When you’re an accountant, your clients often want you to help them reduce their tax liability and get refunds. To do that, you need to be aware of tax credits, deductions, and special programs. Luckily, in Nova Scotia, there is a range of options designed to help low-income taxpayers in particular. You may want to ensure your clients know about the following programs.
Nova Scotia Affordable Living Tax Credit
The Affordable Living Tax Credit is designed to help low-income families pay for increases associated with the province’s harmonized sales tax. Your clients don’t have to apply for this credit. Instead, the provincial government uses information from tax returns to determine eligibility. As of 2018, your clients can earn up to $255 per year plus an extra $60 for each child. For instance, a client with two children may receive up to $375 annually.
This applies to families with annual income under $30,000. If your client’s income is over that amount, the credit is reduced by 5% of the amount over $30,000. For example, if the income is $31,000, the credit is reduced by $50. To calculate, take your client’s income ($31,000) and subtract the threshold ($30,000). Then, take the difference ($1,000) and multiply it by 0.05, which leads to $50. You may want to let your clients know they’ll receive payments with their federal GST/HST credits.
Nova Scotia Poverty Reduction Credit
Like the Affordable Living Tax Credit, the poverty reduction credit doesn’t require an application. Instead, eligibility is based on the income reported on your client’s return. If you have clients who’ve recently had a drop in income and no longer have to file, you may want to encourage them to submit a return anyway. This can be essential for getting access to programs like this.
To qualify, their income needs to be less than $12,000. Then, they receive quarterly payments. As of 2018, the payments are worth a total of $250 per year.
Nova Scotia Tax Reduction for Low-Income Seniors
If you have seniors who receive Guaranteed Income Supplements, they may be able to get a refund of any provincial income tax they pay. In the past, the province sent payments directly to taxpayers, but as of 2014, they have to claim the age credit on line 79 of Nova Scotia’s 428 Form.
To qualify, your clients must meet the following criteria:
- Be a resident of Nova Scotia
- Be age 65 as of Dec. 31 of the previous year
- Have taxable income from line 260 of less than $24,000
Nova Scotia Child Benefit
The child benefit is available to modest-income families with children under the age of 18. As of 2018, if their income is below $18,000, your clients can receive $52.08 per month for their first child, $68.75 for their second child, and $75 per month for any additional children. If their income falls between $18,000 and $24,000, they receive part of this benefit.
To help your clients prepare for tax season, you may want to let them know about programs like these. To keep your clients informed, you may want to monitor both federal and provincial agencies for new rules and updates.