Tax tips for parents

Why read this?

• › You are a new parent;
• › You have a child who has come to live with you;
• › You have a child and are a new Canadian resident.

What to do?

• Apply for and report benefits Use the RC66 Canada Child Benefits Application to apply for the Universal Child Care Benefit, the Canadian Child Tax Benefit and the Child Disability Benefit, or apply online using CRA’s My Account. You can also apply when you register a birth.
  • For heterosexual couples, CRA considers the mother the primary caregiver. If that’s you, you’ll receive all social benefits. However, the lower-income parent must report the income on his or her return, says Cheryl Mont, accountant at Harris and Wright LLP.
  • Gay parents can designate a primary caregiver in their application.
• The Universal Child Care Benefit is worth $160 a month per child under six years of age or $60 a month per child between 6 and 17 years old, and it’s taxable income. In February, you will receive CRA’s RC62 Universal Child Care Benefit Statement.
  • The lower-income partner reports the UCCB, says CRA. Put the amount in box 10 of the statement on line 117 of the return.

Claim expenses and credits

Tip

You may be able to transfer any unused amount to your partner. Complete line 326 of the return and Schedule 2, Federal Amounts Transferred from Your Spouse or Common-Law Partner to determine the amount.

Separation, divorce and shared custody

• If parents share custody, and the child lives with each equally, CRA may consider both as primary caregivers. Each parent will get half the benefits payment they’d be entitled to had they been taking care of the child full time.
• If you are getting separated or divorced, notify CRA using form RC65 Marital Status Change. CRA sends benefits to the primary caregiver. It will re-calculate your payments when it’s notified of the change in marital status. The former secondary caregiver must apply for benefits online or using the Canada Child Benefits Application.
• To designate a father as the primary caregiver, attach a signed note to the benefits application from the female parent stating the father is primarily responsible for the children.

• Childcare (line 214)
  • Claim the expenses you or your partner paid for childcare while at work, school or doing research.
  • The child must be under 16 at some point during the year. (If he or she’s disabled, the age limit does not apply.)
  • Attach Form T778, Child Care Expenses Deduction to the return.
  • The lower-income partner must claim expenses, according to the Income Tax Act, unless that partner is in school, suffering a long-term illness, in prison, or was temporarily separated from his or her partner.

  TIP

  A single parent can elect to have all of the UCCB income taxed in one of his or her children’s hands, says Mont. This shelters it under the child’s basic personal exemption.

• Children’s Fitness Amount (Schedule 1, line 365) and Children’s Arts Amount (Schedule 1 line 370)
  • You can claim up to $1,000 per child in fees for sports and art programs.
  • The child must be under 16 (18 if disabled) at the beginning of the year.
• If your child is disabled, transfer the child’s unused Disability Amount to your return.
  • Use line 316 of the federal worksheet to calculate the child’s transferable disability amount.
  • Then, use line 318 in the worksheet to calculate how much to transfer to you.

Sources: Cheryl Mont, accountant at Harris and Wright LLP, and CRA.