Personal Finance » Tax

Tax benefits for families

Bring a father of 4 boys, I can personally say I am happy with these four tax benefits for families. Here’s a personal viewpoint of how these benefits affect my family:

Enhancement of Universal Child Care Benefit (UCCB)

In 2006, the Government introduced the Universal Child Care Benefit (UCCB), which provides all families with up to $1,200peryear for each child under the age of 6. Here’s a little history of how the UCCB has impacted my family:
  • In 2006, I had 2 kids under the age of 6 and got $100 per month each for a total of $2400
  • In 2007, my 3rd son Jason was born so we got $3200 in the UCCB
  • In 2008, I last son was born and my oldest son Robbie was still under 6 so we got $3700 in UCCB
  • In 2009, Robbie was still under 6 for 11 months of the year so we got $4700 in UCCB
  • In 2010, 3 kids qualify for the UCCB so we got $3600
  • In 2011, Connor turned 6 so our UCCB dropped again to $2900
  • In 2012, 2 kids qualified for UCCB so we got $2400
  • In 2013, Jason turned 6 so our UCCB dropped to $1500
  • In 2014, Brandon turned 6 and our UCCB dropped again to $1100
For 2015 we were scheduled to lose all of the UCCB but the government introduced a new enhancement where kids under the age of 6 would get $160 per month and kids from ages 6 to 17 would get $60 per month. That ultimately, means we got$720 per child or a total of $2880. We should get that amount until 2020 when Robbie turns 17.
Preet Banerjee from the globe and Mail has a great video explaining the changes to UCCB

Child Care Expense Deduction (CCED)

The Child Care Expense Deduction (CCED) allows child care expenses to be deducted from income when those expenses are incurred to earn employment or business income, pursue education or perform research. Generally, only the lower-income spouse can claim the CCED.
Currently, the maximum amount that can be claimed under the CCED each year is limited to the least of:
  • the total amount spent on child care expenses;
  • two-thirds of the lower-income taxpayer’s earned income; and
  • the total of the maximum dollar limits for all children, that is $7,000 per child under age7, $4,000 for each child aged7 through 16 (and for infirm dependent children over age 16), and $10,000 for children who are eligible for the Disability Tax Credit, regardless of their age.
We’ve had child care expenses since having our second child and in 2008, we brought in a full-time nanny, Justina, which has been great for our family. In the past few years, we were able to deduct almost all of Justina’s cost.
In 2015, because all of our kids will be age 7 or older, we would only be able to deduct $16,000 of Justina’s cost but with the new enhancement of $1000 per child, we now can deduct $20,000.

Doubling of the Fitness Tax Credit

The Child Fitness Tax Credit (CFTC) was introduced by the Government in 2006 to help promote physical fitness among children by making it more affordable for Canadian families to register their kids in fitness activities. This year, they have doubled the benefit to $1000 per child to help pay for kid’s activities. With four very active boys, our expenses for the kid’s soccer, hockey, swimming, etc far exceed $4000 so increasing the limit from $500 per child to $1000 per child was really great for us.

Family income splitting

Although I am a big fan of income splitting opportunities, this change will not have a big effect on our household. With Liz working more, now that the kids are older and with me being self-employed, we will be able to split our income effectively without the new Family Tax Cut initiative. Perfect income splitting occurs when both spouses are in the same marginal tax bracket.
Family Tax Cut, a federal non-refundable tax credit worth up to $2,000 for couples with children under the age of 18.

The Family Tax Cut would allow a spouse to, in effect, transfer up to $50,000 of taxable income to a spouse in a lower income tax bracket, providing tax relief up to a maximum of $2,000. Tax relief is calculated on the basis of a difference in federal tax before and after the effective transfer of income.

The Family Tax Cut would take effect starting in the 2014 tax year. Couples would be able to claim the credit when they file their 2014 tax returns. To benefit from the credit, each spouse must file a tax return. Either spouse may claim the credit.

With the Federal election coming, these tax benefits for families may change but for now, they help families reduce some tax burdens.

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