Family Tax Cut is a non-refundable tax credit available to eligible couples with children under the age of 18. The credit is calculated based on the net reduction to the couple’s combined federal taxes if up to $50,000 in taxable income was transferred from the higher income earner to his or her spouse or common-law partner. The Family Tax Cut is capped at $2,000. That means the maximum amount you can claim is $2,000.
Not a real income splitting
Although family tax cut has frequently been referred to in the press as income splitting for families with kids under 18, in reality, unlike pension income splitting, it’s a “notional” form of income splitting. Your net income and the net income of your eligible spouse or common-law partner will not change if you claim the Family Tax Cut. Benefits and tax credits that are calculated base on net income, such as the GST/HST credit, the Canada child tax benefit, the age amount, and the spouse or common-law partner amount, will not change.
How to claim the Family Tax Cut?
Use Schedule 1-A, Family Tax Cut to calculate the amount you can claim. Then enter on Line 423 of Schedule 1, Federal tax, the amount from line 21 of the completed Schedule 1-A.
The non-refundable tax credit can be claimed by either spouse, but cannot be shared.
The Family Tax Cut is effective for the 2014. And it was eliminated for the 2016 tax year and onward, and can no longer be claimed.