Tax Changes for Families

Changes Proposed for 2014 Mean Tax Benefits for Families

NEW TAX CHANGES 

BENEFITING FAMILIES

Earlier this month there were a number of changes proposed expected to take effect in 2015 for the benefit of families. Two-thirds of the families benefiting these changes will be low and middle-income earning families.

Income Splitting Will be Available for Families

The new Family Tax Cut will allow income splitting for families as of the 2014 tax year, when previously this has only been available for seniors. This will allow a higher-income spouse to transfer up to $50,000 of taxable income to a spouse in a lower tax bracket. For example for a family that has a stay at home parent or one who works part time, and allowing them to divide the income for tax purposes. The credit will provide up to $2,000 of tax savings for couples with children under the age of 18, effective for the 2014 tax year.

Enhanced Universal Child Care Benefit replaces the Child Tax Credit and Increases UCCB

The Child Tax Credit is a $2000 tax credit applied to line 367 for a parent with a child 17 or under. This credit is being eliminated at the time of filing the 2014 tax return and replaced with the new Enhanced Universal Child Care Benefit as of January 2015. The credit being replaced can be worth up to $365 per year for each child to the parent claiming it, but only if their income is taxable. The credit goes to waste for many low income parents or single parents who don’t have enough income to make use of it.

The Enhanced Universal Child Care Benefit would increase the current $100 per month to $160 per month for children under 6 years old and will provide $60 per month for children 6 to 18. This benefit would apply regardless of income. In a year $1920 could be received per child.

While this change to the Universal Child Care Benefit is effective January 1, 2015 it cannot be paid until July 2015 after Royal Assent has been received. Until July 2015 regular payments will apply.

If you have applied for the UCCB or Child Tax Benefit in the past nothing further is required to receive this benefit, however if you have never applied you should submit form RC66.

Fitness Tax Credit Increased

While the Arts Credit remains at $500 per year, per child. The Fitness Tax Credit has increased to a maximum of $1000 for each child up to age 16 per year.

In addition to the increase of the current limit in the 2014 tax year, as of the 2015 tax year, the credit will be changed to a refundable credit. Meaning that the credit will result in a refund of a portion of the amount paid when no tax is owing rather than going to waste if the income is too low to owe any tax.

Increase to Child Care Expense Maximum

The current Child Care Expense limits for every age group will increase by $1000 per year.

Contact us at Pain Free Tax & Bookkeeping Service Ltd. to arrange a free analysis of how these changes may benefit your family.