Family Tax in Canada
What is family tax?
Some Canadian family tax breaks are deductions, where the amount is subtracted directly from your gross income. Others are tax credits and represent amounts that are subtracted from your tax owing, usually a percentage. Finally, there are tax benefits, where an amount is paid to you depending on your income, usually a percentage as well.
Who can deduct child-care expenses?
The parent who is the only person supporting a child under 16 or who has the lower net income (including zero income) can claim the expenses. Other conditions may apply if you or your spouse attended school, if your spouse had or has a disability or if you were separated. You can deduct payments to child caregivers, nursery schools, daycare centres, day camps, etc.
Under what conditions can one deduct spousal support payments?
If you make child and spousal support payments, you have to pay child support in full before you are entitled to claim spousal support payments. They are taxable to the spouse or partner who receives them. If your court order requires spousal support, you have to register your court order or written agreement with the CRA by submitting the T1158 tax form.
Is there an advantage for me to pay into a spousal RRSP?
Absolutely, since you get to claim the full tax deduction on your income tax return with a spousal RRSP payment.
Can I get tax credits if I have dependants?
Yes. If you meet certain conditions, you can claim the amount for an eligible dependant on your income tax return. If you care for someone with a disability, you may claim the amount for infirm dependants age 18 or older, the disability amount transferred from a dependant or the caregiver amount.
How do I claim medical expenses for my family and myself?
You can claim the amount of eligible medical expenses you have paid for yourself, your spouse or partner, and your dependent children are under 18, as well as other dependants, under certain conditions.
Can I benefit from a child's tuition, education and textbook amount?
As a parent or grandparent of a student (or the parent or grandparent of his or her spouse), the student may be able to transfer to you all or part of that amount of the student tax deduction to you.
What happens if my spouse or common-law partner does not use all of his or her non-refundable tax credits?
You can claim all or part of those credits, namely the age amount, the amount for children under 18, the pension income amount, the disability amount and the tuition, education and textbook amounts.
Is there a credit for a public transit amount?
You can claim the cost of public transit passes for yourself, your spouse or common-law partner or your children under 19.
Do I get a break for my children's fitness activities?
You may claim the children's fitness tax credit for each child under 16 that you registered in eligible physical activity programs. If your child is eligible for the disability tax credit, you may be able to claim an additional amount as part of the credit.
What is the Universal Child Care Benefit program?
It is designed to help families balance work and family life, whether or not parents use childcare for their children under 6, by providing payments of $100 per month per child. To apply for the benefits, use the Canada Child Benefits application or apply online on My Account. It is a good idea to apply for the UCCB as soon as possible after your child is born, a child starts living with you or you become a resident of Canada. All families are entitled to receive the benefits, however, they are taxable.
What do I have to do to get the Child Disability Benefit Supplement?
Complete Form T2201 for your child and wait for the CRA to determine if he or she is eligible for the disability amount. You can then apply for the CCTB on Form RC66.
Can my child get the GST/HST credit?
If you have applied for the Canada Child Tax Benefit (CCTB) for your children, an additional GST/HST credit will automatically be included in yours.
Who is eligible for the Working Income Tax Benefit (WITB)?
Generally, you are eligible if you are over 19, earned employment or business income and were a resident of Canada. You can also claim the WITB if you have a child under 19 who lives with you and is not eligible for the WITB (eligible dependant). Calculations vary according to your province or territory of residence. It also includes a disability supplement for individuals who are eligible for the disability tax credit. The benefit is reduced by family income in excess of certain thresholds.
Other Tax Considerations
What is the advantage of contributing to a Registered Education Savings Plan (RESP)?
The contributions you make are not tax deductible. The income earned within the plan is only taxed when your child takes the money out for post-secondary education. At that time, it will be taxed at their marginal tax rate, which will probably be lower than yours. The federal government also offers matching contributions depending on your family's financial situation. You may also be interested in the Alberta Centennial Education Savings Plan Grant or the Québec Education Saving Incentive.
Are other programs available in my province or territory?
Did you know that provincial tax credits and tax reductions may be increased in some provinces if you have children?
Please note that except for Québec, all benefits programs are administered by the federal government.