Every year, the federal government tinkers with the rules that determine how much income tax we pay.
This year, as Canadians prepare to file their 2014 returns, we highlight 10 changes that could affect how much you owe — or how much you save.
- Special report: Tax season 2015
- Income splitting: What it is and who benefits
- Stephen Harper announces family tax cut, child care benefit boost
Family tax cut credit
Last October (the day before Halloween, actually), the Harper government announced a package of tax changes for families with children. But only one of those changes — the family tax cut — is in effect for the 2014 tax season. Enhancements to the universal child care benefit and increases to child care expense deductions don't take effect until this year, as does the elimination of the child tax credit.
The family tax cut is a modified version of an income-splitting move first 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. The credit is capped at $2,000.
Single parents, parents who each earn about the same amount, and couples without children will have to look elsewhere for tax relief, as the family tax cut won't provide it.
Children’s fitness tax credit
Last fall, the government announced that the children’s fitness tax credit would be doubled, beginning with the 2014 tax year. Total fitness expenses that can be claimed go 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.
- Disability tax credit and the push for fee caps
- 8 things to know about the family tax cut
- Test your tax knowledge with our quiz
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.
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