Canada: Harper Tax Cuts: Family Crowd Pleasers

On October 30, 2014, Prime Minister Stephen Harper announced new tax measures that will allow income splitting and provide additional tax benefits to families with children. These measures accomplish a 2011 election promise to "help make life more affordable for Canadian families."

The proposed new measures include:

Income Splitting

A new federal tax credit, the Family Tax Cut, will allow eligible couples with children under the age of 18 to transfer up to $50,000 of taxable income from a higher income earner to their lower income spouse for tax purposes. The proposed measures are intended to be effective starting in 2014 providing couples with tax savings of up to $2,000.

Families can claim the Family Tax Cut in the spring of 2015 when they file their 2014 tax returns.

Universal Child Care Benefit (UCCB)

The government is proposing to replace the Child Tax Credit with an enhancement of the UCCB for children under the age of 6. Effective January 1, 2015, parents will receive a benefit of $160 per month for each child under the age of 6, an increase of $60 per month for a total benefit annually of $1,920 per child.

UCCB will also be expanded to include children ages 6 through 17. Effective January 1, 2015, parents with children between the ages of 6 through 17 will receive a benefit of $60 per month for a total benefit annually of $720 per child.

Families will begin to receive payments under the enhanced UCCB in July 2015. The July UCCB payment will include up to 6 months of benefits to cover the period from January through June 2015.

Child Care Expense Deduction

Effective for the 2015 tax year, the maximum amounts that can be claimed for Child Care Expenses will increase as follows:

  • For children under the age of 7: from $7,000 to $8,000;
  • For children aged 7 through 16: from $4,000 to $5,000;
  • For children who are eligible for the Disability Tax Credit: from $10,000 to $11,000

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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