Stephen Harper announces family tax cut, child care benefit boost

[valve37]

Can you believe Trudeau said he would reverse the income splitting if elected. That should go over like a lead balloon. 

Prime Minister Stephen Harper has announced a new "family tax cut," a version of the family income-splitting promise he made during the 2011 federal election, along with increases to monthly child care benefit cheques and to the amount taxpayers can deduct for child care expenses.

The tax cut comes in the form of a non-refundable federal tax credit — meaning it will have no effect on provincial income taxes — and is capped at $2,000.

Harper made his announcement at a campaign-style event at a community centre north of Toronto. He was joined by Finance Minister Joe Oliver and other Conservative MPs, including several from the Toronto area.

• Harper to introduce scaled-down income splitting for parents
• Child fitness tax credit to be doubled and made refundable
• 5 ways the government could tweak income-splitting promise

The prime minister also announced a boost to the universal child care benefit, to $160 a month per child up to age six from the current $100 per month, and is introducing a credit of $60 per month for children aged six to 17 years.

The new credits go into effect on Jan. 1, 2015, but the government will wait until July to make the first payments and make them retroactive.

That means every Canadian family with children under 18 is set to receive $420 per child just three months ahead of the next scheduled federal election — plus regular monthly cheques as the campaign nears.

"Our goal has always been to make sure that Canada is the best country in the world in which to raise a family," Harper told the assembled crowd in Vaughan, Ont.

"Our government is utterly convinced of one thing: when it comes to the cost of raising a family, Canada's moms and dads deserve all of the help that we can give them."

Changes to 2011 promise, but more money

Harper's 2011 promise on income splitting was contingent on a balanced budget, a goal that will officially be met with next spring's budget and one that many observers believe is already a fact.

The 2011 proposal promised couples the ability to transfer up to $50,000 from one spouse or partner to the other to take advantage of lower tax brackets, a move the government projected would cost $2.7 billion per year.

Thursday's announcement puts a cap of $2,000 on the tax savings for each couple, which will reduce the cost of the program and free up money for the universal child care credit increase.

Those two measures together will cost $3.1 billion in 2014-15 and $4.5 billion in 2015-16.

Harper also announced that the limit on the child-care expenses deduction, which allows taxpayers to claim child-care expenses incurred in order to work or go to school, will be raised by $1,000.

Harper said all the measures being introduced would save Canadian families on average $1,100 a year, but higher-income families with more children will stand to save significantly more than that.

Liberal Leader Justin Trudeau was not impressed with Harper's announcements.

"Income splitting is an idea that will give a $2,000 tax cut to families like mine or Mr. Harper's — that's not good enough," he told reporters during a brief statement in Whitby, Ont., where he was campaigning for next month's federal byelection with Liberal candidate Celina Caesar-Chavannes. He did not offer a counter-proposal.

Thursday's event included Harper interviewing a pair of "average" Canadian families on either side of the stage about the daily challenges of raising a family.

Harper previously announced the federal children's fitness tax credit will be doubled immediately, to a maximum credit of $150 per child from $75, and made fully refundable as of 2015. A refundable credit means parents whose incomes are too low to pay taxes will still get money.

The New Democrats announced a $15-a-day child-care plan earlier this month as part of an ambitious plan to create or maintain a million affordable daycare spaces across the country.

Liberal Leader Justin Trudeau has already vowed he’d reverse a Conservative income-splitting policy if his party forms a government. Trudeau will speak to reporters after Harper's announcement.

http://www.cbc.ca/news/politics/stephen-harper-announces-family-tax-cut-child-care-benefit-boost-1.2...

[disisus]

Just to be clear, Trudeau said he wouldn't reverse the pension income splitting for Seniors.

Trudeau made it clear during an interview with Radio-Canada's Les Coulisses du Pouvoir on Sunday he would not reverse pension splitting for seniors — a separate tax measure the Conservatives introduced in 2007.

