# single vs. common-law: what changes?



## JC NewGrad

my partner and i became common-law as of july 2009, so this is the first time we will be filing our taxes as common-law.

some friends have told me that when they started filing as common-law they lost out on various tax credits and received smaller returns than they did the previous year, despite making the same amount of money, having the same amount taken off, etc.

i do not plan to file as single, because i don't think it's worth the risk to have the CRA on my tail, but i'm just curious as to what people's experiences have been, tax wise, when going from single to common-law.

i know that our entitlement to the GST rebate will be affected, but is there much else?

if it's of any use: i make $43,000 (gross) per year and my partner is in school and only makes about $18,000 (gross) per year.

thanks.


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## OptsyEagle

If I were you, I would file as single. That is not to say that you are filing appropriately but the bottom line is, unless you wanted to make a spousal RRSP contribution, then you will end up either paying more tax and/or losing out in other benefits, by filing as married.

CRA defines common law as entering into a conjugal relationship. Since I doubt CRA plans to enter the bedrooms of Canadians to confirm this situation and until they equalize the tax system more fairly, if I didn't have a ring on my finger, my wife would not be listed on my tax return.


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## MoneyGal

There is no "file as single" or "file as common-law" in Canada. Every tax return is completed for an individual. However, you indicate whether you are single/divorced/married/widowed/common-law on your tax return as well. 

Some tax credits are calculated on the basis of household, not individual income. These include the GST credit (as you've noted), as well as child and family tax benefits (only the ones that are income-sensitive, such as the Canada Child Tax Benefit and not the UCCB). 

In addition, some other programs will use net family (=household) income to calculate various entitlements (for example, subsidized daycare in my city, Toronto). 

Unless you have children, the single/common-law/married distinction will not have a big impact on your taxes. And if you have children, and still live together, but do not indicate that you have a spouse on your tax forms, and one parent files including the children as dependents but does not include their spouse's net income on their return, CRA will match up the returns (eventually) by address.


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## JC NewGrad

thanks for the clarification, MoneyGal.

what i really meant was filing, indicating common-law vs. filing, indicating single.

in regards to optsy eagle's suggestion: that's not really a route we'd like to go. regardless of whether CRA would clue in now, we plan on having children together and indicating single now would just cause problems with our tax returns down the road.


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## MoneyGal

Right. There's a spot on the tax return where you indicate if your marital status changed in the year and if yes, when. If you do this truthfully you never have to remember what you said from year to year.


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## Four Pillars

Does anyone have any examples of the "marriage/common law" tax in Canada? (ie what deductions would you lose) I know it exists in the US but I didn't think it happened here.


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## MoneyGal

This could get pretty political pretty quickly. The debate usually comes out in discussions of two hypothetical families with the same gross income - but in one family, the income is earned by two adults, and in the other family, the income is earned by one adult. 

This issue seems to have lost steam over the years, but I personally am very interested in tax and family formation / tax and families. 

Here's a brief article (and to prove I quote agnostically from both the right and the left, it's from the Fraser Institute):

http://www.fraserinstitute.org/Comm...e a Marriage Tax Penalty~-Mar04ffmarriage.pdf

I have an enormous (really) amount of background info on this issue...it's one of my personal (not professional) areas of interest.


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## MoneyGal

That was a pretty incoherent post from me. What I meant to say was, there are those who believe that Canada has a "marriage penalty." The Fraser Institute has (cutely) named it the "Leave it to Beaver" penalty. 

The argument is that families with one income-earner pay more tax than families with two income-earners - and that this situation unfairly penalizes families with stay-at-home moms (I presume moms, using "Leave it to Beaver" as your cultural reference doesn't really invoke stay-at-home dads). 

This issue is really interesting to me. Ultimately, Canada's tax system is built on a series of principles, one of which is progressive taxation (people with more income pay more tax), and another is family-formation-neutrality (tax systems should not encourage or discourage particular family forms). The counterargument to the Fraser Institute is typically not that people with the same gross income should pay the same amount of tax, but that people in like situations should be treated similarly. 

I would love to discuss this issue in more depth and hope others are interested too. 

