With the tax deadline less than two months away, it’s time for a roll-call of the changes Canadians will need to navigate this year.
From short-lived changes to Tax-Free Savings Accounts to a juggling of tax credits for families, Sam Seidman, a Toronto-based accountant, walks us through the changes.
For families
Changes to how and what families can claim is the big one on Canadians radar for the 2015 tax season says Seidman.
Last year, the Harper government eliminated the Child Tax Credit, which was worth an average of $337 per child, and replaced it with the Enhanced Universal Child Care Benefit. The UCCB, which came into play in July, gave families $160 per month for each child under six years old and $60 per month for each child aged six through 17.
“They propped up the money they’re giving you and now the Child Tax Credit is gone,” says Seidman.
While the Liberals have promised to introduce a new, tax-free Canada child tax benefit this summer, families will still have to account for the UCCB on this year’s tax return and claim it as income.
Child-care expenses
“The day care expense (relief) is going up from $7,000 to $8,000,” says Seidman. Which means that parents can claim $8,000 on annual expenses for a child under six and $5,000 for a child between seven and 16 years old.
Child fitness tax credit
The Child Fitness Credit is also seeing a re-work this year, says Seidman.
“Now it’s a refundable amount whereas before it wasn’t,” he says.
Families who claim program costs or registration fees for physical activities will now receive up to $150 per child. It’s a tweak that will predominantly benefit lower income families who, in the past, didn’t see much of a benefit as non-refundable credits go towards taxes you owe but don’t put include a kick-back. For example, if you owed $100 in taxes but could put the $160 credit towards that – with non-refundable, it’d only wipe out the amount owing whereas a refundable credit would wipe out that amount owing and while providing an addition $60 back to you with your tax return.
Income splitting
Harper’s controversial income splitting Family Tax Cut allowed parents or common-law partners with children under 18 years old to transfer up to $50,000 of income from a higher-earning partner to the lower-earning partner, for a tax credit of up to $2,000.
The move, which cost an estimated $2.2-billion, is being undone by the Liberal government surrounding criticisms that it benefits wealthier Canadians rather than tax-burdened lower income and middle class families.
Part of the Liberals campaign hinged on a tax cut for the middle class and a hike for one percenters. Starting in 2016, the federal marginal tax rate on those earning between $45,283 to $90,563 will drop from 22 per cent to 20.5 per cent. So you heard it here, Canadians eligible for the Family Tax Cut only get this year’s 2015 tax filing to take advantage.
Canada Apprentice Loan
It’s an easy one but students in a designated Red Seal trade program can now claim interest on government student loans.