Feds offer tax relief for Canadian families

Prime Minister Stephen Harper also announced Thursday the government will press ahead with income splitting for families with kids under 18 — a multibillion-dollar Conservative election promise from the 2011 election.

Those potential savings will kick in as soon as Canadians file their taxes in the spring.

The so-called “family tax cut” will allow an eligible taxpayer to transfer up to $50,000 of income to his or her spouse for tax purposes in order to collect a non-refundable tax credit of up to $2,000 per year.

The more tangible monthly cheque from the bolstered universal child care benefit will begin arriving in July.

The benefit increases to $160 a month for kids under six, up from $100. The government is adding a new monthly benefit of $60 for children aged six through 17, effective in 2015. The first child care benefit was promised in the 2006 election and delivered shortly afterward.

The two measures together will cost $3.1 billion in 2014-15 and $4.5 billion in 2015-16.

“Our goal has always been to make sure that Canada is the best country in the world in which to raise a family,” Harper told a campaign-style event in Vaughan, Ont.

“Our government is utterly convinced of one thing: when it comes to the cost of raising a family, Canada’s moms and dads deserve all of the help that we can give them.”

The government is also adding $1,000 to the various limits on the child care expense deduction, which allows taxpayers to claim child care expenses incurred in order to work or go to school.

That measure carries an estimated cost of $15 million in 2014-15 and $65 million in 2015-16.

Harper said the major price tags won’t hamstring the government from its other priorities, including making sure the military is properly funded.

But the initiatives take up enough fiscal room that it will make it difficult for the opposition parties to make their own campaign promises without first committing to scrap one of Harper’s initiatives — in other words, taking away money people are already receiving.

NDP Leader Tom Mulcair criticized the income-splitting plan even before Harper’s event had begun, but didn’t answer directly whether he would roll it back if elected prime minister.

“This is a plan, as (former finance minister) Jim Flaherty said, that will increase inequality in our society,” Mulcair said.

“It will only help a very small minority of people at a time when inequality is increasing in our society after years and years of Liberal and Conservative rule.”

Mulcair has already proposed a national child care program that would ultimately cost $5 billion annually.

Liberal Leader Justin Trudeau has already said he would scrap income splitting if elected. He slammed the program during an event at a commuter train station in Flaherty’s old riding in Whitby, Ont.

“The middle class families who take these trains to and from work every day don’t need to pay to give families like mine or Mr. Harper’s a $2,000 tax break,” Trudeau said.

Harper repeatedly hammered home the message Thursday that the entire suite of measures —he described it as an expanded version of the government’s original income-splitting promise — would benefit all Canadian families with children.

“We know Canadians work hard for their money; we know they work hard raising their families too,” Harper said.

“Under the plan we have announced today, every single Canadian family with children will benefit. Everyone will have more money in their pockets.”

All the three major parties will be vying for middle-class votes, particularly those in the ring of middle class suburban neighbourhoods that all but surround the city of Toronto — precisely where both Harper and Trudeau found themselves Thursday.

The event Thursday had all the trappings of an election campaign rally. Harper stood on a stage surrounded by supporters, speaking without a podium from TelePrompTers placed off-stage. In talk-show host style, he sat down with the two families to chat about the tax breaks.

The initiatives are also being widely hailed within the Conservative caucus. Although Flaherty had reservations about the plan, many other Tories felt strongly that the campaign promise be kept.

“I’ve been fighting for family tax fairness for over 20 (years),” Employment Minister Jason Kenney posted to Twitter. “So great to see this day when families are finally respected as an economic unit.”

The Conservatives made the income-splitting promise during the 2011 election campaign, but it was contingent on the federal books being balanced.

Harper has said the federal deficit in the past fiscal year would be $5.2 billion, a fraction of the $16.6 billion forecast, but insisted there won’t be a surplus until next year.

Earlier this month, the Conservatives doubled the children’s fitness tax credit starting this year — another 2011 commitment that was contingent on the federal books being balanced.

A promise to double the maximum annual contribution limit on tax-free savings accounts to $10,000, the last of the three major surplus-contingent 2011 promises, has yet to be implemented.

Harper hinted Thursday that the tax-free savings expansion would be contained in the next federal budget in the spring.

Related article: Tax credits for kids, Investment Executive, Mid-October 2014.