In October 2014, the federal government announced some budget changes that will affect families with children. Here is a summary of some of the changes:
The Family Tax Cut (2014 and subsequent tax years)
Couples with a dependent child under 18 years of age may transfer up to $50,000 of taxable income from the higher income earning spouse to the lower income earning spouse. The maximum tax savings is capped at $2,000.
This would not apply to separated or divorced couples unless they have repartnered. If both parties have repartnered, a child in shared custody could potentially mean both new families could take advantage of this tax savings.
Child Care Expense Deduction (2015 and subsequent tax years)
The child care tax deduction is being increased by $1,000. Therefore, the tax deduction increases to:
- $8,000 per child for children under 7 years of age;
- $5,000 per child for children 7 to 15 years of age, inclusive; and
- $11,000 per child for disabled children.
Children’s Fitness Tax Credit (2014 and subsequent years)
The amount of program fees eligible for a federal non-refundable fitness tax credit for children engaged in qualifying activities doubles from $500 to $1,000 per child. In 2015, this tax credit becomes refundable.
Universal Child Care Benefits (UCCB) (2015 and subsequent benefit years)
The UCCB increases from $100 to $160 per month for children under 6 years of age. A new benefit of $60 per month begins for children 6 to 17 years of age, inclusive.
Child Tax Credit (2015 and subsequent taxation years)
This non-refundable tax credit for children under 18 years of age has been repealed, and replaced by the enhanced UCCB.
To determine if you will be affected by the changes, you should consult a tax specialist.