The Canada Child Tax Benefit (CCTB)
system, consisting of a base benefit and a
National Child Benefit Supplement (NCBS),
is intended to provide assistance to lowerincome families with children. If you meet
an income test, you’ll receive a non-taxable
payment for each child under 18 years of
age. For families with a disabled child, the
Child Disability Benefit supplements child
tax benefits.
The child tax benefit is eliminated once
family net income exceeds a certain amount.
Children’s fitness tax credit
You can claim a tax credit for up to $500
in fees for eligible fitness programs for each
child who is under age 16 at any time during
the year. Generally, an
eligible program is one that is ongoing and
includes a significant amount of physical
activity. The federal credit is calculated by
multiplying the eligible amount by the lowest
marginal tax rate.
An enhanced credit may be claimed for
children under age 18 who are eligible for
the disability tax credit.
Children’s arts tax credit
You can claim a tax credit for up to $500 in
fees in an eligible program of artistic, cultural,
recreational or development activities for
each child who is under age 16 at any time
during the year. Generally, eligible expenses
include fees paid to a qualifying entity for
registration or membership of a child in an
eligible program that is weekly and lasts a
minimum of eight consecutive weeks or, in
the case of camp, a minimum of five days.
The credit is structured in the same
manner as the children’s fitness tax credit.
An enhanced credit may be claimed for
children under age 18 who are eligible for
the disability tax credit.
Tax-free savings account
Every Canadian resident (other than US
citizens and green card holders) aged 18
and older should include a tax-free savings
account (TFSA) as part of their investment
strategy. The tax benefit of these registered
accounts isn’t in the form of tax-deductible
contributions, but in the tax-free earning on
invested funds.
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For US citizens and green card holders,
the decision is more complex, as income
earned in the TFSA must be reported on the
individual’s US personal income tax return,
so the tax savings may be limited and there
will be additional US filing disclosures.
The mechanics of the TFSA are simple:
• You can contribute up to $5,500 annually
($5,000 prior to 2013). If you contribute
less than the maximum amount in any year,
you can use that unused contribution room
in any subsequent year. The cumulative
contribution limit for 2014 is $31,000.
• Income and capital gains earned in
the TFSA are not taxable, even when
withdrawn.
• You can make withdrawals at any time
and use them for any purpose without
attracting any tax.
• Any funds you withdraw from the TFSA —
both the income and capital portions —
are added to your contribution room in the
next year. This means you
can recontribute all withdrawals in
any subsequent year without affecting
your allowable annual contributions.
Recontribution in the same year may result
in an overcontribution, which would be
subject to a penalty tax.
Old Age Security
The Old Age Security (OAS) pension
is a monthly payment available to most
Canadians aged 65 and older. In order to
receive benefits, you must apply for OAS
with Service Canada. You should apply six
months before you turn 65. However, if you
apply at a later date, the pension is payable
up to 11 months retroactively from the date
the application is received.
Starting 1 July 2013, Canadians may
voluntarily defer receipt of OAS benefits for
up to five years. Those who take this option
will receive a higher, actuarially
additional income. The
Guaranteed Income
Supplement
(GIS)
and the Allowance
program
were
designed to provide
further assistance to lowincome seniors. For more information, see
the Service Canada website.
Charitable donations
You’re entitled to a federal non-refundable
tax credit of 15% on the first $200 of
charitable donations, and 29% on donations
over $200.
A first-time donor will be entitled to a onetime federal credit equal to 40% for money
donations of $200 or less, and 54% for
donations between $200 and $1,000. An
individual is considered a first-time donor
if neither the individual nor the individual’s
spouse or commonlaw partner has claimed
a charitable donation tax credit (or the new
first-time donor’s super credit) after 2007.
The maximum donation amount that may be
claimed per couple is $1,000. This one-time
credit applies to donations made on or after
21 March 2013 and before 2018.
The maximum annual claim for charitable
donations is 75% of your net income for the
year. Any donations beyond that may be
carried forward for five years. In the case of
a donation of property, the donation limit can
be as much as 100% of the resulting taxable
capital gain (or recapture, in the case of
depreciable property) included in income.
In the year of your death and in the
immediately preceding year, the donation
limit rises to 100% of your net income. If you
make a “gift in kind” (e.g., capital property
rather than cash), special rules may apply.
Unless you elect otherwise, the property
is deemed to be disposed of at fair market
value for capital gains purposes and you’re
considered to have made a donation for the
same amount.
adjusted pension.
You can download an application package
from Service Canada’s website or you can
order an application by mail.
Two other programs can provide you with
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