What you need to know for the 2016 tax year
The federal Dividend Gross Up and Tax Credit are NOT changing for eligible dividends in 2016
The federal dividend gross-up and enhanced federal Dividend Tax Credit in respect of eligible dividends will
remain at their current levels of 38% of the dividend paid and 15.02% of the taxable amount, respectively.
The Quebec eligible dividend gross-up and enhanced Dividend Tax Credit will remain at their current levels of
38% of the dividend paid and 11.90% of the eligible dividend gross-up, respectively.
The federal Dividend Gross Up and Tax Credit changed for non-eligible dividends in 2016
The federal, gross-up on non-eligible dividends changed for 2016 from 18% to 17%.The federal Dividend
Tax Credit in respect of non-eligible dividends changed from 11.02% to 10.52% of the taxable amount. The
Quebec Dividend Tax Credit will remain at the current rate of 7.05% of the taxable amount of non-eligible
dividends.
TFSA Annual Contribution Limit Decrease
The TFSA annual contribution limit has decreased from $10,000 to $5,500, effective for 2016 and
subsequent taxation years. We recommend clients confirm their contribution room with Canada Revenue
Agency (CRA) or their tax advisor, prior to making contributions.
Minimum Withdrawal Factors for Retirement Income Funds (RIFs) Remain the Same for 2016
The RIF factors will range from 5.28% at age 71 to 18.79% at age 94. The percentage that seniors will be
required to withdraw from their RIF will remain capped at 20% at age 95 and above.
Foreign Account Tax Compliance Act (FATCA)
On February 5, 2014, the CRA entered into an Inter-Governmental Agreement (IGA) with the United
States that requires Financial Institutions to identify and report certain financial accounts for U.S. persons
and specific U.S. owners of non-U.S. entities. TD Waterhouse Canada Inc. submits FATCA reporting to the
CRA, who may forward the information to the Internal Revenue Service (IRS). For the 2016 tax year, the
information provided to the IRS includes client name, address, account balances at year end, income received
and the gross proceeds of disposition by the account in the reporting year.
Foreign Income Verification Reporting (Form T1135)
Canadian investors that owned specified foreign property with a total cost amount of more than $100,000
at any time in the year, are currently required to complete and file a Foreign Income Verification Statement
(Form T1135) for that year.
The 2015 Federal Budget changes remain in effect for 2016; if the total cost of a taxpayer’s foreign property
is more than $100,000, but less than $250,000 throughout the year, the taxpayer will be able to report these
assets to CRA under a simplified foreign asset reporting form. Clients with foreign property that has a total
cost of $250,000 or more at any time during the tax year would need to complete the full T1135 form.
For more information as to what property needs to be reported and for FAQs, please access the CRA site or
alternatively your tax advisor. This reporting is not required for assets held in Registered Plan accounts such as
RSP, TFSA and RIF.
T5008/RL18 Reporting: Statement of Security Transactions.
For the 2016 tax year, clients will receive a T5008/RL18 tax document, which will provide information
detailing all reportable dispositions occurring in the client’s account during the year. The T5008/RL18 will be
provided as a separate tax document and will not be included with your T5 package.
All trade-marks are the property of their respective owners. ® The TD logo
and other trade-marks are the property of The Toronto-Dominion Bank.
Trading Summary
You will continue to receive your Trading Summary, as in previous years, which will provide details related to
acquisitions and dispositions occurring in your account during the year, but any reference to T5008 will be
removed as a separate T5008/RL18 tax document will be issued for the 2016 tax year. The Trading Summary
will be sent separately from your T5008 tax document.
Section 302 Certification
Section 302 of the U.S. Internal Revenue Code contains rules about whether a redemption payment made
by a U.S. corporation redeeming its stock should be treated as either (i) a dividend or (ii) a distribution in
exchange for the stock.
As of January 1, 2016, when a redemption is categorized as a Section 302 event, U.S. withholding tax will
apply to payments made to non-U.S. payees. The non-U.S. owner of the shares will need to complete a
Section 302 certification form to demonstrate that the payment received is a distribution and not a dividend,
and is therefore not subject to withholding tax. If shares you own are impacted by a Section 302 event,
you will be mailed a letter and a Section 302 form that must be completed within 30 days of the event;
otherwise, the full withholding tax rate of up to 30% will apply.
All trade-marks are the property of their respective owners. ® The TD logo
and other trade-marks are the property of The Toronto-Dominion Bank.
Determine Book Value
Book Value is equal to the total cost of the original purchase of the shares including the costs associated with
the purchase such as commissions. The Book Value will have to be adjusted for the value of any extra shares
purchased through a dividend reinvestment plan. The original purchase cost can be determined from the
confirmation slips available in eServices via WebBroker.
eServices
You can search for the security you purchased using the symbol search function in eServices
The confirmation slip contains that total value of the original purchase including commissions
All trade-marks are the property of their respective owners. ® The TD logo
and other trade-marks are the property of The Toronto-Dominion Bank.