- As is the norm most tax years, this year the federal government has made some changes to tax law which could affect your tax savings or tax burden. Here are eight that we would like to bring to your attention.
- Family Tax Cut Credit:
- So far only one of the ‘package of tax changes’ that the Harper government promised families with children in 2014 is in effect; the family tax cut. The family tax cut is a version of income-splitting promised by the Tories in 2011. It allows couples with at least one child under the age of 18 to effectively transfer up to $50,000 of taxable income from the higher-earning spouse or common-law partner to the lower-earning one. The difference in federal taxes owing results in a non-refundable credit that one spouse can claim which is capped at $2,000.
- This year (2015), enhancement to the universal child care benefit (UCCB) and increases to the child care expenses deduction as well as elimination of the child tax credit will take effect.
- Starting in 2015, the Universal Child Care Benefit (UCCB) will be enhanced and parents will be seeing the change in their bank accounts as of July. Right now, the UCCB pays parents $100 per month for every child under six to help pay for some of the costs of childcare. The new UCCB will increase to $160 per month for children under the age of six. And once a child is six years or older, there will be a new benefit that pays $60 per month per child until they turn 18.The changes to the UCCB and extended benefit will arrive in a lump sum retroactive payment in July 2015 and then be paid monthly. If you have a child under six, you will receive $100 per month until July 2015. In July, you should receive an extra $360 payment to reflect the first six months of the year.
- This is completely separate from the Canada Child Tax Benefit which is also paid monthly. The CCTB is based on your household income and is meant to help with the costs of raising a child. Provincial benefits are also unaffected by the enhancements to the UCCB and extended benefits.
- If you receive Child Care Tax Benefit, you don’t have to apply for the new UCCB. However, if your income is too high to receive the CCTB, you must complete Form RC66 Canada Child Benefits Application in order to receive the $60 per month increase in UCCB.
- The amount for children under 18 – sometimes called the Child Tax Credit – will be eliminated at the end of this year. On your 2014 tax return, this credit provides $338 in tax savings per child. Although these savings will be lost after this year the introduction of the new credits should mean more money in the pocket of most Canadian parents.
2. Children’s Fitness Tax Credit
- The total fitness expenses that can be claimed by tax payers, goes from $500 to $1,000. Since the credit is worth 15 per cent of each child's registration or membership fees, the federal credit is now worth up to $150 per eligible child under 16 (or under 18 if the child is eligible for a disability tax credit). Starting with the 2015 tax year, the credit is also being made refundable, which will allow low-income families to take full advantage of it, too.
3. Adoption Expense Tax Credit
- The maximum eligible adoption expenses that qualify for this tax credit were boosted to $15,000 in 2014, up from $11,669 in 2013. In 2015 and subsequent years, this credit will be indexed to inflation.
4. Medical Expense Tax Credit
- There are two changes to note here. The cost of designing a therapy plan for someone who qualifies for the disability tax credit and the cost of service animals that help people with severe diabetes has been included to medical tax credits that can be claimed by tax payer.
5. Search and Rescue Volunteers Credit
- People who spent at least 200 hours as a search and rescue volunteer in 2014 now qualify for $450 in tax relief. This new credit was introduced in the 2014 federal budget.
6. Sharing Information on Canadians in the U.S.
- Canadians who spend a significant amount of time south of the border may be liable to US taxes if they meet the "substantial presence" test. They will be required to file a statement with the IRS. The new rules will allow U.S. immigration and tax authorities, to independently tally the number of days a Canadian resident has spent in the U.S. when travelling to and from the country.
7. Tax Free Savings Account
- Canadians could put $5,500 into a tax-free savings account in 2014. Another $10,000 can be put away in 2015, thanks to a big boost to contribution limits unveiled in the 2015 federal budget. That brings the total cumulative contribution room since 2009 to $41,000 as of this year. Amounts withdrawn from a TFSA in 2014 can also be re-contributed this year, increasing 2015's available contribution room.
8. GST/HST CREDIT
- You no longer need to apply for the GST/HST credit. The tax department's computers will now analyze your return and figure out if you're eligible.
Do contact us at Green, Meikle and Smith, if you would like to take full advantage of the new changes to increase tax saving or reduce your tax burden for the coming tax year.