Income tax changes for individuals

The following is an overview of income tax changes for the 2005 tax year, including proposed changes that may not yet have become law. See the tax guides for more details.

Marital status

The proposed amendments to the Income Tax Act regarding same-sex relationships have now become law. The Canada Revenue Agency has made adjustments to reflect these changes.

Child disability benefit

The maximum amount for the supplement has increased to $2,000.

German pensions

Changes were made to the taxation of social security pensions received from Germany since January 1, 2005.

Capital gains – Exempt capital gains balance (ECGB) 

If you did not use all of your ECGB by the end of 2004, you can only add the unused balance to the adjusted cost base of your shares of, or interest in, the flow-through entity. For more information, see guide T4037, Capital Gains.

RRSPs

Foreign property rule – The 30% foreign property limit for deferred income plans such as registered retirement savings plans (RRSPs) and registered retirement income funds (RRIFs) has been eliminated.

Qualified investments – Investment-grade gold and silver bullion and bars, and certificates on these investments, are considered qualified investments for deferred income plans such as RRSPs and RRIFs.

For more information, see guide T4040, RRSPs and Other Registered Plans for Retirement.

Disability supports deduction

Under proposed legislation, you may be able to claim additional expenses for the disability supports deduction on line 215 of your return. For more information, visit our Web site at www.cra.gc.ca or see Form T929, Disability Supports Deduction. To get forms or publications, visit www.cra.gc.ca/forms or call 1-800-959-2221.

Employment expenses

Definition of "automobile" – Under proposed legislation, the definition of "automobile" has been changed to exclude certain types of vehicles. For more information, see guide T4044, Employment Expenses.

Form T2200, Declaration of Conditions of Employment – Your employer must now complete all of Form T2200 (both Part A and Part B) and then give you a copy for your records. For more information, visit our Web site at www.cra.gc.ca or see Form T2200, Declaration of Conditions of Employment. To get forms or publications, visit www.cra.gc.ca/forms or call 1-800-959-2221.

Adoption expenses

Under proposed legislation, individuals who adopt a child under the age of 18 can now claim certain expenses as a non-refundable tax credit on line 313.

Disability amount

Individuals who have a severe and prolonged impairment in physical or mental functions may be eligible for the disability amount on their tax returns. As a result of proposed legislation, Form T2201, Disability Tax Credit Certificate, has been changed. The eligibility requirements for life-sustaining therapy have been expanded. A section for the cumulative effects of multiple impairments has also been added. Eligibility requirements for impairments with intermittent signs and symptoms have been clarified. More information has been added to the taxpayer information area.

For more information, visit our Web site at www.cra.gc.ca or see Form T2201, Disability Tax Credit Certificate. To get forms or publications, visit www.cra.gc.ca/forms or call 1-800-959-2221.

Medical expenses

Under proposed legislation, you may be able to claim additional expenses as medical expenses on lines 330 and 331.

Allowable amount of medical expenses for other dependants

The maximum amount you can claim for each dependant has been increased to $10,000.

Donations and gifts

Under proposed legislation, there may be limits to the fair market value for gifts of certain property made to a qualified donee after December 5, 2003. For more information, see guide T4011, Preparing Returns for Deceased Persons.

Refundable medical expense supplement

The maximum amount you can claim has increased to $750.

Tax transfer for residents of Quebec

For 2005 and later tax years, you can transfer, to the Province of Quebec, up to 45% of the income tax shown on information slips issued to you by payers outside Quebec.

Tax rate

Under proposed changes announced by the Minister of Finance on November 14, 2005, the lowest personal tax rate is reduced from 16% to 15%.

Basic personal amount

Under proposed changes announced by the Minister of Finance on November 14, 2005, the basic personal amount you may claim on line 300 is increased from $8,148 to $8,648.

Spouse or common–law partner amount

Under proposed changes announced by the Minister of Finance on November 14, 2005, the maximum spouse or common-law partner amount that you may claim on line 303 is increased from $6,919 to $7,344.

Amount for an eligible dependant

Under proposed changes announced by the Minister of Finance on November 14, 2005, the maximum that you may claim as an amount for an eligible dependant on line 305 is increased from $6,919 to $7,344.

More information

For more information, visit our Web site at www.cra.gc.ca, see the General Income Tax and Benefit Guide, use our automated service T.I.P.S. at 1-800-267-6999, or call our general enquiries agents at 1-800-959-8281. To get forms or publications, visit www.cra.gc.ca/forms or call 1-800-959-2221. You can also view personal information about your refund, your GST/HST credit, your Canada Child Tax Benefit, your registered retirement savings plan, and more by visiting www.cra.gc.ca/myaccount.