Child Care Expense Deduction
Parents claiming childcare expenses can reduce their taxable income by a little more this year, as the maximum limit per child has gone up to $8,000 (from the previous limit of $7,000) for each child under seven, and $5,000 (up from $4,000) for children aged seven to 16. If your child has a physical or mental disability, you can claim up to $11,000.
To qualify for this credit, you must have paid another person to care for your child so you could do one of the following: earn income from employment, conduct your own business, attend school or perform research under a grant.
Aside from daycare and nursery school payments, the deduction also considers payments for boarding schools, day camps, overnight camps, nanny services and more. Visit the CRA’s website for a complete list of eligible claims.
If you have a partner or spouse, the person with the lower net income (including zero) must file the claim. The amount claimed cannot be greater than two-thirds of that partner’s earnings.
Canada Child Benefit
The tax-free Canada Child Benefit (CCB) will replace the current Canada Child Tax Benefit (CCTB) and Universal Child Care Benefit (UCCB) as of July 2016. Paid monthly, the CCB will provide a maximum annual benefit of $6,400 per child under the age of six and $5,400 per child aged six through 17. Benefits up to $2,730 per child will be added for children eligible for the disability tax credit.
Unlike the UCCB, the CCB benefit is no longer universal: the more you earn, the less you’ll get. Only those with a net family income below $30,000 will receive the full amount. This calculator can help you determine what your benefit will be.
If you already receive the UCCB, CCTB or both, you don’t need to apply for the new CCB. However, you and your spouse or common-law partner, if applicable, must file a 2015 income tax and benefit return, even if you don’t have income, so the Canada Revenue Agency (CRA) can calculate your payment.
Universal Child Care Benefit (UCCB)
As mentioned above, the enhanced Universal Child Care Benefit (UCCB) that came into effect on January 1, 2015 is being replaced by the Canada Child Benefit as of July 2016. Eligible parents will continue to receive the UCCB (as well as the Canada Child Tax Benefit) until June. Don’t forget that the UCCB is taxable, so be sure to declare the benefit payments you received in 2015 as income on this year’s return.
(Psst! Is this your first year claiming child benefits? You’ll have to fill out an application form, which can be found here.)
Family Tax Cut
This tax cut introduced last year applies to families with kids under 18 in which one partner earns a higher income than the other. The higher-income partner can transfer up to $50,000 of taxable income to his or her partner, which may give the higher earner a tax credit of up to $2,000, depending on the spread between the couple’s income levels. This is the last year to claim this credit—it’s being repealed for the 2016 tax year.
(Looking for an easy way to claim the Family Tax Cut? Get it here.)
Children’s Fitness Tax Credit
Parents are eligible for a 15 percent tax credit for every dollar spent, up to $1,000, on a kid’s fitness class, sports registration, etc., which means the maximum tax refund you can receive is $150 per child. Be sure to claim any fees you paid in 2015 even if they were for programs that didn’t start until 2016. While you don’t need to send your receipts in with your tax return, you’ll need them if you’re audited, so hang on to them.
New this year: the Children’s Fitness Tax Credit is now a refundable federal credit, meaning if your total federal tax credits add up to more than the taxes you owe, you can get a refund for the difference.
Children’s Arts Tax Credit
Like last year, parents can claim up to $500 per child under age 16 for ongoing programs and classes that focus on artistic, cultural and developmental activities—think classes in literary and visual arts, performing arts, music, media, languages, wilderness and natural environment, and more.
Remember: This claim is in addition to the Children’s Fitness Tax Credit, which means you can’t expense the same program in both categories.
Note: Both the Fitness and Arts Tax Credits will be reduced for the 2016 tax year, and eliminated in 2017.
Family Caregiver Tax Credit
If you are a caregiver for a spouse, partner or family member with a mental or physical impairment, you may be eligible to claim up to $2,093 for a non-refundable tax credit of up to $314.
An eligible dependent must earn little to no income and be fully dependent on your care (for example, if your or your spouse/partner’s elderly parent lives with you and requires care, if your child uses a wheelchair, or if your spouse has fallen ill.)
If you’re already claiming the Eligible Dependent Credit (see below), you can still qualify for the Family Caregiver Tax Credit.
Eligible Dependent Credit
In order to qualify for this amount, you must be the sole supporter of a dependent who was living with you in 2015—meaning you do not have a spouse or common-law partner or you were not living with or being supported by a spouse or common-law partner. The dependent must be your parent, grandparent, child, grandchild or sibling (by blood, marriage, common-law partnership or adoption). In the case of a child, grandchild or sibling, the individual must be under 18 years of age or have a mental or physical impairment.
There are many qualifying criteria and exceptions to this credit, so visit the Canada Revenue Agency’s website for full details.
Public Transit Tax Credit
If you, your spouse and/or your kids under the age of 19 purchased public transit passes in 2015, you can claim them. This applies to monthly passes, as well as shorter passes if the passes allowed you to travel unlimited for 20 days within a 28-day period. If you used electronic payment cards, you must have taken 32 one-way trips per month in order to claim the value for this credit.
Be sure to hang on to all receipts as well as your actual passes—those are necessary in order to claim this expense.
Medical Expenses Credit
There is a long list of medical expenses that are eligible for tax credits (get the full list here), including some fertility treatments and prenatal and postnatal treatments. You can also claim eligible medical expenses for dependents.
Adoption Expenses Credit
If you adopted a child under the age of 18 in 2015, you can claim up to $15,255 in adoption fees per adopted child. Adoption fees include money paid to a licensed adoption agency, court and legal costs, document translation, necessary travel expenses, mandatory fees required by a foreign institution and for immigration purposes, plus any other fees required by the provincial or Canadian government. Get more details about eligible adoption periods here.
Want to learn more? Tap into books, courses and smart tips to help with your tax literacy at cpacanada.ca/financialliteracy