Thursday, April 7, 2016

An Apple for the Teachers

Budget 2016 introduces a new tax credit in recognition of personal expenses incurred by teachers and early childhood educators who often end up buying supplies for their students. 

Effective for 2016, eligible employed educators will be able to claim a 15% tax credit for up to $1,000 in eligible expenditures made in a taxation year.

The tax credit will be refundable.  If an eligible educator has no tax to pay after claiming the basic personal exemption and any other available tax credits, the educator will receive a cheque from the government for any portion of this new credit that was not actually applied to reduce tax owing.

The new credit does not apply to an individual who is self-employed because self-employed individuals can deduct business expenses as a matter of course. 

As with any tax credit (and classroom setting), rules apply.
  • To qualify as an eligible educator, a teacher must hold a valid teacher’s certificate and an early childhood educator must hold a valid certificate or diploma in early childhood education.  In each case, the certificate or diploma must be recognized by the province or territory in which the individual is employed.
  •  Expenditures must be for the purchase of eligible supplies for use in a school or a regulated child care facility for the purpose of teaching.
  • Eligible supplies will include the following durable goods.
    • Games and puzzles.
    • Supplementary books for classrooms.
    • Educational support software.
    • Containers (such as plastic boxes or banker boxes for themes and kits).
  • Eligible supplies will also include consumable goods, such as the following.
    • Construction paper for activities, flashcards or activity centres.
    • Items for science experiments, such as seeds, potting soil, vinegar, baking soda and stir sticks.
    • Art supplies, such as paper, glue and paint.
    • Various stationery items, such as pens, pencils, posters and charts.

The employer must certify that the supplies were purchased for the purpose of teaching.  Eligible educators will have to retain all receipts for verification purposes. 

While teachers and early childhood educators will welcome this credit, it provides only partial relief for the out-of-pocket expenses incurred by teachers and early childhood educators.  I hope that cash-strapped school boards and other employers will not use the tax credit as an excuse for requiring teachers and early childhood educators to personally bear more of the costs of classroom supplies.

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The above article provides general commentary of an educational nature. It does not constitute advice for any specific person or any specific set of circumstances. Because circumstances vary, readers should consult professional advisers in order to obtain advice that is applicable to their specific circumstances.