In addition to the Family Tax Cut, the federal government introduced changes to other child benefits this fall.
The Universal Child Care Benefit [UCCB], a monthly benefit paid to parents for each child under the age of 6, has been increased from $100 to $160 per month. A second tier has also been created, for children ages 6 to 17 years old. Parents with children in this category will receive $60 a month.
The increase will take effect in June 2015, at which time eligible families will receive retroactive payments for the first six months of 2015. As long parents are registered to receive other federal child care benefits, no registration is required to receive these benefits.
As a consequence of this measure, the Child Tax Credit, which was federal non-refundable tax credit that a parent received for each child under the age of 18, has been eliminated as of 2015. The credit will be still available for 2014. The total tax credit is $2,234, and taxpayer can save up to $335 from this credit.
UCCB payments will continue to be taxable, as they have in the past. The income will be reported on the tax return of the lower earning spouse. Assuming that the recipient is in the lowest tax bracket, the total net payment that parent would receive in the year is $576. Combined with the $335 that is lost from the elimination of the Child Tax Credit, the net gain for each child would be $241
Receipt of these benefits have no effect on eligibility for the Basic Child Tax Benefit, as income received under the UCCB does not affect this program.
One benefit of the increase in the UCCB for low income families is that they may not have earned enough income to be able to use the non-refundable Child Tax Credit in the past, whereas they will receive a benefit through this program.
In September, the federal government announced that they will be doubling the amount of Children’s Fitness Tax Credit. The maximum credit has been $500 since it was first introduced in 2007. This maximum is being increased to $1,000 per child, starting with the 2014 taxation year.
A taxpayer can save up to $150 of federal tax with this credit, up from the current maximum of $75.
The provincial government also provides a credit of $500, which provides a maximum provincial tax saving of $25.
The provincial government has not commented on whether they will match the federal increase. 2012 was they year the provincial credit was available, five years after the federal credit was introduced.
In a addition, the federal government will be making this credit refundable, starting in 2015. Previously, low income families may have been unable to use this credit, as non-refundable credits can only be used to reduce federal taxes to zero. If a taxpayer owed no tax prior to the credit, they would receive no benefit from it. Making this credit refundable will allow low income taxpayers to benefit from this credit.
The tax credit applies to children under 16, or under 18 if they are eligible for the disability amount.
There have been no changes to the type of activities that qualify for the credit.
A recent global trend in taxation has been to increase the tax rates of the highest income earners.
An addition more localized trend has been for the BC government to change provincial tax rates soon after similar changes in Ontario.
Recently, the BC Ministry of Finance added a temporary tax bracket for people who earn over $150,000, at 45.8%. This was announced soon after the Ontario government introduced their own tax for high income earners, at 49.53% for income above $514.090.
This summer, the Ontario government again increased taxes at the highest bracket. The top tax bracket of 49.53% now starts at $220,000, instead of $514,090. In addition, a new tax bracket was created for taxable income between $150,000 and $220,000, to be taxed at 47.97% up from 46.41%.
It will be interesting to see if the BC government does the same with their own tax rates in the coming years.
The Search and Rescue Volunteer Tax Credit (SRVTC) has been introduced for the 2014 taxation year. This non-refundable federal tax credit will give search and rescue volunteers the same tax treatment as volunteer fire fighters. The eligible portion of the credit is $3,000 and can result in a total tax savings up to $450 for an eligible volunteer.
In order to qualify, the volunteer must engage in at least 200 hours of eligible service in the year. Eligible services include responding to and being on call for search and rescue and related emergency calls as a search and rescue volunteer, attending meetings held by the fire department, or participating in required training related to the search and rescue services.
As a search and rescue volunteer, a taxpayer may receive up to $1,000 as tax exempt income. However, if they claim this exemption, they cannot also claim both the SRVTC. As well, a person cannot claim both the SRVTC and the Volunteer Fire Fighters Tax Credit.
Qualifying organizations must be members of the Search and Rescue Volunteer Association of Canada, the Civil Air Search and Rescue Association, the Canadian Coast Guard Auxiliary, or an organization whose status is recognized by a provincial, municipal or public authority.