The Canadian government provides a number of tax benefits that parents can claim on their tax return to reduce their tax burden. In fact, most reviewers are of the opinion that the budget for 2015 is most beneficial for taxpayers with children below the age of 18.
Unfortunately, parent taxpayers often forget some of the tax credits for which they qualify when rushing to file at the last moment. It is advisable that parents maintain a checklist of all of the tax deductions and credits that they are eligible to claim related to the expenses incurred on their children. Taxpayers should remember to maintain all necessary documentation to support these claims, such as receipts, bills, and slips to validate the claim on their year-end tax return and avoid missing out on any tax benefits.
In this article, A.G. Tax analysts have compiled a lot of deductions and credits that Canadian taxpayers with children may claim, if they qualify. Taxpayers should consider consulting a tax professional to know the credits and deductions for which they qualify, and for which they could qualify for with additional tax planning.
Child-related Medical Expenses
For those medical expenses which are not covered by medicare, such as: baby monitors, nurses, vaccinations, etc.
Family Tax Cut: Introduced in 2014, the family tax cut can be claimed by either of the parents where an income split, were it available, would result in net tax savings for the couple. A maximum of $2,000 can be claimed as a non-refundable credit on a transfer of $50,000 of income.
Child Care Expense Deduction
With the help of this deduction a parent can claim eligible child care expenses incurred as a tax deduction. Recently with proposed changes announced in October, 2014 by Prime Minister Stephen Harper, the child care expense deduction limit has been increased by $1,000 for each category. A parent can now claim a maximum of $8,000 for children under age seven, $5,000 for children between ages 7 and 16 (or children with a physical or mental disability), and $11,000 for children who also qualify for and claim the disability tax credit.
Canada Child Tax Benefit
This is a tax-free monthly benefit provided to qualifying parents to help them raise their minor children. The benefit amount is calculated on the basis of the income reported on the annual individual income tax return of the parents. It may additionally include the ‘National Child Benefit Supplement’ in cases of severe financial difficulties, and/or the ‘Child Disability Benefit’ if the child is suffering from a qualifying disability.
Universal Child Care Benefit
Until 2014, parents could claim the ‘Child Tax Credit’, and UCCB benefit of $100 per child under the age of six. This has been replaced by the enhanced ‘Universal Child Care Benefit’ for 2015 and subsequent tax years. The enhanced UCCB provides qualifying parents an increased benefit of $160 per month per child below the age of six, and a benefit of $60 per child above the age of six but below age 18.
Children’s Fitness & Arts Tax Credit
Parents can claim up to $1,000 for a child below age 16 (Age 18 in cases where the child has a physical or mental disability) per tax year for expenses incurred for their child to participate in qualifying sports and fitness activities. Activities should be for at least an 8-week period, and in the case of a sports/fitness camp, it should be run for a continuous 5 day period. Additionally, if the child is disabled the parent may claim an additional credit of $500 which is available if a minimum of $100 was paid as either registration or membership fees.
While the ‘Children’s Arts Tax Credit’ is a benefit of $500 per tax year for a child under 16 on expenses incurred as registration or membership fees for a qualifying artistic, cultural, recreational, or developmental activity or program.
Tuition, Education, Textbook, Public Transit Amounts
The CRA allows either students or their parents to claim the expenses incurred on a student’s post-secondary education expenses including tuition fees paid, textbook expenses, and travelling expenses.
For tuition fees claimed, the student needs to be enrolled in a post-secondary educational institution and receive a T2206 tuition certificate.
In cases of other qualifying education expenses, a full-time student can claim up to $400 for each month that the student was enrolled in the educational institution, while $120 per month can be claimed for any part-time enrollment.
$65 per month can be claimed by a parent or student for expenses incurred on textbooks for a qualifying full-time education program, and $20 monthly for textbooks required while pursuing a part-time program. This does not mean that you need to keep all of your textbook receipts! These amounts are automatically allocated based on the number of months the student was enrolled in a post secondary institution at a flat rate per month.
That’s not all! Any public transit pass expenses for children below age 19 are claimable as a tax deduction by either one of the parents on their tax return.
Additional deductions and credits include student loan interest deductions, moving cost deductions, disability credits, additional provisions for children born in families with financial hardships, and adoption costs deductions.
Given the large number of potential deductions and credits, it is best to seek professional help. Only a tax professional can guide a taxpayer and inform them about the tax benefits for which they qualify (or could qualify for) based on their unique circumstances.
AG Tax LLP Can Help
If you have any tax-related queries or need assistance with tax planning or filing please contact AG Tax. Our tax professionals are highly-experienced with U.S. and Canadian tax laws and can provide you with the right guidance to handle your tax situation.
Aylett Grant Tax LLP is a full service accounting firm with a dedicated team of experts, who are highly-qualified and experienced in handling situations related to U.S., Canadian, and other international tax laws.
We can assist with:
- Canadian Personal and Corporate tax returns
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