Four ways families pay less tax

I am firm believer that some of our government’s proudest accomplishments have been providing financial support and tax relief to Canadian seniors who have built our great country. 

Whether it has been actions like pension splitting for seniors or increasing the Guaranteed Income Supplement, millions of seniors across Canada have seen a lower pension burden and more support from our government. 

Another key demographic of our country’s success is ensuring the strength and financial viability of Canadian families. And I’m really proud of our government’s recent announcement of a package of tax cuts and increased benefits to make life more affordable for Canadian families. 

Here’s how families can put more money in their pockets in 2015:

1. The Family Tax Cut 

The new Family Tax Cut can lower a family’s overall tax bill by allowing a spouse to effectively transfer up to $50,000 of taxable income to a spouse in a lower tax bracket for federal tax purposes, providing tax relief up to a maximum of $2,000. 

This measure is aimed at couples with children under the age of 18, where one spouse is in a higher income tax bracket than the other.

For example, if one spouse earns $75,000 per year and the other earns $15,000, the higher- income earner could effectively transfer $30,000 to the lower-income spouse for federal tax purposes. 

This would reduce the amount of tax the couple pays by bringing the higher-income spouse into the lowest income tax bracket, resulting in the maximum tax savings of $2,000.

Couples can claim the Family Tax Cut on their 2014 tax returns. To benefit, each spouse must file a tax return, and either spouse may claim the credit.

2. The Universal Child Care Benefit

As part of its family-friendly measures, the Government is also proposing to enhance the Universal Child Care Benefit. 

Parents with children under the age of 6 would receive $160 per month, up from $100. 

In addition, parents with children aged 6 through 17 would receive $60 per month. 

These changes will take effect on January 1, 2015 and be reflected in monthly payments to recipients beginning in July 2015, pending approval of the necessary legislation. The July 2015 payments would include six months of benefits to cover the January to June 2015 period. 

Parents already receiving payments for children under the age of 6 will automatically receive higher monthly benefits, starting in July 2015. 

The July 2015 payment will include up to six months of benefits to cover the January to June 2015 period. 

Parents eligible for the new benefit, for children aged 6 through 17 will begin receiving $60 per month for each eligible child, starting in July 2015. The July 2015 payment will include six months of benefits to cover the January to June 2015 period. 

How do parents qualify? By completing the Canada Child Benefits Application form. Parents who have already completed this form to access other child-related benefits do not have to resubmit the form unless their family situation has changed. 

3. The Child Care Expense Deduction

Parents incurring child care expenses to go to work or school can deduct child care expenses from their income when filing their tax returns. 

Starting in the 2015 taxation year, the Government has proposed that the maximum dollar amount that can be claimed each year increase by $1,000. The new maximum dollar limits would be:

• $8,000 per child under age 7;

• $5,000 per child aged 7 to 16 (and for infirm dependent children over age 16); and

• $11,000 for children who are eligible for the Disability Tax Credit. 

4. The Children’s Fitness Tax Credit

If parents have kids enrolled in sports, they can now claim expenses of up to $1,000 per year for each eligible child. That’s double what they could have claimed previously. 

Parents can take advantage of the new $1,000 limit when they file their tax returns for 2014.

Starting in 2015, the credit will become refundable, which means that families with incomes too low to be taxable will also benefit when they file their 2015 tax returns. 

Our government understands the importance of strong Canadian families. If constituents would like more information, my staff and I are available to assist you at 1-888-805-2513 or info@guylauzon.ca.

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