Trudeau has already said a Liberal government would reverse the Harper government's decision to raise the age of eligibility for Old Age Security from 65 to 67.

[disisus]

More from the announcement:

– The enhanced Universal Child Care Benefit will replace the existing Child Tax Credit (a non-refundable tax credit that provides relief up to $338 per child under 18) for the 2015 and subsequent tax years. The government says all families will be better off by replacing the Child Tax Credit with the enhanced UCCB. Over a full year, parents will receive up to $1,920 for each child under age six and up to $720 for each child aged six to 17.

– Expanding the Universal Child Care Benefit is expected to help about four million families and cost the government $4.4 billion annually going forward (although $1.8 billion will be saved each year by eliminating the Child Tax Credit).

– The enhanced UCCB payments will take effect in January 2015 but will only start arriving in mailboxes and bank accounts in July 2015 (up to six months of benefits will be included in July payment). Benefits received under the enhanced UCCB will be taxable for the lower-income spouse.

– There will be a $1,000 increase in the maximum dollar amounts claimed under the Child Care Expense Deduction, effective for the 2015 taxation year. The changes will see the maximum expense amount increase to $8,000 from $7,000 per child under age seven, to $5,000 from $4,000 for each child aged seven through 16, and to $11,000 from $10,000 for children who are eligible for the Disability Tax Credit.

– All told, the government expects the new tax breaks will see families with children receive, on average, about $1,140 in tax relief and benefits each year, helping about four million families.

How does income-splitting work?

A couple would gain from income-splitting by being able to transfer taxable income from one spouse in a higher tax bracket to the other spouse in a lower tax bracket.

For example, Canadians pay 15-per-cent federal income tax on the first $43,953 of taxable income, but the tax rate increases to 22 per cent on the taxable income over $43,953 and up to $87,907.

A sole-earner family (with one parent working and one staying at home) earning $80,000 a year would see their income over $43,953 taxed at the higher rate of 22 per cent. But if that family could split the income to $40,000 each, they would both end up in the lower tax bracket and only pay federal income tax of 15 per cent, saving the family money.

However, many Canadians would receive little or no gain from income-splitting for families, including couples in the same tax bracket, single adults living alone, single parents (who have no spouse to split with), childless couples and couples with only grown children.

[art-in-the-making]

No wonder! It is very expensive and it has already been made abundantly clear that 90% of Canadians will not benefit from this plan.

And it will cost $2 or $3 bil - in other words 90% of of Canadians funding tax breaks for the select few. Harperocracy at its finest!

Even Flaherty was against it!

[prior-of-verity*shake-hands-with-your-devil]

Not really much different than his last child care money handout.........buying votes.

All this does is make the rich, richer. 

Taken from a recent study:

At first glance, many will cheer Harper's new offering. After all, who would not want an extra $2,000 a year in tax savings? But don’t applaud yet. So what’s wrong? Well a LOT.
 
First, a few studies now have estimated that up to 85 per cent of Canadians will not benefit one penny from this new policy. It excludes all single working parents and childless couples. At a price tag of $27 billion over the next six years.

Second, why insist on couples having children? What is the relationship between income splitting and children? Well, absolutely nothing. It makes no sense. Zero. Zilch. Nada. So why is Harper insisting on announcing a policy that targets presumably straight couples with children? This raises bizarre questions about his motives.
 
The answer, of course, is rather obvious. This is just a ploy to satisfy all those right-wingers who see a man and a woman with children as the perfect image of the Canadian nucleur family. And if the woman is barefoot and pregnant, and is a stay-at-home mom, even better.
 
But what about hard-working, single adults? Nope, no benefits for you. Childless couples where one has lost his or her job? Move on, nothing to see. Loving gay and lesbian couples? Well, maybe if you have children, but otherwise nope. And since most gay and lesbian couples have no children, is this policy specifically designed to be discriminatory? Oh, and of course, the breadwinner must make an income sufficiently high to be able to transfer $50,000 to his spouse. So you gotta be rich too!

