FAMILY TAX CUT STRATEGIES

FAMILY TAX CUT STRATEGIES

BY: AMIT PURI (CPA & CA from the Institute of Chartered Accountants of Ontario (ICAO))

On October 30, 2014 CRA announced the Family Tax Cut, a new non-refundable tax credit of up to $2,000 for eligible couples with minor children based on the net reduction of federal tax that would be realized if up to $50,000 of an individual's taxable income was transferred to the individual's eligible spouse or common-law partner. This would take advantage of a spouse's lower income tax bracket

Eligibility

To be eligible, your spouse or common-law partner must be a resident of Canada on December 31 of the year (or on the date of death) and you were not, because of a breakdown in your marriage or common-law partnership, living separate and apart from each other at the end of the year and for a period of 90 days or more beginning in the year.

How to claim it

1: You were a resident of Canada on December 31 of the year (or on the date of death);

2: You have an eligible spouse or common-law partner for the year who has not claimed the Family Tax Cut;

3: You have a child who is under 18 at the end of the year who ordinarily lives throughout the year with you or your eligible spouse or common-law partner;

4: You were not confined to a prison or similar institution for a period of at least 90 days during the year;

5: Neither you nor your eligible spouse or common-law partner became bankrupt in the year;

6: Neither you nor your eligible spouse or common-law partner elected to split eligible pension income in the year; and

7: Both you and your eligible spouse or common-law partner file an income tax and benefit return for the year.