As you spend quality time with your family-on-Family Day, it’s also an opportune moment to reflect on the changes that have taken place in your household over the past year, as they may have implications for your tax situation.
Tax on Family Day: Exploring Tax Changes for Families
As you reflect on the past year and enjoy Family Day, it’s essential to consider how changes in your household may impact your tax situation. Whether you’ve become a blended family or experienced minimal changes, it’s worth noting how certain factors can influence your tax filing this year.
Benefits of the Canada Child Benefit (CCB)
Introduced in 2016 as a replacement for the Canada Child Tax Benefit, the CCB offers significant advantages for eligible families. It can provide a maximum annual benefit of up to $6,765 per child under 6 years old and up to $5,708 per child aged 6 to 17. The maximum benefit is available to families with a net income below $31,711, gradually phasing out for higher-income households. Additionally, starting in 2019, social assistance payments received by kinship care providers are excluded from net income calculations for CCB payments, with this change being retroactive to 2010.
Combining Expenses and Maximizing Benefits
Within a family, spouses have the option to either claim their individual charitable donations or consolidate them under one spouse’s claim. The first $200 of donations is eligible for a 15% credit, while additional amounts receive a credit of 29% or 33%, depending on the taxable income level. Generally, it is more advantageous for one spouse to make the claim.
Furthermore, spouses can combine medical expenses, allowing the lower-income spouse to claim the total amount. Expenses exceeding 3% of net income are eligible for a credit.
Parental Benefits and Flexibility
For parents, there is cause for celebration. The supplemental parental sharing benefit offers an additional five weeks of benefits when both parents agree to share parental leave, providing greater flexibility to families. This benefit became effective for children born or placed for adoption after March 17, 2019.
Moreover, the Working While on Claim program has been extended to include maternity and sickness benefits. This pilot program empowers mothers to plan their return to work more flexibly while retaining a higher portion of their Employment Insurance (EI) benefits. Claimants can keep 50 cents of their EI benefits for every dollar earned, up to a maximum of 90% of their total EI benefits.