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Helping Families Prosper
Keeping Taxes Low
Canadians work hard for their money. That is why the Government of Canada has lowered taxes year after year.
For example, the Government has:
- cut the Goods and Services Tax (GST) from 7% to 5%;
- created the Tax-Free Savings Account (TFSA). Nearly 11 million Canadians have opened a TFSA;
- reduced the lowest personal income tax rate and increased the basic personal amount;
- introduced pension income splitting; and
- brought in the children’s arts and fitness tax credits.
Overall, the federal tax burden is at its lowest level in half a century. With a balanced budget in 2015, the Government is providing greater tax relief and increased benefits for Canadian families. These new measures, alongside others introduced by the Government since 2006, will provide tax relief and benefits of up to $6,600 for a typical two-earner Canadian family of four in 2015.
Tax Relief and Benefits for Canadian Families
Proposed new measures to support families include:
- An enhanced Universal Child Care Benefit that would provide an increased benefit of up to $1,920 per year for children under the age of 6, and a new benefit of up to $720 per year for children aged 6 through 17, effective January 1, 2015.
- A $1,000 increase in the maximum dollar amounts that can be claimed under the Child Care Expense Deduction, effective for the 2015 taxation year.
- The Family Tax Cut, a federal non-refundable tax credit of up to $2,000 for couples with children under the age of 18, effective for the 2014 taxation year.
In addition, the Government has doubled the Children’s Fitness Tax Credit to $1,000 as of 2014, and made it refundable effective for the 2015 and subsequent taxation years.
Every Canadian family with children under the age of 18 will benefit from this package of measures.
An Enhanced Universal Child Care Benefit
In 2006, the Government introduced the Universal Child Care Benefit (UCCB), which provides all families with $100 per month for each child under the age of 6. The UCCB currently provides direct federal support to approximately 1.7 million families with young children.
The Government is proposing to enhance the UCCB by increasing the benefit to $160 per month from $100 per month. Parents would receive up to $1,920 per year for each child under the age of 6.
The Government is also proposing a new benefit of $60 per month, or up to $720 per year, for children aged 6 through 17.
The enhanced UCCB would replace the existing Child Tax Credit for the 2015 and subsequent taxation years. By replacing the Child Tax Credit with the enhanced UCCB, all families with incomes too low to be taxable, and who cannot take advantage of the Child Tax Credit, would benefit.
How You Can Benefit
Enhanced payments for the UCCB would take effect as of January 2015 and would begin to be reflected in monthly payments to recipients in July 2015. The July 2015 payment would include up to six months of benefits to cover the January to June 2015 period.
To qualify, parents have to complete the Canada Child Benefits Application form. Parents who have already completed this form to access other child-related benefits do not have to re-submit the form, unless their family situation has changed.
An Increase in the Child Care Expense Deduction
The Child Care Expense Deduction (CCED) allows child care expenses incurred to earn employment or business income, pursue education or perform research to be deducted from income for tax purposes. The Government proposes to increase the dollar limits of the CCED by $1,000—i.e., to $8,000 from $7,000 per child under age 7, to $5,000 from $4,000 for each child aged 7 through 16 (and for infirm dependent children over age 16), and to $11,000 from $10,000 for children who are eligible for the Disability Tax Credit.
These changes would apply for the 2015 and subsequent taxation years.
How You Can Benefit
Parents will be able to take advantage of the increased dollar limits for the Child Care Expense Deduction when they file their tax returns for the 2015 taxation year. Parents may claim the deduction for eligible child care expenses incurred to earn employment or business income, pursue education or perform research. Generally, only the lower-income spouse can claim the deduction.
A New Family Tax Cut
For couples with children under the age of 18, the new Family Tax Cut allows a spouse to, in effect, transfer up to $50,000 of taxable income to a spouse in a lower tax bracket, providing up to a maximum benefit of $2,000. Tax relief is calculated on the basis of the difference in federal tax before and after the effective transfer of income.
How You Can Benefit
The tax relief provided by the Family Tax Cut is effective for the 2014 and subsequent taxation years, for couples with children under the age of 18.
To benefit from the credit, each spouse must file a tax return. Either spouse may claim the credit.
Doubling of the Children’s Fitness Tax Credit
The Government has doubled the Children’s Fitness Tax Credit (CFTC) to $1,000 per child and made it refundable. Making the tax credit refundable ensures that even those who do not earn enough to pay income taxes can benefit from this credit.
The CFTC was introduced by the Government in 2006 to help promote physical fitness among children by making it more affordable for Canadian families to register their kids in fitness activities. The CFTC currently provides benefits to 1.4 million families.
How You Can Benefit
Parents can take advantage of the new $1,000 maximum per child limit as of the 2014 taxation year. Children must have been under 16 years of age (or under 18 years of age if eligible for the Disability Tax Credit) at the beginning of the year in which an eligible expense was paid. To be eligible, expenses must be for registration fees or membership in a prescribed program of physical activity.
Beginning in the 2015 taxation year, the Children’s Fitness Tax Credit will become refundable, increasing benefits to low-income families.
Quick Facts About New Support for Canadian Families
- Every Canadian family with children under the age of 18 will benefit from this package of measures.
- An overwhelming majority of these benefits will go to low- and middle-income families.
- Since 2006, all Canadians have benefited from significant tax relief, including a 2‑percentage-point reduction in the GST, broad-based personal income tax relief, the introduction of the Tax-Free Savings Account to help Canadians save, and the introduction of the Working Income Tax Benefit to help ensure that more low-income Canadians are financially better off as a result of getting a job.
The enhancements to the Universal Child Care Benefit, the increase in the Child Care Expense Deduction limits and the new Family Tax Cut are subject to parliamentary approval.
Find out more at Canada's Economic Action Plan.
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