Tax Changes For 2015

The government recently announced some changes that will impact family tax planning. The tax breaks are directed at couples with children. The most notable is the ability to realize some benefit from income splitting from a higher-earning parent to a lower-income parent, but this is quite different from the pension income splitting that has been in place for some time now. The “Family Tax Cut” is tied to federal non-refundable credits and thus has no bearing on provincial tax; also, the benefit is capped at $2,000 in annual tax savings.

There are some changes with respect to children. The $2,000 non-refundable credit for children under the age of 18 is gone, but the Universal Child Care Benefit (UCCB) will increase from $100 to $160 per month for children under 6 and include a new monthly amount of $100 for children aged 6 to 17 years where none was paid previously. The limit for child-care deductions will increase by $1,000 per child per year, and the limit for children’s fitness expenses will double from $500 to $1,000.

The proposed changes have still not been passed into law but were expected to take effect January 1, 2015. Though these changes will not affect your 2014 personal tax return, they should be considered in your tax planning for 2015.

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