What the new family tax credits mean for you

If you have kids under 18, you’ll probably be impacted by some of the tax changes announced by the federal government late last week. Some changes take effect this year and others in 2015. Here’s what’s new:

Children’s fitness amount (2014)

The amount of children’s fitness expenses you may claim for each child has increased from $500 to $1,000. The increased credit is worth $751.

What do you need to do? Not much, just hold onto your receipts for your children’s fitness expenses. When you complete your tax return you’ll be able to enter up to $1,000 (rather than up to $500).

Family tax cut (2014)

This new tax credit (which is frequently referred to as income splitting) is worth up to $2,000 for families where the parents are in different tax brackets. On Wednesday, we’ll have a post dedicated to this new credit and what it might mean for your family.

What do you need to do? Both partners must complete a return to be eligible for this credit, and both of you must complete your returns at the same time (since it takes your total income and tax credits into account). If you use linked profiles, we’ll automatically add the credit to your return and we’ll walk you through a few additional questions.

Child care expense limits (2015)

The maximum deduction limits for child care expenses will increase to:

  • $8,000 (from $7,000) per child under age seven,
  • $5,000 (from $4,000) per child age seven to 16 (and infirm dependent children over age 16), and
  • $11,000 (from $10,000) per child who is eligible for the Disability Tax Credit, regardless of his or her age.

What do you need to do? Not much, just hold onto your receipts for your child care expenses. When we calculate your allowable deduction, we’ll use these new limits.

Changes to the UCCB (2015)

The universal child care benefit (UCCB) will increase to:

  • $160 (from $100) per month for each child under six, and
  • $60 (from $0) per month for each child between six and seventeen.

The UCCB is paid out monthly by cheque or direct deposit. While the changes to the UCCB will be effective from January 2015, the first seven months’ difference will be paid out in July 2015. This means:

  • for children under six, you’ll receive $100 per month from January to June, $520 in July, and $160 per month starting in August.
  • for children between six and seventeen, you’ll receive $420 in July and $60 per month starting in August.

These changes to the UCCB will not impact the CCTB (Canada Child Tax Benefit), which is the other monthly payment that some families receive.

What do you need to do? If you’re already receiving the UCCB for your child, you simply need to file a 2014 tax return to continue receiving it. We’ll update this post when the government announces how to apply for the UCCB for children over six.

Federal amount for children (2015)

The “federal amount for children under 18” (which is a non-refundable credit that you claim when you file your tax return) will be eliminated in 2015. This credit is worth about $338 total in 2014. This credit is sometimes referred to the child tax credit and is not the same as the CCTB.

What do you need to do? Nothing, we’ll update SimpleTax accordingly in 2015.

Still have questions? Check out our frequently asked questions about these new credits.

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1 When you claim children’s fitness expenses, you get a 15% federal tax credit for each dollar you paid. $500 in expenses equals a $75 tax credit ($500 × 15%).

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