Stephen Harper Announces New Tax Cuts for Families
November 7, 2014
Prime Minister Stephen Harper recently announced tax changes that provide tax savings to Canadian families. Here’s a summary of what you need to know.
New Family Income Splitting Tax Credit
The government introduced a new non-refundable income splitting tax credit providing tax savings of up to $2,000 for couples with children under 18, starting in 2014.
Generally, to be eligible for the non-refundable credit, an individual must be a Canadian resident at the end of the year, have an eligible spouse (including a common-law partner) and a child under 18 at the end of the year who ordinarily lives throughout the year with the individual or his or her spouse.
To claim the credit, both spouses must file an income tax return and also must not elect to split any pension income they might have. If a child lives with both of his or her parents throughout the year, either parent may claim the credit but not both.
Child Care Expense Deduction
The Child Care Expense Deduction allows parents to deduct child care expenses incurred to earn employment or business income, pursue education or perform research. Generally, the lower-income spouse (or a single parent) can claim the deduction. The government has proposed the annual dollar limits for this deduction increase by $1,000 per child, starting in 2015.
Universal Child Care Benefit and Child Tax Credit
The Universal Child Care Benefit (“UCCB”) will increase to $160 per month (from $100 per month) for each child under age six. The government is also introducing a new benefit of $60 per month for children aged six through 17. Both these changes will take effect starting in January 2015 and will be reflected in monthly payments received starting in July 2015. While the UCCB is increasing, the existing Child Tax Credit (available to individuals with children under 18) will be eliminated.
How does this impact you?
Our Chartered Professional Accountants can help you determine whether you can take advantage of the new tax credit and other changes announced on October 30, 2014. Please contact us for more details.