It’s not easy to keep up with and understand all the tax credits and deductions available to families. Take the time to review the various tax benefits available, and you may be able to reduce your tax bill or even get a refund on your next tax return. Find out more in this financial column by financial planner Julie St-Cyr.
Here’s an overview of the different family situations that can generate tax credits from the Quebec and federal governments.
Are you receiving child support payments?
Keep in mind that support payments made under a judgement or agreement made after April 30, 1997, do not have to be included in the recipient’s income. In addition, such payments are not tax-deductible for the payer.
A number of the above-mentioned tax credits and programs apply to parents living alone with their children. If you are in this situation, you are entitled to the amount for an eligible dependant. And if you live in Quebec and are the only occupant of your home, you may be eligible for the amount for a person living alone as well as the additional amount for single-parent families.
In addition to the tax credits mentioned above, there are tax measures specifically designed to help low-income families. For low-income workers with children, there is the Canada Workers Benefit. The amount you receive depends on your family income.
In addition, low- and moderate-income families may qualify for GST/HST credits. Delivered in the form of tax-free quarterly payments, these credits allow you to recover the GST or HST you paid on goods and services you purchased.
In certain situations, tax credits can be transferred from one spouse to the other. This tax strategy can be beneficial if one spouse does not have sufficient income to claim the credits, by allowing the other spouse to use the available credits. It could reduce your family’s overall tax bill.
Keep in mind that a Registered Education Savings Plan (RESP) is an excellent way to save for your children’s post-secondary education.2 The contributions are not tax-deductible, but they do attract government grants.3 Deposited directly into your RESP, the grants supplement your investment. Educational Assistance Payments (EAPs), which are made up of accumulated income and grants, are taxable for the beneficiary when withdrawn. In most cases, students are in a lower tax bracket, which means they do not have to pay any tax.
Julie St-Cyr, Financial Planner
1. For a child born after December 31, 2003, whose family is financially eligible. Eligibility for the Canada Learning Bond is evaluated annually.
2. See our prospectus at kaleido.ca for information about eligible post-secondary programs.
3. Some conditions apply. Check out our prospectus at kaleido.ca.