As an aside, I note that more than 70% of women with children under the age of 6 (I'm one of them, BTW) work outside the home. However, hard to know whether this is by choice or necessity...so I'm not sure one could effectively argue that fully 70% of people in a given category would make different choices if the tax system changed.


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## Four Pillars

That is a good topic - much better than the original one. 

I honestly don't know if a single person should pay the same tax as a couple that make the same combined income. 

When I was single I used to get annoyed by this and I always thought that it would be better once I got married. My taxes would stay the same but there would be more income. Of course now my wife is a stay-at-home mom so I'm back in the same situation. 

I have thought about this a lot and I really can't think of any good reasons why a single person or couple/family with one income should get a tax break just because there is only one income.

This issue is more relevant for families where there is one fairly high income (that can support a family) and one person decides to stay home (for a few years at least). This doesn't affect low income families.

I guess you could argue that it would be good social policy to give single income families tax breaks to encourage 1 person to stay home but that would be opinion.


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## brad

MoneyGal said:


> The argument is that families with one income-earner pay more tax than families with two income-earners - and that this situation unfairly penalizes families with stay-at-home moms


While it may be unfair, I guess the pertinent question (which you touched on further down in your post) is, is it a disincentive? I tend to be skeptical of the idea that tax policies like this have a big effect on behaviour; I doubt the tax penalty enters into the equation (or at least is not a deciding factor) for most couples considering whether they can afford to make the switch to one income.

In my own life, I find that the only tax-related disincentive that affects my behaviour is that I'm less willing to take on projects that bring in extra money because I know they'll be taxed at my combined marginal rate, which is 48.2% (I'm in Quebec). So if my employer dangles a $1,000 publication bonus in front of me, I probably won't bother to do the extra work to write up a publication because I know I'll only get a little more than $500 out of it.

But the marginal tax rate doesn't, for example, discourage me from saving money even though the interest is taxed at the marginal rate. Similarly, I think that the "stay at home mom tax" is unlikely to discourage moms from staying at home. I think they'll make that decision for other reasons, and while the tax penalty isn't fun I have a hard time believing it would act as a barrier--except possibly in a few cases where people would only just barely scrape by on one income.


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## OptsyEagle

Four Pillars said:


> I have thought about this a lot and I really can't think of any good reasons why a single person or couple/family with one income should get a tax break just because there is only one income.


FP. It is not that I am suggesting that a one income earner should get a tax break, I am suggesting that a one income earner should not pay more tax as a family then a family with two earners, earning the same family income. If you want to call it a tax break, fine, I call it tax fairness.

As for the OP comment about having children. I doubt he will be the first person to have what starts out as a friend, who turns into a significant other. I applaud him on wanting to do things above board. I do as well, but only when it is fair. When it is not, I do everything I can to make it fair. But again, I will appreciate his contribution to our tax burdens, if that is the route he/she chooses.


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## OptsyEagle

By the way, once you have children, you are legally common law. CRA doesn't need to go into your bedroom to figure out whats happening there, once the little guys starts coming out of the woodwork.


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## CanadianCapitalist

JC NewGrad said:


> thanks for the clarification, MoneyGal.
> 
> what i really meant was filing, indicating common-law vs. filing, indicating single.
> 
> in regards to optsy eagle's suggestion: that's not really a route we'd like to go. regardless of whether CRA would clue in now, we plan on having children together and indicating single now would just cause problems with our tax returns down the road.


I wouldn't go that route either. Yes, you might lose some transfer payments like the GST credit but, hey, that's how it is.

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/prsnl-nf/mrtl-eng.html?=slnk


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## Four Pillars

OptsyEagle said:


> FP. It is not that I am suggesting that a one income earner should get a tax break, I am suggesting that a one income earner should not pay more tax as a family then a family with two earners, earning the same family income. If you want to call it a tax break, fine, I call it tax fairness.
> 
> ...


Fair enough (no pun intended) - I guess I used the term "tax break" since I'm assuming that it would mean less taxes for a single earner family which implies a break. But you are right - it's just a different way of applying taxes. Ie applying taxes based on family income rather than individuals.

The only way I could see something like this being implemented would be to tax households instead of individuals and raise the tax brackets so that the total amount of tax collected would have to remain constant.

There is no way this change could be made otherwise unless the government really cut back some services.

