Immigrate to Canada to learn about living in Canada: On December 8, 2014, the Canada Revenue Agency (CRA) explained some adjustments for the 2014 tax filing. The "Canadian Taxpayers Federation" published a report stating that due to the federal government's introduction of the "Family Tax Cut" (FTC) program, along with the increase in the "Universal Child Care Benefit" (UCCB), many families will be able to reduce their tax burden significantly in the new year. Aaron Warwick, a national director of the Federation, stated that the tax savings could be substantial, ranging from hundreds to over $2,500, allowing families to reduce their tax liabilities; however, single taxpayers and those without children under 18 will have to pay more taxes due to increased contributions to "Employment Insurance" and the "Canada Pension Plan" starting in 2015.
Additionally, as a tax resident of Canada, if you have income earned overseas and have paid taxes on it, due to the tax treaty between China and Canada, the taxes paid in China are recognized by Canada. However, after two years, you may need to pay taxes on your overseas income in full. For example, if you earn CAD 100,000 overseas, currently you only need to supplement with CAD 2,000-3,000. If, after two years, the taxes paid overseas are not recognized, you may need to pay CAD 30,000-40,000 in taxes. This change is particularly important for those who have little or no income in Canada but have high salaries or businesses overseas, serving as a significant reminder. Mr. Jiao Lianhai mentioned that this proposal has already received many inquiries, indicating the strong reaction from the Chinese community regarding potential revisions to this policy.
The detailed changes include the following 11 items:
1. Increase in the Children’s Fitness Amount: The tax credit for each child under 16 years of age has increased from CAD 500 to CAD 1,000 per child.
2. Search and Rescue Volunteer Amount: A refund of up to CAD 3,000 can be claimed.
3. Family Tax Cut: Starting from the 2014 tax year, eligible families with children under 18 can receive a tax reduction of up to CAD 2,000.
Income splitting allows couples with children under 18 to file separately, enabling the higher-earning spouse to transfer a portion of their income (up to CAD 50,000) to the other spouse’s tax return, with a maximum tax savings limit of CAD 2,000 per couple. For example, in Ontario, if one spouse has no income while the other earns over CAD 130,000, the marginal tax rate reaches 46.41%. By transferring CAD 50,000, the net income of the high-income spouse decreases, while the spouse receiving this income remains in a lower tax bracket, thus achieving dual tax savings.
Another benefit of filing separately is that the spouse who previously had no income can now start earning income, allowing them to begin contributing to pensions and Registered Retirement Savings Plans (RRSP), helping both partners build a more comfortable retirement. If the income disparity between spouses is not significant, they will not benefit from this preferential policy.
4. Universal Child Care Benefit (UCCB): Starting January 1, 2015, the monthly benefit for children under 6 will increase from CAD 100 to CAD 160, and children aged 6-17 will receive a monthly benefit of CAD 60. This subsidy will take effect from January 1, 2015, but parents will have to wait until July 2015 to see changes in their child benefit payments.
The amount of tax-deductible expenses for children attending kindergarten has increased: previously CAD 7,000 for children under 6, now it is CAD 8,000; for children over 6, it has increased from CAD 4,000 to CAD 5,000.
5. Emergency Services Volunteers: The CAD 1,000 tax exemption policy has changed.
6. Adoption Expenses: The deductible adoption expenses per child have increased to CAD 15,000.
7. Medical Expenses: Some disability tax credit costs paid as wages, or costs incurred to manage severe diabetes services, can now be claimed as medical expenses.
8. Investment Tax Credit: The mining development tax credit policy has been extended, and flow-through share agreements reached before April 2015 will also qualify for tax credits.
9. GST/HST Credit: Individuals no longer need to apply separately for the GST/HST credit; when filing their tax return, the Canada Revenue Agency will determine eligibility based on reported income. If there is a spouse, only one of the two can receive the GST/HST credit, which will be paid to the person assessed first, with the amount remaining unchanged.
10. New Online Mail Service: Starting in February 2015, when you file your 2014 tax return, you can register for this new service by providing your email address, allowing you to access your tax records anytime and anywhere. You can also choose to receive email notifications when your Notice of Assessment or Reassessment is completed.
11. Starting February 9, 2015, the Canada Revenue Agency will launch a mobile application (APP) for individual taxpayers, facilitating access to tax records through mobile devices.