New family tax cut: Obscure or apparent?
So, what’s new in the family tax cut? First,
let’s get to know what family tax cut is all
about. This tax cut is meant for families with
children under the age of 18 in which one
spouse earns more than the other.
The government provides the incentive of transferring a certain amount of the taxable income from the higher-income partner to the other half, which consequently leads to earning a tax credit depending on the slab difference between their income levels. This tax credit is non-refundable and can be claimed by either spouse, but it is not liable to be shared.
The changes are made in the Enhanced Universal Child Care Benefit (UCCB), effective January 1 of this year, but citizens have a mere visibility to these benefits. This is something Canadians should become familiar with and know the truth behind.
The UCCB, which is taxable, will benefit parents in two ways:
There is a certain amount of monthly maximum benefit per child for the parents with kids under six years of age.
Similarly, for children aged between six and 17, the family is bound to receive a new amount of benefit per child per month.
Now the question arises if these increases are actually legitimate. It has been said that the version of the family tax credit announced by Prime Minister Stephen Harper last October was a twisted version.
The entire motive behind this was to address the criticism that this would only widen the gap between Canada’s rich and poor with the tax benefits left for the rich families. But even after this, critics say this is going to benefit a small percentage of the Canadian population. The government says that this will benefit all families with children under the age of 18.
There are certain wrinkles on these particular benefits.
The family tax credit is said to be a hypothetical transfer of income; there is no actual split. So what actually happens that the income isn’t actually transferred? Hence, there are no tax savings.
Another important point is that these changes in those two measures will be effective only this year, and the payments will arrive in July 2015, which is just a few months before the next fall election. The most important thing is the increase in tax benefit will not be received until July 2015.
The number of children in the family does not matter. It does not make any difference for the purposes of credit. Spouses need to file 2014 tax returns and must be Canadian residents in order to claim this credit. Neither of the spouses can claim this credit in case of a declared bankruptcy.
There are certain hidden things in this family tax cut. For instance, there has to be at least one child under 18 years old and no single parents should apply. Another significant point is that both parents need to be under different tax brackets.
Another thing to raise an eyebrow over is that critics say this family tax cut is difficult to understand and get familiarized with.
What needs to be done is to gain a better view of this family tax cut in order to understand the actuality behind it rather than being flawed by the system and misunderstood by the tax filers as well.
Editorial opinions or comments expressed in this online edition of Interrobang newspaper reflect the views of the writer and are not those of the Interrobang or the Fanshawe Student Union. The Interrobang is published weekly by the Fanshawe Student Union at 1001 Fanshawe College Blvd., P.O. Box 7005, London, Ontario, N5Y 5R6 and distributed through the Fanshawe College community. Letters to the editor are welcome. All letters are subject to editing and should be emailed. All letters must be accompanied by contact information. Letters can also be submitted online by clicking here.
The government provides the incentive of transferring a certain amount of the taxable income from the higher-income partner to the other half, which consequently leads to earning a tax credit depending on the slab difference between their income levels. This tax credit is non-refundable and can be claimed by either spouse, but it is not liable to be shared.
The changes are made in the Enhanced Universal Child Care Benefit (UCCB), effective January 1 of this year, but citizens have a mere visibility to these benefits. This is something Canadians should become familiar with and know the truth behind.
The UCCB, which is taxable, will benefit parents in two ways:
There is a certain amount of monthly maximum benefit per child for the parents with kids under six years of age.
Similarly, for children aged between six and 17, the family is bound to receive a new amount of benefit per child per month.
Now the question arises if these increases are actually legitimate. It has been said that the version of the family tax credit announced by Prime Minister Stephen Harper last October was a twisted version.
The entire motive behind this was to address the criticism that this would only widen the gap between Canada’s rich and poor with the tax benefits left for the rich families. But even after this, critics say this is going to benefit a small percentage of the Canadian population. The government says that this will benefit all families with children under the age of 18.
There are certain wrinkles on these particular benefits.
The family tax credit is said to be a hypothetical transfer of income; there is no actual split. So what actually happens that the income isn’t actually transferred? Hence, there are no tax savings.
Another important point is that these changes in those two measures will be effective only this year, and the payments will arrive in July 2015, which is just a few months before the next fall election. The most important thing is the increase in tax benefit will not be received until July 2015.
The number of children in the family does not matter. It does not make any difference for the purposes of credit. Spouses need to file 2014 tax returns and must be Canadian residents in order to claim this credit. Neither of the spouses can claim this credit in case of a declared bankruptcy.
There are certain hidden things in this family tax cut. For instance, there has to be at least one child under 18 years old and no single parents should apply. Another significant point is that both parents need to be under different tax brackets.
Another thing to raise an eyebrow over is that critics say this family tax cut is difficult to understand and get familiarized with.
What needs to be done is to gain a better view of this family tax cut in order to understand the actuality behind it rather than being flawed by the system and misunderstood by the tax filers as well.
Editorial opinions or comments expressed in this online edition of Interrobang newspaper reflect the views of the writer and are not those of the Interrobang or the Fanshawe Student Union. The Interrobang is published weekly by the Fanshawe Student Union at 1001 Fanshawe College Blvd., P.O. Box 7005, London, Ontario, N5Y 5R6 and distributed through the Fanshawe College community. Letters to the editor are welcome. All letters are subject to editing and should be emailed. All letters must be accompanied by contact information. Letters can also be submitted online by clicking here.
