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Author Topic: Tax Tips for Families with Children  (Read 3512 times)

Offline CareDC

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Tax Tips for Families with Children
« on: February 24, 2009, 02:30:01 PM »

-  Families will continue to benefit from a $2,038 Child Tax Credit for
       each child under the age of 18. This will result in a federal tax
       saving of $305 per child. And if one parent cannot use the entire
       amount to lower their tax payable, the unused amount can be
       transferred to a spouse or common-law partner.

    -  Parents can claim the Children's Fitness Amount. The non-refundable
       credit is worth up to $500 for children under the age of 16 enrolled
       in an eligible program of physical activity. Not every program meets
       the eligibility guidelines so you need to ensure you know the
       requirements. Make sure you keep your receipts. Disabled children will
       also qualify for the credit if they are under 18.

    -  The Universal Child Care Benefit (UCCB) is available to any child
       under the age of six regardless of the family's income. Each child
       under six is eligible for the $100 per month benefit. UCCB is taxable
       in the hands of the lower-income spouse.

    -  Upon the birth of a child, parents should complete Form RC66, Canada
       Child Tax Benefit Application and send it to the CRA. This form will
       register their child for the GST/HST Credit and Universal Child Care
       Benefit (UCCB) as well as the Child Tax Benefit.

    -  Taxpayers who use public transit can claim a non-refundable tax credit
       for their passes. This includes passes purchased for dependent
       children under the age of 19. The passes have to be for a period of at
       least one month or weekly passes purchased over a period of four
       consecutive weeks. Electronic payment cards also qualify.

    -  The rules for Registered Education Saving Plans (RESPs) changed in
       2007. Designed to help save for a child's post-secondary education,
       the RESP amount has been raised to $50,000 lifetime contribution.
       There are also no longer any annual limits on RESP contribution.
       Canada Education Savings Grant (CESG) per year has been increased from
       $400 to $500.

    -  A new Registered Disability Savings Plan (RDSP) is being introduced to
       help families save for the financial security of a disabled family
       member. There are great incentives provided to encourage people to
       open RDSPs like Canada Disability Savings Grant, which will provide
       matching government contributions. For a lower income family, a one
       time Canada Disability Savings Bond will provide an initial government
       contribution of up to $1,000 to kick-start the plan.

    -  Lower income families qualify for the Canada Learning Bond (CLB). The
       Government provides $500 in a CLB at birth for children whose families
       are entitled to the National Child Benefit Supplement. As long as the
       family is still entitled to the supplement, they will receive an
       additional $100 CLB each year until the age of 15.

    -  Apply for a social insurance number upon a birth of the child. You
       will need this in order to open an RESP. It will also be required even
       for minor jobs such as babysitting or paper routes. Money earned from
       this type of employment qualifies for the calculation of an RRSP
       deduction limit.


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