Income-splitting changes to be announced

[Locke]

Originally Posted by Calgary14

The key here is the maximum savings of $2k. Due to this it really only benefits families with a combined income of around $75k annually. Anything beyond that and it doesn't benefit most people. Without the maximum of $2k it would have meant the splitting could benefit people who have a much higher income ($125k annually or more) while their spouse has a lower income. I think that was the original idea but they made a last minute change.

My guess is that they try to make up for it by increasing the UCCB (universal child care benefit) from the super-low $100 per month it's currently at.

The financial repercussions of that original concept would have been incredible.

Its a double entry system, if theres savings at one end it has to result in costs at the other.

The potential tax savings to taxpayers from an unrestricted income-splitting program would be significant, so much so that it would likely have to be counterbalanced by an increase in overall tax rates.

[mrkajz44]

Personally, I think this is the first step towards a "family based" filing system. The US has this already in place where you file jointly when married or common law. A change to something like that would be too radical, so this is the first small step towards filing one tax return for a "family unit".

I do agree with the policy behind it - it makes the tax system more equitable overall, which is one of it's main goals. Not great personally, as I have no kids, but I think this is a step in the right direction.

[Fire]

Originally Posted by Regorium

It'll hurt me because my taxes will probably go up to pay for this.

It also supports a lifestyle that I don't agree with (single income families), but that's of course a matter of opinion.

You don't support the idea of single income families? That's a first I heard someone say that. I would interested to hear why?

Personally I would think having a parent home with the children would be better for the children in most circumstances.

While I don't get any benefit from this tax break I prefer it over more child care tax breaks.

[foshizzle11]

what if you could move one spouse into a lower bracket but still keep the other in there, ie at least 1 drops down. I think this would be beneficial overall. Is there any information about how this is done? Will this process be quite complicated or just something added into quick books for example.

We usually do our own taxes but this year, since it could be a bit more complicated we might find a professional to help us. Any suggestions from CP?

[rayne008]

This is the first time I can ever remember a tax cut (other than GST) that will benefit me in an direct way.

Basically a $2000 tax break + extra $840 UCCB benefit/year + increase in Child Care Tax amount makes a huge difference in our budget.

[calgarygeologist]

Originally Posted by rayne008

This is the first time I can ever remember a tax cut (other than GST) that will benefit me in an direct way.

Basically a $2000 tax break + extra $840 UCCB benefit/year + increase in Child Care Tax amount makes a huge difference in our budget.

Isn't the UCCB only increasing $60 per month ($720 per year)?

[Slava]

Originally Posted by foshizzle11

what if you could move one spouse into a lower bracket but still keep the other in there, ie at least 1 drops down. I think this would be beneficial overall. Is there any information about how this is done? Will this process be quite complicated or just something added into quick books for example.

We usually do our own taxes but this year, since it could be a bit more complicated we might find a professional to help us. Any suggestions from CP?

Locke.

[bizaro86]

Originally Posted by darklord700

I think child care deduction of $7K per child should be increased. $1K a month is the minium of child care you can find in Calgary. We are still missing $5K deduction for my kid every year.

So, I will benefit the max amount from this change if they do it, but I don't see any particular reason why the gov't should have to pay for yours, mine, or anyone else's daycare. I had the kid (well, my wife did), I can pay for his care, or either my wife or I will care for him.

I'm not sure I understand why it makes sense for the gov't to pay for daycare, I think a lowered set of tax rates across the board would be better than increasing the UCCB

[Dentoman]

Originally Posted by calgarygeologist

Isn't the UCCB only increasing $60 per month ($720 per year)?

Math might be wrong, but there also is a new benefit of $60 a month for kids aged 6-17.

[darklord700]

The most one family could benefit is

$2K - income splitting
additional $60/mth or $720/year per kid from UCCB
Lose $2131 or $319.65 tax credit from elimination of Child Tax Credit.

But UCCB is taxable so it really doesn't affect me or people with income all that much.

[calgarygeologist]

Originally Posted by Dentoman

Math might be wrong, but there also is a new benefit of $60 a month for kids aged 6-17.

Didn't see the new UCCB for kids aged 6+. That is a nice little bonus.

[You Need a Thneed]

That $60 per child for kids 6-17 would be a nice plus.

[darklord700]

Originally Posted by calgarygeologist

Didn't see the new UCCB for kids aged 6+. That is a nice little bonus.

The $60/mth or 720/year is offset by the elimination of Child Tax Credit of $2131 deduction or $319.65 tax credit. But since the $720/year UCCB is taxable right now and if it is still taxable in the future, you bascially have a net $100 or so tax benefit for each year for each kid depending on your tax bracket.

[calgarygeologist]

Originally Posted by darklord700

The $60/mth or 720/year is offset by the elimination of Child Tax Credit of $2131 deduction or $319.65 tax credit. But since the $720/year UCCB is taxable right now and if it is still taxable in the future, you bascially have a net $100 or so tax benefit for each year for each kid depending on your tax bracket.

Once again I'm not on the ball with all the changes. I didn't realize the Child Tax Credit was going away. The increase in the Child Fitness Tax Credit is still going ahead right?

[Dentoman]

Originally Posted by calgarygeologist

I didn't realize the Child Tax Credit was going away.

Me neither .... oh well.

[darklord700]

Originally Posted by calgarygeologist

The increase in the Child Fitness Tax Credit is still going ahead right?

Didn't see Child Fitness tax credit being mentioned in the news release. However, I bet Harper reads my posts here so the Child Care Deduction has been increased by $1000 starting 2015. It will be $8000 for kids under 7 and $5000 over 7. I can now afford my morning Lattes.

http://www.ctvnews.ca/politics/incom...lies-1.2079559

[rayne008]

Originally Posted by rayne008

This is the first time I can ever remember a tax cut (other than GST) that will benefit me in an direct way.

Basically a $2000 tax break + extra $840 UCCB benefit/year + increase in Child Care Tax amount makes a huge difference in our budget.

obviously my years have 14 months..

[V]

Yeah, the UCCB increase for me is pretty much equivalent to what they're taking away, so all I really get out of this is $2k. Still, nothing to sneeze at.

[edslunch]

Originally Posted by darklord700

The $60/mth or 720/year is offset by the elimination of Child Tax Credit of $2131 deduction or $319.65 tax credit. But since the $720/year UCCB is taxable right now and if it is still taxable in the future, you bascially have a net $100 or so tax benefit for each year for each kid depending on your tax bracket.

Let me get this straight. The conservative government is increasing government handouts (giving us the $60) AND increasing taxes (eliminating the child tax credit). I thought they opposed tax and spend??

[Sylvanfan]

I would benefit a lot more if things like health care expenses and daycare were considered family expenses instead of individual.