Third, from an economic point of view, this policy makes really no sense at all: it is in fact devoid of any economic meaning. What’s the purpose of it? To put some money back into the pockets of the privileged, that’s all. Yes, they may end up spending it, but don’t count on this contributing to the economic recovery, or to reduce unemployment.

[disisus]

Since this new plan cancels the old Child Tax Credit which even single parents could claim, with this new income-splitting plan which the single parents can't claim, does that mean lower income parents will now pay more ? It was a non-refundable tax credit so they probably didn't get much for it anyways.

If you really wanted to benefit everyone wouldn't you just lower the 15% of federal taxes you pay on taxable income up to $43,953 to 14.5 or 14%?

[valve37]

I'd hazard a guess the responders so far do not qualify for any of this plan or know anyone that will and sound like devout Liberals.

Lots of small children in my area with quite a number of stay at home mothers. Income splitting by my two children and their respective spouses with five grand children between them will benefit quite nicely. Three cheers for the plan!   

[valve37]

I just got a spooky email from the Liberal party. Why I get these every other day is beyound me!

It says:

It’s that time of year again – Halloween’s just around the corner.

And do you know what spooks us the most?

Four more years of Conservative Government!

It could happen if they keep outraising us.

Thankfully there is something you can do about it:

                                   DONATE NOW!ld happen if they keep outraising us.

Thankfully, there’s something you can do about it:

[disisus]

Here's a link that shows how income splitting might benefit you:

http://www.theglobeandmail.com/globe-debate/distribution-of-income-splitting/article21382406/?from=2...

[brandeentertainment]

They must be paying attention to all your conservative loving post on ebay LOLOL.....

[valve37]

Now I'm getting them everyday Brand!

Get on board Art and Leslie.

Friend --

Thank you for everything you do.

Every day our movement for change is growing stronger. And it’s no secret why.

Since this fundraising drive began, 2,533 Canadians have stepped up to donate $140,237 in response to an email like this one.

Friend, now I’m asking you: can you donate $3 and help us reach $350,000 by midnight?

Thanks for chipping in before the deadline.

Justin Trudeau

[davca.8je2v]

Second, why insist on couples having children? What is the relationship between income splitting and children? Well, absolutely nothing. It makes no sense. Zero. Zilch. Nada. So why is Harper insisting on announcing a policy that targets presumably straight couples with children? This raises bizarre questions about his motives.
 
The answer, of course, is rather obvious. This is just a ploy to satisfy all those right-wingers who see a man and a woman with children as the perfect image of the Canadian nucleur family. And if the woman is barefoot and pregnant, and is a stay-at-home mom, even better.
 
But what about hard-working, single adults? Nope, no benefits for you. Childless couples where one has lost his or her job? Move on, nothing to see. Loving gay and lesbian couples? Well, maybe if you have children, but otherwise nope. And since most gay and lesbian couples have no children, is this policy specifically designed to be discriminatory? Oh, and of course, the breadwinner must make an income sufficiently high to be able to transfer $50,000 to his spouse. So you gotta be rich too!

Third, from an economic point of view, this policy makes really no sense at all: it is in fact devoid of any economic meaning. What’s the purpose of it? To put some money back into the pockets of the privileged, that’s all. Yes, they may end up spending it, but don’t count on this contributing to the economic recovery, or to reduce unemployment.

Do you even read things or just open your mouth and see what comes out? No need for stay at home Mom--could be a stay at home dad and get the same benefits (but I guess being sexist like you that would not cross your mind). Also it never said you had to transfer $50,000 you can transfer up to     $50,000  so if 1 parent (no matter the sex) makes $75,000 and the spouse makes $25,000 they can then "split" the income so they both are shown as making $50,000 each and thus paying less income tax. Not sure how as you say "benefits the rich"  but then again not sure I understand where a lot of your idea's come from

[valve37]

I would tell those that qualify or not, and/or know people that do under the plan and who do not agree with the plan, to protest. Protest by not taling advantage of income splitting and send back any cheques you receive in July 2015.

