Family tax cut

The Government is proposing a new Family Tax Cut, a federal non-refundable tax credit worth up to $2,000 for couples with children under the age of 18.

Family tax cut is a version of the family income-splitting promise the Conservative party made during the 2011 federal election.

The Family Tax Cut would allow a spouse to, in effect, transfer up to $50,000 of taxable income to a spouse in a lower income tax bracket, providing tax saving up to a maximum of $2,000. Tax saving is calculated on the basis of a difference in federal tax before and after the effective transfer of income.

The Family Tax Cut would take effect starting in the 2014 tax year. Couples would be able to claim the credit when they file their 2014 tax returns. To benefit from the credit, each spouse must file a tax return. Either spouse may claim the credit.

The government claimed more than 1.7 million families were expected to benefit from the new Family Tax Cut. However, income-splitting plan is widely criticized that it gives lavish tax benfits to the rich families while giving little benefits to those who actually need it the most. Independent analysists believe the income splitting program would beneift 15 percent Canadians and provide little or nothing for the other 85 percent.

Liberal Leader Justin Trudeau vowed to reverse Conservative income-splitting policy if his party wins in next election. NDP Leader Tom Mulcair also critized the income-splitting plan that it "will increase inequality in our society".Those oppose the income-splitting plan include former Conservative finance minister Jim Flaherty.

News - November 14, 2015

Universal Child Care Benefit changed in 2015

Child care expenses deduction limits increased in 2015

Children's Fitness Tax Credit (CFTC) changes

A list of tax credits with explanation

Additional information