"cents" of the new tax law changes to maximize refunds

Transcription

"cents" of the new tax law changes to maximize refunds
MAKING “CENTS” OF THE NEW TAX LAW CHANGES TO MAXIMIZE REFUNDS
Confusion around Family Tax Cut may mean Canadians are leaving money on the table
Calgary, AB – M arch 10, 2015 – It may have been featured in a national government
advertising campaign but the new Family Tax Cut seems to be a source of confusion for
many according to the results of a recent Leger survey for H&R Block Canada. While 50 per
cent of Canadians had heard of the Family Tax Cut, only 15 per cent said they expected any
of the new tax changes (including the Family Tax Cut) to impact their tax return.
And when asked to identify situations where families could take advantage of the Family
Tax Cut, the results were poor. Although 27 per cent identified families where one spouse
earns all the income would benefit, when presented with other options that might qualify,
there were few correct answers.
“The Family Tax Cut will provide the most benefit to families where one spouse earns all
the income but that is not the only situation that results in tax savings,” says Caroline
Battista, senior tax analyst, H&R Block Canada. “Even a small disparity in income between
two spouses could result in a few hundred dollars of savings so don’t make the mistake of
thinking you do not qualify. You don’t want to miss out and pay more tax than you need to.”
The survey asked Canadians to identify which of the following family examples would
benefit from the Family Tax Cut.
•
One spouse earns $50,000 and the other earns $40,000
o W ill benefit . Family Tax Cut savings would be $277.
o Only 10 per cent knew this would qualify.
•
One spouse earns $100,000 and the other earns $75,000
o W ill benefit. Family Tax Cut savings would be $484.
o Only 13 per cent knew this would qualify.
•
One spouse earns $80,000 and the other earns $50,000
o No benefit. They are both in the same tax bracket.
“The Family Tax Cut is a form of income splitting and whether or not you can benefit really
depends on your tax brackets,” says Battista. “For people concerned that claiming the
Family Tax Cut will affect their other benefits, you don’t need to worry. The credit is
calculated on a separate schedule and does not impact the rest of your tax return.”
The Family Tax Cut allows couples with at least one child under the age of 18 to claim a
non-refundable tax credit equal to the amount that would be realized by transferring up to
$50,000 of taxable income from the higher-income to the lower-income spouse or commonlaw partner. The maximum claim is limited to $2,000.
Families with children under 18 were expecting a larger refund (38 per cent) but Quebec
residents were the most likely to be pessimistic about receiving a bigger refund (76 per
cent).
Other new tax changes for 2014 include:
• Doubled Children’s Fitness Tax Credit: Parents will be able to claim up to
$1,000 per child on their 2014 tax return, an increase of $500 from previous years
• Enhanced U niversal Child Care Benefit: Though it is not part of the tax
return, families will start seeing the benefit in July 2015. For children under six, the
monthly amount will increase to $160 from $100. For children six to 18, parents will
now receive $60 per month. The first six months of 2015 will be paid in a lump sum
in July 2015 and then payments will be received monthly. The UCCB income is
taxable in the hands of the lower income parent.
About H&R Block Canada
In 2014, H&R Block Canada celebrated 50 years of preparing tax returns in Canada as the
leading tax preparation firm in the country. Headquartered in Calgary, Alberta, the
company serves Canadian taxpayers in more than 1,200 offices across the country. H&R
Block Canada Inc. is a subsidiary of H&R Block, Inc., a diversified company with
subsidiaries providing a wide range of financial products and services. Additional
information about H&R Block Canada is available at 1-800-HRBLOCK or visit
https://www.hrblock.ca/ for more tax tips.
For more information, please contact:
Tina Quelch
Calador Communications
(416) 925-6034 x 22
[email protected]

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