Tax Credits for Families with Children

They say having children is one of the greatest achievements in life. The amount of work and money that goes into raising children is insignificant compared to the joy that one receives. That doesn’t mean that we wouldn’t take help if it was offered.  Luckily, the Canadian Government provides a wide range of different tax credits and deductions related to child care.

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Canada Child Tax Benefit (CCTB)

The Canada Child Tax Benefit is a tax free monthly payment that is open to families to help them with the cost of raising children that are under the age of 18. The CCTB may also include the national child benefit supplement which is another benefit made eligible for low income households. Additionally, it can also include the Child Disability Benefit which is for households who care for children who have physical and mental impairments.

In order to be eligible, all of the following conditions must be met:

  1. you must live with the child, and the child must be under the age of 18;
  2. you must be primarily responsible for the care and upbringing of the child;
  3. you must be a resident of Canada; and
  4. You or your spouse or common-law partner must be a Canadian citizen, a permanent resident, a protected person, or a temporary resident who has lived in Canada for the previous 18 months, and who has a valid permit in the 19th month.

If you become separated or divorce during the course of the year, it is important that you notify the Canada Revenue Agency. This is because the amount that you receive for the Canada Child Tax Benefit is based on your total family income. By claiming your marital status as single, you would have a lower total household income and therefore be eligible to receive a higher amount in the CCTB. For more information on issues related to divorce and separation, please consult this article on the tax implications of divorce and separation in Canada.

You can apply for the CCTB by filing the Form RC66, Canada Child Benefits Application.

Universal Child Care Benefit

The universal child care benefit is part of the Federal government’s Universal child care plan. It is designed to provide financial assistance to families with children less than six years of age. It is paid in installments of $100 a month per child, equating to $1200 a year.

Eligibility for the UCCB is automatically processed when you apply for the Canada Child Tax Benefit. If you are not eligible for the CCTB then you may apply for the UCCB by using the same RC 66 Form as the CCTB.

Children’s Activity and Arts Tax Credit

Extra curricular activities are an essential part of the lives of most children.  That is why the Canadian Government provides a credit for enrolling your children in eligible activities.  For 2013, you can claim up to $535 and up to $53.50 for each child that is under 16 years of age.  Additionally you can receive up to $107 for a child with a disability that is under 18.

It is important to note that this credit covers both fitness and non-fitness activities.  Fitness activities simply involve any type of activity that involves a substantial amount of physical exertion that uses cardio respiratory endurance and muscular strength.

Non-fitness activities include: classes relating to music, dance, languages, dramatic and visual arts. These also include tutoring sessions and any activities that provide intellectual and academic stimulation and enrichment. To qualify, these activities and programs must be independent of a school’s curriculum and must occur at least on a weekly basis.

The expenses that can normally be claimed are registration and membership fees, and a portion of the registration that covers expenses related to equipments and uniforms.

About The Author – Allan Madan

Allan Madan is a CPA, CA and the founder of Madan Chartered Accountant Professional Corporation . Allan provides valuable tax planning, accounting and income tax preparation services in the Greater Toronto Area.

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