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TAX CREDITS FOR FAMILIES IN CANADA - New tax credits 2020 - YouTube
Channel: The Independent Dollar
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Hi everyone and welcome back to The
Independent Dollar as we are now in our
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last week of our February Tax Tips &
Update Series. If it's your first time here,
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we make new videos every week on
personal finance topics in a way that is
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straightforward and easy to understand.
In today's video we're going to be
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focusing on some helpful tax credits and
benefits that you could apply for when
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you file your taxes this year,
especially for those of you with children.
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Here's a quick summary of the benefits
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and credits that we'll be looking at
today:
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the Canada Child Benefit, Climate Action
Incentive, Adoption Expenses, Childcare Expenses,
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Eligible Dependent, and finally
the Public Transit Tax Credit. For those
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of you with lower income who reside
Ontario, stick around until the end
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because we're also going to be covering
a brand new tax credit for 2019 that you
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can now apply for as well. There are some
very helpful credits and grants
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available to individuals and families
with disabilities, but this topic is
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quite intensive so we won't be covering
those today. That being said, if that's
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something that you'd be interested in,
then let us know by commenting below and
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we'll make a video specific to that
topic for you. While we won't go into
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extensive detail on each credit, we will
give you a quick overview of what it is
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and what the maximum benefits are for
this year. As we make our way through
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these credits we will refer to them as
either a payment, a refundable, or
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non-refundable credit, and whether or not
they are income tested. The difference
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between a refundable credit and a
non-refundable credit, is how they are
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applied on your tax return.
Non-refundable credits are used to
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reduce your taxes owing. Once your taxes
reaches $0, the credit is now complete
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and any remaining non-refundable credits
are lost. With refundable credits however,
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once your taxes reach $0 any amount
remaining in these credits will be paid
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to you in the form of a tax refund. If a
benefit or credit is income tested, it
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means the amount that you will receive
will be reduced or even possibly
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eliminated at higher levels of income.
Therefore non income tested benefits or
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credits will not be impacted at higher
levels of income and are the same for
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all individuals and families.
First up is the Canada Child Benefit.
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The Canada Child Benefit is an income
tested monthly payment made to families
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to help with the increasing cost of
raising children. This benefit is
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non-taxable and is therefore not
included as income anywhere when you
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file your tax return. The monthly
payments run from July to June which
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means the amount that you made in 2019
will be reflected in your July 20 - June 21
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monthly payments.
For 2020 this is the maximum annual
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amount that you can expect to receive:
for children under the age of six you
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could expect to receive$6,639
at a maximum per child.
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For children between the age
of six and seventeen, the amount is
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$5,603 per child.
It's important to know as well
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that depending on which province you
live in, there may be additional credits
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that you can apply for as a family. In
Nova Scotia for example, there is a Nova
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Scotia Child Benefit and it's paid out
on a monthly basis in addition to the
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federal Canada Child Benefit amount.
Aside from these benefits there is also
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the Canada Learning Bond designed to
help families with lower income. It's a
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free bond that you can apply for simply
by opening an RESP account without even
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having to make a deposit and it's a
great way to start saving for your
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children's education. Now the bond itself
starts at $400 with additional annual
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bonds that you can apply for. We have a
quick video on the topic so I would
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definitely encourage you to check that
out if you haven't had a chance already.
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Next up is a Climate Action Incentive. In
some provinces the federal government is
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charging us a carbon tax on fossil fuel
purchases, like when you fill your car up
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at the gas station for example. To offset
some of this you are able to claim a
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refundable tax credit on your tax return.
New for the 2019 tax year, New Brunswick
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is no longer part of us but if you live
in Alberta you are now eligible to claim this credit.
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The amount you receive is
based on your family size and is not
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income tested. Here is a list of the
provinces that can claim the credit and
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the amount you can expect to receive
based on your family size:
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Now let's take a closer look at adoption
expenses.If you paid adoption expenses
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last year or you're planning to adopt in
the future, it's important to keep a
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detailed record of all of these expenses because
you'll be able to claim them as a
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non-refundable credit on your tax return.
While not all expenses are eligible,
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here's an example of a few that you can
claim: adoption agency fees, court, legal
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and administrative expenses, document
translation fees, and mandatory expenses
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paid for the child's immigration. We'll
include a link in the description to a
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more extensive list from the CRA website.
