New job? New baby? Newlywed? Find out how your taxes could change.
February 27, 2017
Was last year full of change for you? Maybe you started your soon-to-be epic career, welcomed a new addition to your family or tied the knot with the love of your life. If any of these sound familiar, it’s good to remember to keep your friendly federal tax team – a.k.a. the Canada Revenue Agency (CRA) – in the know. Big changes in your life can mean big changes to your taxes, so we’ve come up with a few scenarios to walk you through what you should know along the way.
You started your first job
The switch up from student to fully-fledged employed adult can be a big one. You might have been surprised to see how much tax came out of your first paycheque, but there’s a chance you have a tax credit waiting to be claimed. If you couldn’t claim all of your tuition and education credits while you were in school, and didn’t transfer all of them to someone else, they would have carried forward when you filed your next return. That means they could be used this year to lower your overall tax bill.
You put a ring on it
Congrats! While you’re enjoying heartwarming wedded bliss, take a moment to loop in the CRA of your new marital status with an RC65 Form – Change of marital status. Here’s some more good stuff to know:
- Though you might do everything together, taxes won’t be one of them. Spouses still file their own returns at tax time, but you’ll include your partner’s SIN and net income on the first page.
- You won’t end up paying more taxes, but benefits like the GST/HST and Canada Child Benefit (CCB) can be affected by your new household income.
You bought your first place
No more rent payments for you! If you’re a first-time homebuyer you’re eligible for the Homebuyers' amount. This is a $5,000 credit, which works out to $750 in tax savings.
Here’s a few more things to know:
- If you bought your place with your better half, the credit can be split between you if you’re both first-time buyers.
- You don’t need a specific receipt to make this claim – you’ll just need to have the paperwork that proves you bought a house in the past year if the CRA asks.
- If you borrowed from your RRSP for your down payment, you have two years before the CRA will start asking you to repay it.
You’ve got a little one on the way
Hello, baby! The first few weeks with a new addition can be a bit hectic, you may have forgotten you registered your child at the time of birth. Here’s what else you should know:
- You might start receiving Canada Child Benefit (CCB) payments: This monthly payment is determined by household income, and is meant to help with the cost of raising a child.
- You’ve taken maternity or parental leave: New parents that will receive Employment Insurance payments should remember that this income is taxable, so can mean a tax bill at the end of the year depending on what other income was earned during the rest of the year.
- You’re thinking about starting an RESP: Your little one won’t be little forever. Though post-secondary education seems like a long way off, deposits into a Registered Education Savings Plan (RESP) can qualify for matched dollars through the Canadian Education Savings Grant, so it’s a good idea to start early.
Had some other life changes in the last few months?
Maybe you went through some other big changes that aren’t listed above, and are wondering if they affect your taxes…
- Are you a single parent with a child who turned 18 last year?
- Is your spouse earning significantly more income this year?
- Did your spouse quit a job to stay at home with the children?
- Are you caring for an elderly parent?
If you answered yes to any of these questions, then your tax situation has changed too. It’s a good time to consult a Tax Expert to make sure you have the right amount of tax being withheld by your employer, and see if you might qualify for other credits or deductions.
When big changes come along, it’s easy to get swept up in them and put your taxes on the backburner. Taking a minute to update the CRA of any tax-changing events will save you some headaches down the road, so keep them in the know!