The Family Tax Cut is a new non-refundable credit.
Essentially, you get a Federal tax credit intended to simulate the annual Federal tax benefit of income splitting with a lower income spouse to a maximum transfer of $50,000 and a maximum tax benefit of $2,000.
This will start on 2014 personal tax returns.
To be eligible for the credit, you must meet all of the following criteria:
o be married (including common-law partners) to a Canadian
- resident at the end of the year;
- have a child under age 18 who resides with you;
- not make a pension splitting election (either spouse);
- file a return (both spouses);
- be resident in Canada;
- not become bankrupt in the year; and
- not be incarcerated for a 90 plus day period in the year.
- Universal Child Care Benefit (UCCB) payments will be increased by $60 per month for all children under age 18 (so you get $160 per month for children under age 6 and $60 per child age 6 to 17). This is effective January, 2015 but payments will not begin until July, 2015. A Canada Child Benefits Application Form will be required for parents who have not previously completed such a Form to get other benefits, or for those whose situation has changed.
- The Child Tax Credit (worth $338 per child under age 18 in 2014) will be eliminated in 2015. Instead of a $338 Federal tax credit, the taxpayer will receive $720 ($60 per month as indicated above) in new UCCB payments to be reported by the lower income spouse. Even at a 50% tax rate, the taxpayer will still be ahead. The enhanced portion of the credit for an infirm child will remain available, despite the base credit being eliminated.
- The annual limit on Child Care Expenses will increase to $8,000 per child under age 7, $5,000 per child age 7 to 16, and $11,000 per disabled child, a bump of $1,000 per child in each category. This will also be effective in 2015.
- The Fitness Tax Credit doubles in 2014. For eligible expenses of $1,000, a Federal credit of $150 is obtained ($1,000 @ 15% = $150). This credit will become refundable in 2015. “Refundable” means that in situations where less than $150 in tax is assessed, federal taxes will be reduced to $0 and the unused portion of the credit will be refunded to the taxpayer. The Arts Tax Credit remained unchanged.Action Item: Ensure your children, aged 17 and under, are registered for UCCB.