Income Splitting
The government plans to introduce legislation to allow limited income splitting for couples with children under 18. The so called "family tax cut" will allow an eligible taxpayer to transfer up to $50,000 of income to his or her spouse for tax purposes in order to collect a non-refundable tax credit of up to $2,000 per year. This tax credit is expected to be available beginning with the 2014 tax year.
Universal Child Care Benefit
The Universal Child Care Benefit will be increased by $60 per month to $160 for children under the age of 6 and a new benefit of $60 per month will be available in respect of children aged 6 through 17. These enhanced benefits will take effect January 1, 2015, and will be reflected in monthly payments to recipients beginning in July 2015. This enhanced program will replace the existing Child Tax Credit.
Child care expenses
Starting in 2015, the maximum annual amounts that can be claimed for child care expenses will increase by $1,000. The following annual limit will apply for each child:
Age 6 or less - $8,000
Age 7 to 16 - $5,000
Over 16 infirm dependent children - $5,000
Children eligible for the disability tax credit - $11,000
Deduction for safety deposit boxes
The deduction for safety deposit box fees has been eliminated for taxation years beginning after March 2013. As a result, you can no longer deduct the cost of a safety deposit box.
Capital gains exemption limit rising to $800,000
Starting with the 2014 tax year, the farm and small business qualifying shares exemption limits has risen by $50,000 to $800,000. Starting in 2015, the lifetime limit will be indexed to inflation.
First-time donor's super credit
The first time donor super credit on up to $1,000 of donations will be available again in 2014. This increased tax credit adds 25% to the current credit and only applies to cash donations; donations in kind are not eligible.
This credit is only available to individuals if neither the individual nor the individual's spouse has claimed a donation tax credit in the preceding five tax years.
Children's fitness tax credit
The federal government has announced that the amount that can be claimed under the children's fitness tax credit for 2014 and subsequent years will be doubled from $500 to $1,000 per child and that the credit will be made refundable effective for the 2015 and subsequent taxation years
Offshore investments
CRA's on-going efforts to strike a balance between what is reasonable versus what is required reporting has led to further changes to Form T1135 Foreign Income Verification Statement. For 2014 and subsequent tax years, taxpayers may only have to report aggregate amounts (by country) for specified foreign property held in accounts with registered securities dealers and Canadian trust companies rather than providing the detail of each such property.
Specified foreign property continues to include debt and equity securities of foreign entities, cash held in foreign bank accounts and foreign rental property. Where the aggregate cost of all specified foreign property exceeds $100,000 CAD at any time in the year, all such property is reportable. Although these rules do not result in any additional tax payable, there are substantial penalties for failing to make these disclosures when required. It is best to contact your Crowe MacKay Tax advisor now if you are unsure as to whether these rules apply to you- planning ahead will help ensure you obtain the necessary information ahead of the filing deadline.
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.
