Tax Tip: Family Tax Cut

There are still considerable questions and uncertainties with respect to the new Family Tax Cut. This credit is generally available for families who have a child under 18 years of age at the end of the year (other criteria must be met as well).

Claiming this tax credit will not impact a taxpayer’s actual net income or taxable income – it is simply a reduction of taxes (tax credit) which mimics the effect of a transfer of up to $50,000 of taxable income between spouses or common-law partners, to save up to a maximum of $2,000 in tax.

Because the actual net and taxable income does not change, the GST/HST Credit, Canada Child Tax Benefit (CCTB), and other federal or provincial benefits and tax credits will not change either.

To take advantage of the credit, taxpayers must have advised CRA about children they have. If not already done, this can be accomplished by completing CRA’s Form RC66.

Action Item: Ensure that CRA knows about your children.