4 easy ways for Canadian parents to pay less tax for 2012

02/24/2013

Thank you to  David Field from WSC Insurance Group for showing us how our families can save up to $531.25 this tax season!

The Canadian Federal Government offers many tax credits for parents for this 2012 year tax filing. These are not deductions that reduce your overall income; these tax credits are applied only to the amount of tax you owe. Therefore, it does not reduce your taxable income or move you to a lower tax bracket. For parents earning enough income to have taxes owing for 2012, these tax credits could save one parent up to $478.65 per child in taxes ($531.25 for parents in Ontario). The following tax credit numbers are for 2012 tax filings only and only one parent may claim each of these credits.

Children under the age of 18

For each child in your home under the age of 18 a tax credit of $2,191 may be claimed. This results in a maximum tax savings of $328.65 ($2,191 x 15%) per child.

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns360-390/367-eng.html

Children’s fitness credit

This credit applies to each child under the age of 16 (as of January 1, 2012). A tax credit of up to $500 per child is available for eligible fitness expenses paid for that child. That equals up to $75 ($500 x 15%) in tax savings per child per year. To qualify these fitness programs must include a lot of physical activity, be supervised and must be either 8 weeks (minimum one session per week) or 5 consecutive days. Expenses such as food, accommodation and travel do not apply. It is important to receive a proper receipt from qualify fitness programs for your child.

http://www.cra–arc.gc.ca/tx/ndvdls/tpcs/ncm–tx/rtrn/cmpltng/ddctns/lns360-390/365/menu–eng.html

Children’s Arts tax credit

This tax credit works much like the Children’s fitness credit where a tax credit of up to $500 per child (under age 16) is available on expenses incurred for artistic or cultural activities (including literary arts, visual arts, performing arts, music, media, languages, customs and heritage). Again, that means up to $75 ($500 x 15%) in tax savings per child per year. To qualify, these programs must be supervised and have a duration of 8 weeks (minimum one session per week) or 5 consecutive days. Expenses such as food, accommodation and travel do not apply. Just like with the Children’s fitness credit it is important to have a proper receipt from the qualifying arts program for your child. http://www.cra–arc.gc.ca/tx/ndvdls/tpcs/ncm–tx/rtrn/cmpltng/ddctns/lns360-390/370/menu–eng.html

Children’s activity tax credit (Ontario residents only)

This tax credit works much like the others but it is only for those parents living in Ontario. It is a cross between the fitness and arts credits listed above. So if you qualify for either the Canadian Federal Government’s fitness or arts tax credit, you likely qualify for this Ontario children’s activity tax credit. This credit allows parents to claim up to $526 in expenses, providing a tax credit of $52.60 per child. There is a detailed list of activities that qualify. Again, the program must be supervised and have a duration of 8 weeks (minimum one session per week) or go 5 consecutive days. As with the similar federal tax credits expenses such as food, accommodation and travel do not apply.

http://www.fin.gov.on.ca/en/credit/catc/index.html

For more information, please visit David’s website.  For an article on Child Care Deductions click here.