Cash in with your kids this tax season
By Nizam Shajani, CA, MBA, Partner
Kids are expensive – however they can be useful for tax savings when filing your personal returns. Get credit for being a parent. Here are some tips to save on tax if you have children.
Canada Child Benefit is a tax free payment available for children under the age of 18. This replaces the previous Canada Child Tax Benefit. The amount of benefit you receive depends on the number of children you have and your family net income. You are eligible for up to $6,400 per child under the age of 6; $5,400 per child aged six through seventeen. This maximum is available to families with net income of under $30,000 – families with more income will receive less. Estimate show this benefit runs out for a family with one child under age 6 when income reaches $185,000; for a family with one child under age 6 and one child over age 6 with income over $190,000; with one child over age 6 when income reaches $155,000. To receive you payment, complete your pervious year tax return.
Children’s Fitness Tax Credit is now $500 per child and provides a refundable credit of 15% based on the amount spent on eligible fitness activities for children under the age of sixteen. This refundable credit is available for 2016 tax filings and will be eliminated for 2017.
Children’s Arts Credit is $250 per child for programs of artistic, cultural, recreational or development activities. This is a 15% non-refundable credit based on the amount spent and is still available for 2016 tax filings and will be eliminated for 2017.
Child Care Expenses can generally be deducted by the lower income spouse to a maximum of $8,000 for children under age seven and $5,000 for children aged seven through sixteen.
Credit for Transit Passes for children under the age of 19 can be claimed by either parent.
Tuition, education and textbook credits are available for post-secondary students for 2016. This includes the tuition amount plus an additional amount for full time students of $400 per month of enrolment plus $65 per month for textbooks. Part time students can claim the additional amount at $120 for each month of enrolment and $20 per month for text books. Credits not claimed by your child can be transferred to yourself, your spouse or their grandparents. Unused credits can be carried forward. The education and textbook credits will be eliminated for 2017, however the tuition credit will remain.
Credit for Student Loan Interest can also be claimed or carried forward for five years.
Moving expenses to attend post-secondary school may also be deductible under certain circumstances.
Tax deductions and credits can be used to offset the high costs of raising children. Considerations can be made on the child tax credit, childcare deductions, fitness and arts credits, tuition, education and textbook credits, interest on student loans, transit pass costs and moving expenses.
This information is for discussion purposes only and should not be considered professional advice. There is no guarantee or warrant of information on this site and it should be noted that rules and laws change regularly. You should consult a professional before considering implementing or taking any action based on information on this site. Call our team for a consultation before taking any action.