The net result would be that a single income family (like mine) would pay less tax, but it would be more than the amount of tax paid now by a dual-moderate-income family with the same family income. 

Similarily, the tax paid by a dual-moderate-income family would go up.

This would make it more "fair" and you would end up with a lot of unhappy dual-earners and a bunch of single income families that are somewhat happy to pay less tax but the tax reduction might not be high enough to make much of a difference.


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## CanadianCapitalist

Four Pillars said:


> This would make it more "fair" and you would end up with a lot of unhappy dual-earners and a bunch of single income families that are somewhat happy to pay less tax but the tax reduction might not be high enough to make much of a difference.


I remember reading somewhere that 70% of families are dual income. That's why addressing this issue might be a non-starter right now. The single-income families might be happy but you also have twice the number of seriously unhappy dual-income families. And unhappy voters are more likely to vote against you than happy voters are likely to vote for you.

PS: Just to be clear, I totally agree with the view point that the tax system is unfair to single-income earners and we are a dual income household.


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## OptsyEagle

And those points are really my points. The system as it is, is unfair. The problem in getting it changed is all political. A dual income family may agree that our system is unfair, but I doubt they think they should pay more tax to in order to fix it. As we know, that is the only way to fix it, since we can't really cut the single earner's taxes without growing our deficit or cutting other services that will inevitably annoy other voters.

Soooooo... our political leaders do nothing, since being unfair to a few is better than angering the many. Democracy at work. That being said, I lived with my current wife for 6 years before I married her and I can tell you I had no problem declaring myself single for those 6 years. 

Now as one poster indicated, our unfair tax system did not keep me from getting married. My wife is worth a lot more than a few dollars in extra tax, but that in itself does not make the system fair.


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## Four Pillars

OptsyEagle said:


> And those points are really my points. *The system as it is, is unfair*. The problem in getting it changed is all political. A dual income family may agree that our system is unfair, but I doubt they think they should pay more tax to in order to fix it. As we know, that is the only way to fix it, since we can't really cut the single earner's taxes without growing our deficit or cutting other services that will inevitably annoy other voters.....


But why exactly is it unfair? In a progressive tax system the $100k income earner will pay more than twice as much taxes as someone who earns $50k. Are you really saying that a flat tax is more fair?


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## CanadianCapitalist

OptsyEagle said:


> And those points are really my points. The system as it is, is unfair. The problem in getting it changed is all political. A dual income family may agree that our system is unfair, but I doubt they think they should pay more tax to in order to fix it. As we know, that is the only way to fix it, since we can't really cut the single earner's taxes without growing our deficit or cutting other services that will inevitably annoy other voters.


Not really. If the Government is running a surplus, they could implement some sort of income splitting and not take something away from dual income families. Of course, the point is now moot since we don't have a surplus.

I'm wonder if full income splitting should be allowed would have unintended consequences. It might encourage more people to work less resulting in lower labour participation rates, which might have undesirable economic effects. I haven't thought this through entirely, so don't bite my head off here.


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## andrewf

For those who think that it is unfair that a dual-income family pays less tax than a single-income, two-parent family with the same household income, consider that the other spouse being able to stay at home is worth something, either in quality of life or in terms of 'home production' in childcare, home renovations, household work, etc. Thus, a two parent, single income family is actually 'better off'/wealthier than the dual-income family with the same income. You're all supposing that there is no value in the other spouse staying at home.

Now, if we want to talk about fairness, what about single-income, single-parent families? Seems to me that this group is genuinely treated unfairly.


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## ashby corner

brad said:


> So if my employer dangles a $1,000 publication bonus in front of me, I probably won't bother to do the extra work to write up a publication because I know I'll only get a little more than $500 out of it.
> 
> .


I'd look at is as "yeah, I'll take 500 bucks"


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## OptsyEagle

Four Pillars said:


> But why exactly is it unfair? In a progressive tax system the $100k income earner will pay more than twice as much taxes as someone who earns $50k. Are really saying that a flat tax is more fair?



It is the fairness between a single earning family where one person earns $100,000 per year versus a dual income family where each earns $50,000. Why should the 2nd family get to keep so much more money? How is that progressive?


