12 Dec 2014

You might think it’s too soon to start thinking about your personal taxes for this year.

It’s always a good idea to be up-to-date on the changes in the Canadian tax system, though … especially when those changes might affect you and your family.

Revenue Canada has introduced some new credits and improved some existing ones to help Canadian individuals and families lower their tax bills or increase their tax refunds.

Probably the biggest change is the Family Tax Cut, announced in October by the federal government.

The Family Tax Cut (FTC) is a non-refundable tax credit of up to $2,000 for eligible couples with minor children.

If you’re an eligible taxpayer, you can transfer up to $50,000 of income to your spouse to collect the tax credit.

It’s more commonly called “income splitting” and it allows one spouse to take advantage of the other’s lower-income tax bracket.

You’re eligible if:

✓ Your spouse is not claiming the FTC
✓ You have a child who is younger than 18 at the end of the taxation year and lives with you or your spouse
✓ You are a Canadian resident at the end of the taxation year (or if you were a resident of Canada on the date of your death in the taxation year)
✓ You were not in prison or similar confinement for a period of at least 90 days during the taxation year

Your spouse is eligible to split income with you if:

✓ He or she is a Canadian resident at the end of the taxation year (or at the time of death)
✓ He or she is — at any time of the year — married to on in a common-law partnership with you and living with you at the end of the year and for at least 90 days to start the new year
✓ He or she was not in prison or similar confinement for a period of at least 90 days during the taxation year

You are not eligible if either you or your partner:

✓ Does not file a tax return for 2014
✓ Become bankrupt in the taxation year
✓ Makes a pension splitting election in the taxation year

The FTC is expected to benefit more than 1.7 million Canadian families, costing the government almost $2 billion annually going forward.

That’s not all

Here’s a summary of the remaining new or improved tax measures the government introduced this year:

Children’s fitness

The Children’s Fitness Tax Credit allows parents to claim fees paid for registration or membership in a prescribed program of physical activity. The federal government increased the eligible amount to a maximum of $1,000 per child.

An additional amount of $500 is available if the child is eligible for the Disability Tax Credit and a minimum of $100 has been paid for eligible fees in the year.

More childcare benefits

The Universal Child Care Benefit has increased for children younger than six years old. Effective January 1, 2015, parents are eligible for a benefit of $160 per month for each eligible child, up from $100 per month.

Parents may also receive $60 a month for eligible children aged six through 17.

Adding to the family

You can claim an amount for eligible expenses related to the adoption of a child younger than 18 years old.

The government raised the amount of eligible expenses for each child from $11,669 to $15,000.

Your furry friends

If you or a member of your family requires a service animal, you are now permitted to claim some costs under your medical expenses. Among the eligible costs are the animal, its care and maintenance (including food and veterinary costs), training and personalized therapy plans.

Community service

A new non-refundable tax credit gives thanks to individuals who sacrifice time and energy to helping others. Search and rescue volunteers who perform at least 200 hours of eligible services may qualify for a tax credit of $450.

Volunteer firefighters are eligible for this credit, but cannot claim the Volunteer Firefighter Tax Credit if they elect to claim the Search and Rescue Volunteer Tax Credit.

Tweaking the GST/HST

You’ve always had to tick a box on your T-1 return, indicating you were applying for the goods and services tax or harmonized sales tax credit.

Revenue Canada will now take care of that for you, determining all Canadians’ eligibility based on their tax return. If you have a spouse or common-law partner, only one of you is eligible and the credit will go to the partner who has his or her return assessed first.

Looking for help?

Tax laws can throw some people into a tizzy. If you need help with your personal tax return, we’re here to help. We can assist you with your taxes and planning. We specialize in personal taxes and small-business accounting and financial services. Contact one of our tax specialists and we can help you optimize the tax benefits and credits available to self-employed individuals and small businesses.

Fill out our contact form or give us a call at 403-226-8297.