Federal Budget -> October 30, 2014 Update
October 30 2014 Federal Tax Update - Personal Income Tax Changes
All provisions were subsequently incorporated into Bill C-59, which received Royal Assent on June 23, 2015.
The federal government is implementing a new Family Tax Cut in the form of a non-refundable tax credit, which is effective for the 2014 and later taxation years. This would allow couples with children under the age of 18 to notionally split the income of the spouse with higher earnings, transferring up to $50,000 of taxable income to the lower income spouse in a taxation year. Because this is being done as a non-refundable tax credit, it does not affect the calculation of provincial or territorial income tax.
The non-refundable credit, calculated based on the change in combined income tax of the couple resulting from the transfer of a notional amount of taxable income, could be used by either spouse, and may not exceed $2,000.
Our Canadian Tax and RRSP Savings Calculators include the Family Tax Cut.
Universal Child Care Benefit (UCCB) Enhanced for 2015
The government proposes to increase the monthly UCCB for children under 6 from $100 to $160, and proposes to introduce a $60 per month benefit for children age 6 to 17. This would provide an additional $720 per year for each child under 18. As with the existing UCCB, this amount is taxable in the hands of the lower income spouse, and a single parent can opt to include the benefit in the income of a dependent child for whom the eligible dependant amount is claimed.
This change would be effective as of January 1, 2015, but increased payments will not be available until July 2015. The July 2015 payment would include up to 6 months of benefits to cover the January to June 2015 period.
Child Tax Credit Eliminated for 2015
Due to the increase in the UCCB in 2015, the Child Tax Credit, which is a non-refundable tax credit claimed on the tax return, will be eliminated for the 2015 and later taxation years. This would automatically eliminate the Family Caregiver Tax Credit amount that would be available for infirm minor children. Legislative changes will be made to ensure that the Family Caregiver Tax Credit is still available for infirm minor children when the Child Tax Credit is eliminated.
There has been no change announced for the Canada Child Tax Benefit (CCTB), which provides monthly payments to eligible families.
Child Care Expense Deduction Increase for 2015
The government increased the maximum amount of the child care expense deduction by $1,000 per child, as follows:
Children's Fitness Credit Doubled for 2014
On October 9, 2014, the federal government announced in a news release that the Children's Fitness Amount Tax Credit will be doubled to $1,000 per child for 2014 and subsequent years, and that the credit will be made refundable effective for the 2015 and subsequent taxation years.
The Children's Fitness Credit was part of Economic Action Plan 2014 Act, No. 2, which received Royal Assent on December 16, 2014.
Department of Finance Resources
Backgrounder: Helping Families Prosper - includes Family Tax Cut examples
Notice of Ways and Means Motion - October 30, 2014
Notice of Ways and Means Motion - March 24, 2015 - Family Tax Cut, increases to Child Care Expense Deduction limits, repeal of Child Tax Credit.
Canada Revenue Agency Resources
Revised: June 27, 2015
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