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## OptsyEagle

CanadianCapitalist said:


> Not really. If the Government is running a surplus, they could implement some sort of income splitting and not take something away from dual income families. Of course, the point is now moot since we don't have a surplus.
> 
> I'm wonder if full income splitting should be allowed would have unintended consequences. It might encourage more people to work less resulting in lower labour participation rates, which might have undesirable economic effects. I haven't thought this through entirely, so don't bite my head off here.


Even if we had a surplus, that money should go to pay down debt. That is another pet peeve of mine, in that whenever a new politician once to offer a benefit to some group, they just do it and don't do anything to pay for it. My opinion here is simply that equal family income should pay equal tax. That either means lowering one groups taxes or raising the other. 

As for having one spouse stay at home, that is a personal decision that should not require them to pay extra tax. Tax should be based on income. That same family could have more take home pay, but have decided to forego this for the benefits a stay at home spouse can provide. I believe if they make this decision, they should forego the take home pay the new job would provide, but I do not think they should bear a larger proportion of our country's costs and obligations.


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## OhGreatGuru

andrewf said:


> Now, if we want to talk about fairness, what about single-income, single-parent families? Seems to me that this group is genuinely treated unfairly.


Actually, no. The single-income, single-parent gets to claim $10,320 credit for a child under 18 on line 305 (equivalent to a spouse) But if said parent marries or admits to being in a common-law relationship, they lose that credit, and won't get a spousal credit unless their spouse is making less than $10,320. 

It's even worse if 2 single parents get together. They each lose the $10,320 Line 305 credit, only one is eligible for a spousal credit, and only if the other spouse makes less than the credit amount.


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## OhGreatGuru

This is one of the few times I agree with a Fraser Institute study. The discrimination of our tax system against single-earner families is one of my favourite hobby horses. Making it increasingly difficult for families to raise children on one salary has had huge socio-economic consequences, including: family sizes; increasing demand for publicly subsidized day care; demands for all-day kindergarten & junior kindergarten (at public expense); unemployment rates, etc.

I wish it was at least "family-formation-neutral". Although I think a social policy case could be made for making it more postive than neutral. But right now I think it is negative.

PS. I was actually surprised (and disappointed) to see the US comparison. I thought their joint tax return system was supposed to have addressed this, and hoped for a similar system in Canada. Maybe it did once, but "bracket creep" has not kept pace with inflation.


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## Four Pillars

andrewf said:


> For those who think that it is unfair that a dual-income family pays less tax than a single-income, two-parent family with the same household income, consider that the other spouse being able to stay at home is worth something, either in quality of life or in terms of 'home production' in childcare, home renovations, household work, etc. Thus, a two parent, single income family is actually 'better off'/wealthier than the dual-income family with the same income. You're all supposing that there is no value in the other spouse staying at home.
> 
> *Now, if we want to talk about fairness, what about single-income, single-parent families? Seems to me that this group is genuinely treated unfairly.*


I agree - I think that is a much more serious issue than reducing taxes for high income earners who have a spouse that chooses to stay home.


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## Four Pillars

OptsyEagle said:


> It is the fairness between a single earning family where one person earns $100,000 per year versus a dual income family where each earns $50,000. Why should the 2nd family get to keep so much more money? How is that progressive?


I really don't know. That's why I haven't been able to figure out what my opinion is on this issue.


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## Four Pillars

OhGreatGuru said:


> This is one of the few times I agree with a Fraser Institute study. The discrimination of our tax system against single-earner families is one of my favourite hobby horses. *Making it increasingly difficult for families to raise children on one salary* has had huge socio-economic consequences, including: family sizes; increasing demand for publicly subsidized day care; demands for all-day kindergarten & junior kindergarten (at public expense); unemployment rates, etc.
> 
> I wish it was at least "family-formation-neutral". Although I think a social policy case could be made for making it more postive than neutral. But right now I think it is negative.
> 
> PS. I was actually surprised (and disappointed) to see the US comparison. I thought their joint tax return system was supposed to have addressed this, and hoped for a similar system in Canada. Maybe it did once, but "bracket creep" has not kept pace with inflation.


But why should the gov't be taking steps to make it easier to raise kids on one salary? Is that some sort of right? Personally, I think it is a luxury when a family has the option of having one person stay home (if that is what they want).


