible portion.

The only way to reduce your tax burden is to contribute to an RRSP.   If you take your severance package as cash, it will be taxed at your personal tax rate.

• Amount for children born in 1992 or later: You can claim $2,089 for each of your or your spouse’s or common-law partner’s children who were under the age of 18 at the end of the year and who lived with you throughout 2009.
• Child care expenses: You may be able to claim a deduction for child care expenses (for example – day camp payments).
• Medical expenses: You may be able to claim a non-refundable tax credit based on the cost of medical expenses for any 12-month period ending in 2009.
• Child Disability Benefit: If your child is eligible for the disability amount, and is under the age of 18, you may be able to apply for the Child Disability Benefit, a maximum of $204.58 per month.
• Child benefits: You may be able to apply for the Canada Child Tax Benefit (for children under the age of 18) and the Universal Child Care Benefit (for children under the age of six) and receive monthly payments to help with the cost of raising children.
• Children’s fitness tax credit: You may be able to claim a non-refundable tax credit of up to $75 based on eligible fitness expenses (to a maximum of $500 per child) paid to register your or your spouse’s or common-law partner’s child in a prescribed program of physical activity. If your child is eligible for the disability tax credit, you may be able to claim an additional credit of $75 for that child.
• Goods and services tax / harmonized sales tax (GST/HST) credit: Low and modest-income individuals and families may apply for this quarterly payment by completing the application on the first page of their 2009 income tax and benefit return.
• Working income tax benefit (WITB): Working individuals and families with low income may be able to claim this refundable tax credit. The WITB includes a supplement for individuals who are entitled to the disability amount. Eligible individuals and families may also apply for advance payments.
• Public transit tax credit: If you use public transit and have bought certain transit passes or electronic payment cards, you may be able to claim this non-refundable tax credit.
• Home-related non-refundable tax credits:You may be able to claim the Home Renovation Tax Credit of up to $1,350 based on eligible home renovation or alteration expenses of more than $1,000, but not more than $10,000, or the First-time Home Buyers’ Tax Credit of up to $750 for the acquisition of a qualifying home.
• Registered retirement savings plan (RRSP): You may be able to deduct your RRSP contributions.

For more information, please visit Canada Revenue Agency

If legislation passes as proposed, the Canada Revenue Agency would be responsible for the administration of the harmonized sales tax (HST) in Ontario and British Columbia. The HST would replace existing provincial sales taxes and the Goods and Services Tax in those provinces beginning July 1, 2010.

In broad terms, the existing Ontario Retail Sales Tax (RST) will generally cease to apply and HST will begin to apply to:

• Sales of goods where the goods are delivered, and ownership is transferred, on or after July 1, 2010;
• Sales of services to the extent the services are performed on or after July 1, 2010;
• Supplies of property by lease, licence or similar arrangement for the part of the lease interval on or after July 1, 2010;
• Goods brought into Ontario or imported by a resident of Ontario on or after July 1, 2010; and
• Sales of admissions, including season tickets, for entry to a place of amusement on or after July 1, 2010.

Transitional rules will apply to amounts that are paid or payable before July 1, 2010 for property or services that are delivered, performed or made available on or after July 1, 2010.

For more information on the transitional rules for the HST please visit Canada Revenue Agency

In order to participate, the CRA invites Canadians to visit the CRA’s YouTube Channel to find out why the underground economy is a problem for all Canadians. Then create a video, and tell the CRA how the underground economy is a problem for Canadians and business. Videos can be submitted to the CRA’s YouTube channel. The winner will be honoured with the 2010 CRA Independent Video Producer Award at a special screening to take place in Ottawa later this year.

The YouTube video contest will be open until May 30, 2010. Videos entered in the contest may be used in CRA outreach initiatives. For more information on the underground economy, guidelines for video submissions, and a link to the CRA’s YouTube channel, go to Canada Revenue Agency

• Retirement Pension
• Survivor Benefits
• Disability Benefits
• Pension Sharing
• Credit Splitting
• Social Security Agreements

You must apply for all benefits in writing. Canada Pension Plan will determine if you are eligible for the benefit.

Canada Pension Plan rates are adjusted every January if there are increases in the cost of living as measured by the Consumer Price Index. This Table (Canada Pension Plan – Payment Rates) lists the maximum and average monthly rates for Canada Pension Plan benefits for 2010, except for the death benefit which is a one-time payment.

For more information, please visit Service canada