Under certain conditions you may quality for the amount for an eligible dependant. This includes those separated/divorced during the year or who pay child support. (Shutterstock/Rawpixel.com)
With minimal enhancements to federal tax deductions for families this year, it’s crucial to maximize the benefits available in your tax return. Here are a few incentives that are often overlooked.
1. Non-refundable Canada caregiver credit. You could originally claim this credit by merely living with a person aged 65 or older, regardless of whether they had an impairment, says Josée Jeffrey, a financial planner at Focus Retraite et Fiscalité in Montreal.
“Since 2017, you don’t need to live with the person,” he explains. “However, they must rely on you because of a prolonged physical or mental impairment, for regular and consistent support with some or all of the basic necessities of life, such as food, shelter and clothing, as well as help with their daily activities.”
Unless the dependant is already entitled to the disability tax credit, the CRA may ask for a signed statement from a medical practitioner. “Today, you don’t have to live under the same roof, but the dependant must need daily support, which may be harder to prove,” adds Jeffrey.
Also, if you claim this credit for a dependant 18 years of age or older, no one else can claim it as well. The credit can also be claimed for a spouse.
2. Amount for an eligible dependant, including those separated/divorced during the year or who pay child support. “If you were a single parent at any time during the year, no matter for how long and meet other conditions, you can claim the amount for an eligible dependant,” says Jeffrey. “People often think they can no longer claim this amount the year they become common-law partners—that is, after living with a partner for 12 consecutive months. But they can. They can also claim the credit the year the dependent child turns 18.”
3. Medical expenses are generally eligible for a non-refundable federal tax credit provided that the amount paid is in excess of the lesser of $2,302 or 3 per cent of net income. For lower income earners, they may also qualify for a refundable credit. Note that travel expenses for getting medical services at least 40 kilometres from your home can be claimed for you and your children if conditions are met.
4. There are also the benefits of pension income splitting. Jeffrey explains: “Imagine a retiree whose spouse still works and, despite having a good income, earns less than their retired spouse. People think there’s no advantage to transferring pension income to the spouse. And yet, this isn’t true. First, the couple benefits from having the transferred income taxed at the spouse’s lower marginal rate. Second, the couple stands to double up on a tax credit on eligible pension income. Even though the spouse doesn’t directly earn that pension income, she may be entitled to an additional credit amount of up to $2,000.”
MORE TAX FILING TIPS
Before you dive into your tax return, don’t forget to look into the provincial measures that apply to you. You can also read some of our tips on filling out tax returns and learn how new tax rules will impact returns for the 2018 income year and plans for 2019.