Raising a family is a difficult job at the best of times, but it can be particularly challenging in periods of economic doubt and uncertainty.
There are a number of ways Canadian families can use existing credits, benefits and programs to help them buy their first home, lower the amount of tax they pay each year and put more money in their pockets to help them raise their families.
New in the 2012 tax year was the Family Caregiver Tax Credit, elimination of expense limits that can be claimed by caregivers for caring for infirmed dependant relatives, enhancements to the Registered Disability Savings Plan (RDSP), and greater personal tax exemptions for Canadians and their families travelling to and from the United States and other foreign destinations.
Effective January 1, 2012, the Family Caregiver Tax Credit, a 15-per-cent non-refundable credit on an amount of $2,000, provided tax relief for caregivers of infirm dependent relatives including, for the first time, spouses, common-law partners and minor children.
The government has also removed the $10,000 limit that caregivers can claim for incurring extraordinary medical and disability-related expenses for caring for an aging parent, sibling or other financially-dependent relative.
Canadians spend millions every year on medical expenses like prescription drugs and special medical equipment for their loved ones. These costs can quickly add up for a family caregiver. There currently is no limit on the amount of eligible expenses a taxpayer can claim for himself/herself, a spouse or common-law partner, or a dependent child younger than of 18. However, there was a limit of $10,000 for caregivers, which now has been eliminated.
As well, the 2012 federal budget made some enhancements to the Registered Disability Savings Plan (RDSP) and the personal tax exemption limits for Canadians and their families travelling to the United States and other foreign destinations.
The RDSP, which provides long-term financial security for children with severe disabilities, now includes greater flexibility for withdrawals from the plan and an expanded definition of who may hold an RDSP.
Effective June 1, 2012, the government also raised the value of goods that Canadian travellers can bring into the country tax free to $200 after 24 hours outside the country and $800 after a minimum of 48 hours. In addition, Canadians now can rent a vehicle in the United States and bring it over the border to Canada tax-free if they've been out of the country for more than 48 hours.
The Universal Child Care Benefit (UCCB) provides families with $100 per month ($1,200 a year) for each child younger than six. The UCCB allows parents to choose their preferred care option: spend the money on daycare, stay with a relative, or have a parent stay at home. The decision rests with the parents.
The Children's Fitness Tax Credit allows parents to claim a credit of up to $500 per child under 16 against the fees for sports and programs like ballet, hockey and soccer, while the Children's Art Credit allows parents to claim another $500 per child under 16 for artistic and cultural activities such as art and music lessons.
"These are some of my favourite family-friendly tax credits," said Cleo Hamel, senior tax analyst for H&R Block. "Not only are they straightforward and easy to claim, but they are also great examples of the tax code encouraging kids to be active athletically and artistically."
Buying a home is probably one of the largest investments that most Canadians ever make, and there are credits and plans available to help defray these costs.
The First-Time Home Buyers Tax Credit, for example, allows buyers to save up to $750 on qualifying homes. The credit also is available to existing homeowners who are eligible for the Disability Tax Credit who purchase a more accessible of functional home or for the benefit of a DTC-eligible person who is related to the home purchaser.
Saving for a down payment is often the most challenging aspect of buying a first home. Under the home buyers' plan, the government recently increased to $25,000 the maximum amount that Canadians can withdraw from their Registered Retirement Savings Plans for a down payment on their first home.
"Your home is your most important asset, and all Canadians should take advantage of credits that help put them in a home they will love," Hamel said.
Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.
Copyright 2013 Talbot Boggs
