Tax changes to be aware of before filing this year

Every year, the government introduces budget items andchanges to federal programsthat can affect how much tax you pay and what credits you can claim. We highlightsome of the main changes thataffect your 2013 tax return and beyond.

Overseas employment tax credit This is a credit claimed by employees of Canadian companies with operations abroad that work in certain sectors such as natural resources, engineering, construction, installation, agriculture and some support activities for those industries. The government announced in the 2012 budget that it would be phasing out the credit starting in the 2013 tax year.

Thecredit would usually be equal to the tax payable on 80 per centof an individual's qualifying foreign employment incomeor $80,000, whichever is less. As the creditgets phased out, that percentage will decrease, going down to 60 per cent in 2013,until it is at0 in 2016.

NewincomeamountIn January 2013, the federal government introduceda new grant called Federal Income Support for Parents of Murdered or Missing Children. The program provides financial support to parents who take time off work tocope with the death or disappearance of a child that occurred as a result of a crime. The money parents getissubject to federal and provincial tax, which means it must be declared as income. This amount would be entered on Line 130 of your federal tax return. Read more about the eligibilityrequirements and conditions of the grant here.

Adoption expenses tax credit In its 2013 budget, the government extended the period during which individuals can claim expenses related to an adoption. The eligible period now begins right when an applicationis made for registration with a provincial or territorial ministry responsible for adoption (or with an adoption agency licensed by a provincial or territorial government rather than when an adoption file is actuallyopened. The eligible period can also beginwhen an application related to the adoption is made to a Canadian court if this date is earlier than the initiation of the application with adoption authorities. Adoption expenses are claimed on Line 313 of your federal return.

First-time charitable donation The government has introduced a temporary "first-time donor's super credit"for the first $1,000 donated by individuals who have never claimed a credit for charitable donations. The super credit supplements the usual value of thecharitable donationtax credit by 25 per cent. The supplement applies to gifts of money up to $1,000 donated in one tax year between March 20, 2013, and the end of 2017.

Itcan be shared with a spouse or common-law partner as long as the combined total doesn't exceed $1,000. You're considered a first-time donorif neither younor yourspouse or common-law partnerhave claimed and been allowed a charitable donationtax credit for any year after 2007. The credit can only be claimed once in the tax years 2013 to 2017. Read more about this credithere.

Last year forsafety deposit box deduction

Mineral exploration tax credit The government has extended its 15 per cent tax credit for investors in flow-through shares of mineral exploration companies to allflow-through share agreements entered into before April 1, 2014. Flow-through shares are a way forjunior mining companies that have trouble raising capitalto finance exploration and developmentto shift these expenses onto shareholders.

• End of overseas tax credit may hurt mining, resource sectors
• Charitable tax credits: 7 things you need to know

The temporary credit was introduced in the October 2000 budget update and has since been extended several times. The aim of the credit, according to NaturalResources Canada, is to "assist junior mining companies in raising new equity through flow-through shares" in order to help"maintain or increase the amount of exploration activity in Canada." The creditis a non-refundable tax credit that can be carried back three years and carried forward 20 years.

Tax-free savings accountThe annuallimit on what you can contribute to your TFSA increased last year from $5,000 to $5,500and remains at that amount for the 2014 contribution year.

Family caregiver amount In 2012, the government introduced a$2,000 creditthat can be claimed on top of the credits that individuals claim if they have a dependant with an impairment in physical or mental functions. For the2013 tax year, the family caregiver amount you can claim has increased to $2,040.

Safety deposit box deduction Individuals and corporations will nolonger be able to deduct the cost of renting a safety deposit box that is used to store papers related to their investment portfolio. For corporations, the new rule kicks in as of March 21, 2013, and for individuals, it begins in the 2014 tax year. Experts suggest the government decided to eliminate this deduction in theMarch 2013 budget because it realized that the increasing use of electronic records makes it less likely that the safety deposit boxes are being used to store the kind of documents intended in the original deduction.

Snitch rewards kick in

Stop International Tax Evasion Program As of 2014, the Canada Revenue Agency has a new incentive program for whistleblowers who help the agency catch large-scale tax evaders.

Individuals who provide the CRAwith "specific and credible details of major international tax non-compliance"that leadto the collection of unpaid taxes of at least $100,000 will receive a reward offive to 15 per cent of the federal tax collected. The CRA will enter into a contract with informants if it deems that a case has merit.

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Lifetime capital gains exemption Under the government's 2013 economic action plan, the exemption will be increased from $750,000 top $800,000 as of the 2014 tax year. In subsequent years, it will also be indexedto inflation. The new lifetime exemption limit will apply even to individualswho had previously reached the exemption limit.

Pooled RegisteredPension Plans The 2013 tax year is the first full tax year that federally regulated pooled pension plans have been allowed although none is yet operational. The government passed legislation in December 2012 regulating the voluntary retirement savings plans. PRPPs are aimed at people who don't have workplace pension plans.

Theplans pool workers' contributions and are managed by third-party administrators such as banks or insurance companies that have been licensed to do so by the Office of Superintendent of Financial Institutions. Manulife Financial and Standard Life have beenlicensed to administer PRPPs but neither has yet registered a plan.

• For more information onPRPPsclickhere.

PRPPs resemble defined-contribution plans in that all of thereturns on contributors' investments are earned from the market, and there is no guarantee of benefits as with a defined-benefit plan. Employers don't have to participate but are responsible for selecting the PRPP administrator and remitting contributions. Currently, PRPPsare available only for employees of federallyregulated businesses everywhereexcept in the Yukon, Northwest Territories and Nunavut, where employees in any industry as well asself-employed individuals can participate. Quebec, Alberta and Saskatchewan have all passed legislation approving PRPPs, but nonehas yet enacted it. Quebec plans to start offering them as of July 1, 2014, and will make it mandatory for businesses of a certain size to make them available to employees.

The CRA's full list of tax changes for 2013 is here.