When you're considering a move back home, it's worth it to do a little research before choosing the date for the move. I learned this lesson the hard way when I moved back home after retiring from the army.
Joey is a fictional character
Joey moved from Alberta to Nova Scotia in October of 2016. He purchased his first home in Nova Scotia in November and came to see me when it was time to do his income tax.
Apparently someone had told him that he could claim the costs related to the purchase of his new home. He wasn't pleased when I told him that this claim was only available to people who had sold a property at the old location.
He was irritated but we got over it. Sometimes there's a tendency for people to shoot the messenger but Joey was graceful.
That is....until I told him how much he would have to pay the government this year. Let's talk about provincial marginal tax rates.
Joey made $130,000.00 in Alberta (between Jan - Oct). Joey's employer collected tax based on the assumption that he would be filing taxes in Alberta which makes sense. But, when it comes time to do your taxes, the government expects your the taxes based on where you were residing on December 31st of that year. On December 31st Joey was ringing in the new year in his new man cave in Nova Scotia - therefore, so Joey would be taxed at the Nova Scotia tax rate.
Nova Scotia 17.5%
Alberta 10 %
Joey was in for a shock - he wouldn't be getting that new boat this year. I get it! I get it! I get it Joey! I'd be pissed too. But I have to follow the law.
My advice to anyone considering a move, be strategic about the date. Check your marginal tax rates, hold off and move in the new year if it is more beneficial to do so!!! Sometimes we have no control over this but at least you can do a little planning.
Joey just called to make an appointment to get his 2017 taxes done - I'm glad he realizes that I don't make the rules.
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