When it comes to tax time, it always pays to do a good review of the tax changes from one year to the next and find those “dark horses”; the little-known tax facts that can make a big difference on tax filing outcomes.
One such change exists for pilots flying in and out of Canada, another for overseas workers and yet a third for those whose employers pay premiums for wage loss replacement plans.
Pilots. Non-resident pilots flying in and out of Canada may have to report their earnings on the Canadian tax return for the first time in 2013. All of the income attributable to the flight is reportable if the flight departs from a location in Canada and arrives in a location in Canada. One half of the income is attributable if the flight departs from a location outside Canada and arrives here or leaves from Canada but lands outside Canada. No reporting is required if the flight departs and arrives in a location outside Canada.
Overseas Workers. Canadian residents, meanwhile, who performed services outside Canada for more than six consecutive months beginning or ending in the tax year, for either a Canadian employer or a Canadian owned foreign affiliate, may be able to claim the Overseas Employment Tax Credit, using Form T626. Qualifying income must be in exploration for natural resources, construction, installation, agricultural or engineering activities. The amount to be sheltered, however has changed in 2013 – it’s 60% of income up to $60,000. In past years this was 80% of income up to $80,000 a year. The credit will be end by 2016.
Group Sickness Plans. There is a new line on the T1 tax return – line 103 – intended for wage loss replacement plan contributions made by the employee. This is not added to income; but serves as a notation line for CRA. Be sure, though, to reduce any wage loss replacement plan income reported on your T4 slip by contributions you made and have not previously deducted.
Employer contributions to group accident/sickness plans will show up as a taxable benefit on your 2013 T4 slip for the first time. This will not occur if the employer contributions will result in a wage-loss replacement benefit payable on a periodic basis; such premiums will continue to be non-taxable.
It’s Your Money. Your Life. There are many tax rules that are specific to employed taxpayers. Be sure to come up to speed on income sources that may have changed their tax status, new indexed credits like the Canada Employment Credit ($1,117 in 2013), behind-the-scene changes to the tax laws, and the lucrative deductions available if you qualify to make a claim on Form T777 Employment Expenses. A certified tax professional who has taken a recent tax update course is well equipped to cover the nuances with you now, before the busy tax season begins.
Evelyn Jacks is president of Knowledge Bureau and author of 51 books on tax and personal wealth management. Her newest book Jacks on Tax: 2014 Edition is now available. She is also the founder and director of the Distinguished Advisor Conference (DAC). The theme of the 2014 three day think tank in Horseshoe Bay, Texas Nov 9-12 will be “Think BIG: Find the Sweet Spots in Wealth Management” Follow Evelyn on Twitter at @EvelynJacks.