Canadian Taxation

2013 Personal Income Tax Questionnaire – Children

Published On January 6, 2014 | By Joseph (Ken) | 2013 Tax Time Questionaire, Personal tax

child

Today’s article relates to question #3 on the 2013 Personal Income Tax Questionnaire sent to clients.

DID YOU HAVE ANY NEW CHILDREN IN 2013?

As the questionnaire is sent to existing clients, I already have details relating to any children born prior to 2013, and I always ask new clients to bring in a copy of their prior year tax return.

Although the Fraser Institute says “it is possible to raise a child on about $3,000 to $4,000 a year, and even less if parents only include necessary expenses and are careful with their dollars.“, very few people will find they can keep their costs that low. The good news is that there are tax benefits, credits and deductions available to help offset costs related to raising a child.

Here is a list of a majority of them with some commentary.

1) Child Tax Benefit

With the Child Tax Benefit, eligibility is based upon total FAMILY income (so in the case of a two parent family, it is their combined income), province of residence and number of children.

There are three parts to this benefit: Basic Benefit, National Child Benefit Supplement and Child Disability Benefit.

The Basic Benefit is available to families that earn up to about $116,000 a year, though the amount of the benefit will decrease as the family earns in excess of about $44,000.

The National Child Benefit Supplement is available to families that earn up to about $44,000 a year, though the amount of the benefit will decrease as the family earns in excess of about $26,000.

The Child Disability Benefit is similar to the Basic Benefit but only available to those families with a disabled child.

2) Universal Child Care Benefit

All families, regardless of income, are eligible to receive $100 each month per child under six.  Each family needs to apply for the Child Tax Benefit, in order to qualify for the Universal Child Care Benefit.

To apply for both benefits, use the Canada child benefits application.

Unlike the Child Tax Benefit, the Universal Child Care Benefit is taxable and must be claimed as income by the parent with the lower income.

3) Equivalent-to-spouse credit (Eligible dependent amount)

The equivalent-to-spouse credit is available to single parent families – those who file as single, divorced or separated. 

Single parent families are allowed to claim ONE child as an “eligible dependent” UNLESS they pay child support for that child – you cannot claim an equivalent-to-spouse credit if you pay support for that child.  

It is possible to claim this credit even if the child did not live with or wasn’t supported by the parent for the entire year BUT only one parent can claim the credit for that child (*as noted in my past article on marital status, if the parents of the child do not agree in advance as to who will claim the deduction, the CRA will disallow both claimants).

4) Child Tax Credit 

Not to be confused with the Child Tax Benefit (noted above), the Child Tax Credit is a non-refundable credit available to families for each child under 18. The tax credit is $2,234 for 2013 and can be claimed by either parent (but not both).

5) Adoption expenses

In the year that an adoption is made final, a family can claim a deduction fo adoption expenses incurred, up to a total of $11,669.

6) Child-related medical 

For any children up to the age of 18, a parent can claim medical expenses, if not reimbursed by extended insurance coverage.

In addition, families can claim medical expenses incurred in an attempt to get pregnant (in-vitro), medical expenses during the pregnancy (pre-natal care) and medical expenses during the birth (hospital room).

7) Child Care Deduction

Child care deduction is available to a maximum of $7,000 for each child under seven and $4,000 for each child between seven to sixteen years. It is important to be aware that usually the LOWER income spouse has to claim the amount and the amount can only be claimed if the parent incurred the expense to work, carry on a business or go to school.

8) Children’s Fitness Credit and Children’s Arts Credit

Parents are able to claim up to $500 annual per child, under the age of 16, for any fitness and/or art activity (combined credit of $1,000).

9) Public Transit Amount

For children under 19, a parent can claim a deduction for public transit.

If you have any questions about anything, please feel free to email me at info@josephlea.com or post a comment below.

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About The Author

Joseph (Ken)
(Ken) is a Registered Public Accountant with over 25 years of public practice experience in the accounting profession. Ken specializes in accounting information systems, taxation and financial reporting.

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