PETER DOLEZAL: Feds’ good-news tax announcements have already begun

An election year is usually a good one for Canadian taxpayers.

An election year is usually a good one for Canadian taxpayers. The party in office typically dispenses, bit by bit, selected tax cuts as proof of its solid stewardship of the nation’s finances.

2015 is no exception. In fact, the federal government did not even wait for the usual pre-election budget. The good-news announcements began in late 2014, a full year before the mandatory federal election date of October 19, 2015.

To date, all the announced changes are designed to assist families with children.

The Children’s Fitness deduction amount has increased from $500 to $1,000 — worth an extra $75 in lower annual taxes; the maximum Child Care Deduction limit has been increased by $1,000 annually; the Universal Child Care Benefit for children under age six has increased from $100 to $160 per month. And, for children age six to 17, a new monthly Child Care Benefit of $60 has been introduced.

Individually, not dramatic changes, but taken together, a welcome improvement, particularly for younger families struggling to make ends meet.

The most dramatic tax change however, is the new Family Tax Cut, often referred to as income splitting, for families with children under age 18. This innovation will allow a notional transfer at tax-time, of up to $50,000 of annual income, from the higher-earning wage-earner to a lower-earning spouse. This could lead to significant family tax savings, to a maximum of $2,000 annually.

The greatest advantage will accrue to those families with a stay-at-home spouse caring for children — triggering some criticism that the changes will most benefit wealthier families.

Regardless, this major tax change introduces to younger families an income-splitting opportunity — long enjoyed by many seniors on certain qualifying pension incomes.

To claim this new Family Tax Cut benefit, couples will need to file simultaneous, linked tax returns, as is the case with seniors claiming a notional pension income-split.

The new Child Care Deduction limits took effect January 1, 2015. The Child Fitness deduction and the Family Tax Cut however, apply retroactively to the 2014 tax year.

With a federal budget due in late February or March, expect further tax tinkering to benefit voters other than solely families with children.

A key, long-promised change based on the government’s achievement of a balanced budget has been the raising of Tax Free Savings Account (TFSA) eligibility from its current $5,500 annually, to a potential limit of $10,000. It remains to be seen whether the recent dramatic fall-off in oil-related revenues will allow the government to follow through on this promise.

The federal government deserves credit for nearing its objective of a balanced budget by 2015 — and it is gratifying to see the taxpayer sharing in that success.

Let’s celebrate these changes, recognizing that a tax cut is good not only for the taxpayer, but also for the resulting increase in economic activity. Neither the government nor we Canadians should forget however, that any tax cuts trickling down to us are merely a partial return of the significant taxes we have already paid.

 

A retired corporate executive, enjoying post-retirement as an independent Financial Consultant (www.dolezalconsultants.ca), Peter Dolezal is the author of three books, including his most recent, The Smart Canadian Wealth-Builder.

 

Contact Panorama Rec Centre to register for Peter’s Elder College Spring session– Financial & Investment Planning for Retirees & Near-Retirees (Wednesdays, March 18 to April 15).

Just Posted

Feds kickstart Indigenous Guardians program with $5.7M in early funding

Part of $25M announcement from March to commit financial help for First Nations to remain stewards of their land

NDP leader Jagmeet Singh visits with Langford high school students

Students asked him questions about current political issues

New report finds B.C. victims of opioids crisis on lower of end of socio-economic spectrum

UVic scholar calls for decriminalization of drugs responsible for opioid crisis

Victoria Curling Club, arena parking lot considered for new Crystal Pool location

Considering other vendors could cost Victoria first year of provincial and federal funding

City of Victoria to see 588 affordable housing units

Provincial funding is aiming to see 4,900 new mixed-income rental properties across B.C.

VIDEO: Amazon to split second HQ between New York, Virginia

Official decision expected later Tuesday to end competition between North American cities to win bid and its promise of 50,000 jobs

Kuhnhackl scores 2 odd goals as Isles dump Canucks 5-2

Vancouver drops second game in two nights

Student arrested at Vancouver Island elementary school

Pupils never in danger, incident unrelated to the school

POLL: Have BC Ferry waits ever forced you to cancel your travel plans?

Many BC Ferry passengers heading out from Swartz Bay to Tsawwassen on… Continue reading

Stink at B.C. school prompts complaints of headaches, nausea

Smell at Abbotsford school comes from unauthorized composting operation

Fear of constitutional crisis escalates in U.S.; Canadians can relate

Some say President Donald Trump is leading the U.S. towards a crisis

Racist slur cleaned off memorial at Qualicum First Nation graveyard

Site was hit by vandals on Friday; many immediately offered support and assistance

B.C.-based pot producer Tilray reports revenue surge, net loss

Company remains excited about ‘robust’ cannabis industry

Canada stands pat on Saudi arms sales, even after hearing Khashoggi tape

Khashoggi’s death at Saudi Arabia’s consulate in Istanbul further strained Riyadh’s already difficult relationship with Ottawa

Most Read