Let us review the changes to the main family benefits provided by the Government of Canada in 2015.
The amount for the Universal Child Care Benefit (UCCB) will increase. This is the credit paid for each child under 6 years old regardless of the family income. This amount increased from $100 to $160 per month per child under 6 years old. This is the amount paid on the 20th of each month. However, the first 7 months ($420) payment for 2015 will be paid out in July of this year. Then, from August 2015 onwards, the payment will be $160 per month per child.
The UCCB is now extended for children up to 18 years old. Therefore, families with children over 6 years, but under 18 will receive $60 per month per child, when before they used to receive no benefit. Again, the first 7 months ($420) payment for 2015 will be paid out in July of this year. Then, from August 2015 onwards, the payment will be $60 per month per child. This is an additional $720 per year for all children under 18 years old. This is more than the $338 credit for the “federal amount for children under 18” that will eliminated next year in the 2015 individual tax return.
The Child Tax Benefit (CCTB) is also paid out on the 20th of every month. However, there are no changes for the CCTB. The CCTB amount depends on the income of the family. The families which qualify for the CCTB will continue to receive it in the same amount.
Another notable change is the children’s fitness amount. It increased from $500 to $1,000. This translates to an additional $75 using a federal 15% federal tax credit on the additional $500. However, the children’s arts amount remained the same at $500.
Similarly, the disability tax credit, caregiver amount, and other main credits remained effectively the same, or with an inflation adjustment to the amount.
The Federal Government announcement of the family tax cut effectively benefits families in which the spouses are in different tax brackets. It allows the transfer of up to $50,000 of taxable income to the spouse in lower income tax bracket. In turn, this potentially can provide tax relief up to a maximum of $2,000. Effectively, this is a notional form of income splitting that can potentially translate to a non-refundable tax credit worth up to $2,000.