[art-in-the-making]

I would say protest by keeping any cheques and at the ballot box as well, by voting ABC Anyone-But-Con

Valve, did you catch the latest - Harper-Conservative point man on Election Fraud Dean Del Mastro, Convicted of Election Fraud!!! Guilty on all counts. Hollywood writers wouldn't come up with better material for JT's donation campaign!

Imagine - Alberta turfed out Redford over what? an airplane ticket? Maybe Albertans will wisen up to the Harperocracy...

[valve37]

ABC not in the cards, this announcement is a game changer.

Mastro has to go. 

[atvds1210]

LOL at the blanket "it's only for the privilged".   Would have been great when my spouse stayed home for a few years, we were certainly not priviliged and tightened the belt.  

I can argue that tax deductible childcare is more of a benefit for the priviliged.  None of it is that black and white.

Same old political game.  McGuinty brought in Family Day statutory holiday for election purposes, and benefits that were previously efficiently handled as part of filing income tax are now sent by cheque to voters several times a year.  My student kids would have adjustments on their tax filings and a refund - now a lot of that comes in the mail in a series of cheques all year long, and at a dang good expense to crank out all those checks across the province. 

[dipmicro]

Why are people so much against income splitting? Couple where one makes $60k and other makes $30k live $45k/person lifestyle so they deserve to be taxed from $45k/person income, what is wrong with this?

What I find unfair is to tax and tax relief differently based on age or race or religion or gender.

[valve37]

The Cap:

"The wrinkle is that the resulting non-refundable tax credit has been capped at $2,000 per couple.

This means income splitting will provide a meaningful saving opportunity for Canadian families, but not as much as previously thought.

The maximum credit of $2,000 per couple was added after fierce criticism from pundits that income splitting would benefit higher-income families more so than lower-income families.

“The $2,000 cap limits the value of income splitting for higher income families,” says Knowledge Bureau president and MoneySense tax expert Evelyn Jacks. “The couples that will benefit most are those where there’s a large income disparity and they’re making roughly $60,000 to $70,000 in combined income, by our calculations.” At that point couples will hit the $2,000 cap, so those with higher incomes will not get a larger benefit. “It’s not as good as a provision that would allow up to $50,000 of income to be split all across the various income streams, particularly because we are losing the non-refundable Child Tax Credit in the process,” Jacks adds. The average market income for families with children under the age of 18 in Canada is $106,000."

http://www.moneysense.ca/must-read/who-will-benefit-the-most-from-income-splitting

[art-in-the-making]

Couple where one makes $60k and other makes $30k live $45k/person lifestyle so they deserve to be taxed from $45k/person income, what is wrong with this?

The one example you pull sounds reasonable on the surface. That's why it's such a seductive play on tax payers.

But you realize you're also giving a $2k benefit to the $110k+$0k  or $210k+$0k couples ~ where one parent is already staying at home, reading to the kids, taking them around to doctors, dentists, endless social and physical activities, sipping lattes and eating healthy salads in posh cafes.

But what does that do for the $30k+$30 couple or the $30k + $0k single parent - whose kids basically get left to survive with any solution available ? Parents too tired to pay attention to them when they get home. In the case of single parents, what if they are interested in say pursuing a relationship or going to a gym after work? Paying out up to half their salary on daycare and after work then what?

In fact, the greater the household income, the more chance there will be enough difference between the two salaries to get the maximum benefit.

So we the taxpayers are giving an extra $2k to virtually every high income family - where the low income earners - who actually need the help - get nothing under this program.

I agree there is some merit to your $60k/$30k scenario but it still seems pretty sadistic to devise a scheme that actually pays out more the wealthier you are!

[valve37]

Pierre. How do you see the 15% NRTC rate applying to the $2000 max? Wouldn't it have to be added after the % rate to be a full $2000 deduction?