For the 2019 tax year, the maximum amount
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that you can claim is $16,255 for
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each child under the age of eighteen. Now
let's take a closer look at child care expenses.
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If you kept detailed receipts
of expenses that you paid to take care
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of your children, you might be able to
claim them on your tax return as a
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non-refundable credit. Generally an
expense would be eligible to be claimed
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as long as it was incurred in order for
you to do the following: to go to work
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including managing your own business, to
go to school on a full-time basis
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including high school, or to carry on
research that you received a grant for.
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The maximum amounts that you can claim
for the 2019 tax year are as follows:
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$8,000 for each child born between 2013
or later, $11,000 for each child born in
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2019 or earlier for which you could
claim the disability amount for, and
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$5,000 for each child born
between 2003 and 2012 who has a physical
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or mental impairment but you cannot
clean the disability amount for.
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While these are the maximums, the most
that you can claim will be limited to
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two-thirds of your income, as you can see
here. So as an example, if you made
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$20,000 last year, your total
claim for all children combined will be
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In a household, the lower income
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earner is required to claim the child
care expenses. That being said, in some
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cases exceptions are made; like if the
lower income earner was attending school
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either in a full-time or part-time
capacity,
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or if a lower income earner was unable
to care for the children because of a
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mental or physical impairment whether
that be on a temporary or permanent basis.
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As always, we'll include links in
the description to these exceptions so
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you can see which options match your
individual situation. Next up is the
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Eligible Dependent credit. The Eligible
Dependent Tax Credit is an income tested
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non-refundable credit intended to
provide tax relief for single taxpayers
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who are providing financial support to
the following: dependents children under
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the age of 18, dependents who are
mentally or physically infirm, and then
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parents or grandparents. It is important
to understand though, that in order to
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claim an eligible dependent the person
you are claiming the credit for must be
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fully dependent on you for financial
support. For the 2019 tax year, the
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maximum you can claim is $12,069. I'll include a link
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in the description to schedule five
which you will need to complete in order
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to claim this credit. As well there are
exceptions where this credit cannot be
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claimed which will also include a link
for but the most common exception is
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when you're separated for the entire
year and you're the sole person paying
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child support. In that case, you are
likely ineligible to claim this credit.
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Last but not least is a Public Transit
Tax Credit. The Public Transit Tax Credit
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was a federal non-refundable credit that
allowed you to claim up to 15% of
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the cost of your transit passes. The
credit was eliminated in 2017, but you
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can still go back and make adjustments
on your tax returns or claim the credit
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if you haven't filed those years yet. In
those cases, you can claim the credit on
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fees you paid up until and including the
month of June 2017. There is however a
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public transit credit for seniors
available in Ontario called the senior
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public transit credit. In order to
qualify you would have had to have been
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at least 65 years of age or older as of
December 2018 and the fees paid in the
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2019 tax year. Similar to the cancelled
federal credit,
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it offers seniors up to 15%
of their transit fees paid to provincial
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transit operators in Ontario in the form
of a non-refundable credit.
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For those of you sticking around until
the end for the new tax credit, for the
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2019 tax year the Ontario government
introduced a new non-refundable credit
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designed to help individuals who are
minimum-wage workers called LIFT:
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Low-Income Individuals and Families Tax
Credit. It's possible this is a result of
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the rollback in the minimum wage
increase in the province. The credit is
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intended to ensure that individuals
making minimum wage do not pay
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provincial taxes, as long as you don't
have income from any other source
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apart from your regular job. If you do,
then the benefit is reduced as your
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income rises. The maximum you can qualify
for for this year is $850 or a
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little over 5% of your income, whichever
is less. The credit will be further
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reduced though by 10% of any income in
excess of $30,000 or family net income in
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excess of $60,000 whichever is greater. Now if you
you watched our video on how income is
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taxed in Canada, then you would know that
in Ontario in addition to paying the
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provincial and federal taxes, you're also
required to pay a provincial health premium.
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So while this new credit will
reduce or potentially eliminate
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provincial taxes owing, it will not
reduce that health premium. So for those
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earning over $20,000, it's possible
you'll still have a provincial amount to pay.
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This wraps up our video on some of
the common benefits and credits
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available for families in Canada. Stay
tuned for a final tax video who will be
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breaking down some quick tips on
donation tax credits we'll also share
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some strategies to keep in mind when
claiming them in order to get the best
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return possible. Thank you for watching
and we'll see you back here on Thursday.
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