Its always nice to get good tax news to pass along, such as those impending tax changes recently announced by Government, but not yet enacted.
For the first time, families will have direct access to income splitting savings that have heretofore been restricted to spouses with pension income. The mechanism will not be exactly the same but Canadian couples with a child under the age of 18 will be entitled to split up to $50,000 of taxable income, with an allowed maximum tax reduction of $2,000. The larger the disparity between the current income of the spouses, the more advantageous this opportunity will be. The cap of $2,000 in savings is a new wrinkle not previously circulated, but in any event, the change will be helpful to many families, and will apparently be available for 2014 tax reporting once legislation is passed.
In addition, families can look forward to increases for the Universal Child Care Benefit (UCCB) for children under six years of age, from $100 to $160 per month, effective January 1, 2015, but which will not be paid out until July, 2015. Families with children between the ages of 6 and 17 will for the first time qualify to receive this support at a level of $60 per month. Keep in mind that these payments are taxable in the hands of the lower income spouse, so are designed to be most beneficial to lower income families.
A further benefit for the 2015 tax year is a much needed increase to the annual cap on child care expense deductions from $7,000 per child under 7 to $8,000, a number that has not changed in decades and will help better reflect the actual costs families face for childcare services. The rate for children age 7 to 16 will rise to $5,000 from $4,000, and for children who qualify for the Disability Tax Credit, the limit will be $11,000 per year.
Coupled with the previously announced doubling of the Children’s Fitness Tax credit there has been some very significant tax movement this year to the benefit of younger families.
For my clients I will be analyzing the impact of these changes on individual tax circumstances during our annual tax work and providing personalized feedback.
More information on these announced changes can be seen here: http://www.fin.gc.ca/n14/14-155-eng.asp