Child Tax Credits and Deductions

Note: The children’s fitness tax credit, including the supplement for children with disabilities, has been eliminated for 2017 and later tax years as explained this CRA post.

The Updated Canada child benefit (CCB) is a tax-free monthly payment made to eligible families to help them with the cost of raising children under 18 years of age. The CCB might include the child disability benefit and any related provincial and territorial programs.

Welcome to tax time here in Canada. As tax season ramps up, we will look at the various implications for you and your tax return.

In this blog we will look at the credits and deductions for those of you that have children. For starters, many of you may or may not be aware of the enhanced Universal Child Care Benefit that will replace the Child Tax Credit for 2015. It will effectively increase the benefit by $60.00 to $160.00 per month for each eligible child. This one happens to be a taxable benefit and will not have the taxes withheld before you get each payment. Hopefully this will not be a surprise and that you have enough withholdings from income to cover it. Think about setting up a new TD1 form with your employer(s) to cover this for future consideration.

The cap on childcare expenses has been increased as well. It has gone up by $1,000.00 across the board. Nothing else changes. The spouse with the lower or no earnings must in almost all cases be the one claiming the expense and can only claim it if that spouse is in school, working or running a business. Eligible expenses include daycare, babysitting, boarding school as well as sports schools, day and night camps.  The new limits are as follows:

  • $8,000.00 for children aged 6 or under at the end of the year in 2015
  • $5,000.00 for children aged 7 to 15 at the end of the year in 2015
  • $11,000.00 for children with disabilities

The Children’s Fitness Credit has also changed for 2015. Where it has been a non-refundable tax credit in the past, it is a refundable credit for 2015. This means that there is a potential of actually getting a refund if your tax owing is already at zero. The limit for this credit remains at $1,000.00 per child. Be aware that there are criteria as to what programs qualify for the credit. The program must:

  • Be at least 8 weeks in duration
  • Be supervised
  • Be suitable for children
  • Involve significant amounts of physical activity including cardiopulmonary endurance

The fitness credit only applies to children 15 years of age or younger as of January 1, 2015. The exception is for children with disabilities. They must be 18 years of age as of January 1, 2015 and an additional $500.00 can be claimed.

If you need further Child Tax Credits and Deductions assistance in sorting it all out, connect with us as you ramp up for tax time.

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