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## MoneyGal

ISTM this is the "family formation" issue. For better or for worse, Canada taxes individuals, not households. If we moved to tax households, we would (inadvertently and ... vertently) encourage the formation of particular household forms in order to capture higher tax benefits. Or at least this is the argument I have read when I've probed this issue over time. And Canada's tax policy is explicitly family-formation neutral. 

Yes, some social benefits are delivered to households and based on net family income. However, in all cases (child tax benefits and the GST/HST rebate), these are delivered to lower-income households exclusively. The only other significant transfer payment - OAS - is *not* based on household income but on individual income. 

There are also ways to equalize household income by income-splitting. Not many, and they don't produce a huge result when one spouse has significant income and the other spouse has none, but you can do spousal loans, spousal RRSPs, and the self-employed have lots more latitude to employ spouses.


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## OhGreatGuru

_But why should the gov't be taking steps to make it easier to raise kids on one salary? Is that some sort of right? Personally, I think it is a luxury when a family has the option of having one person stay home (if that is what they want)_

As a start, at least don't penalize them for doing so, which the current tax system does. All of our family law has moved in the direction of considering married and common-law couples as a single economic unit. But our Income Tax Act is desigend to penalize single-earner families making he same gross income as two-income families.

As for why the tax system should make it easier to raise kids on one income, there are a whole lot of answers. But dealing with only the economic:
The parental cost of Day care is subsidized through the income tax system;
The availibility of affordable day care is subsidized hugely by provincial governments;
Junior kindergarten is Universal Day Care provided entirely at taxpayer's expense;
Full-Day senior kindergarten is Universal Day care provided entirely at taxpayer's expense; (The arguments that they are needed for "education" reasons are a crock, based on studies done on urban slums in the US where the kids really were better off in school than at home)
After-school care is still needed for most of these kindergarten orphans if both parents are working.

So, instead of making it more economical for families to raise their own children, we are headed in the direction of paying professional salaries for universal day care at public expense. This will be more expensive, not less. And it is day care on the basis of "want", not need. It buys votes, but doesn't concentrate our tax dollars on those who really need it. I see no reason why I should pay higher taxes so a double-income family can pursue a yuppie lifestyle. 

Make it more affordable for families to raise at least pre-school children on one income, and you reduce the need for subsidized day care to a manageable amount. And then we can afford to subsidize those who really need it.

Don't even let me get started on the long-term social costs of institutionalizing our children too early.


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## Four Pillars

OhGreatGuru said:


> _But why should the gov't be taking steps to make it easier to raise kids on one salary? Is that some sort of right? Personally, I think it is a luxury when a family has the option of having one person stay home (if that is what they want)_
> 
> As a start, at least don't penalize them for doing so, which the current tax system does. All of our family law has moved in the direction of considering married and common-law couples as a single economic unit. But our Income Tax Act is desigend to penalize single-earner families making he same gross income as two-income families.
> 
> As for why the tax system should make it easier to raise kids on one income, there are a whole lot of answers. But dealing with only the economic:
> The parental cost of Day care is subsidized through the income tax system;
> The availibility of affordable day care is subsidized hugely by provincial governments;
> Junior kindergarten is Universal Day Care provided entirely at taxpayer's expense;
> Full-Day senior kindergarten is Universal Day care provided entirely at taxpayer's expense; (The arguments that they are needed for "education" reasons are a crock, based on studies done on urban slums in the US where the kids really were better off in school than at home)
> After-school care is still needed for most of these kindergarten orphans if both parents are working.
> 
> So, instead of making it more economical for families to raise their own children, we are headed in the direction of paying professional salaries for universal day care at public expense. This will be more expensive, not less. And it is day care on the basis of "want", not need. It buys votes, but doesn't concentrate our tax dollars on those who really need it. I see no reason why I should pay higher taxes so a double-income family can pursue a yuppie lifestyle.
> 
> Make it more affordable for families to raise at least pre-school children on one income, and you reduce the need for subsidized day care to a manageable amount. And then we can afford to subsidize those who really need it.
> 
> Don't even let me get started on the long-term social costs of institutionalizing our children too early.


I don't agree that anyone is being penalized.

I do agree that JK and SK are daycare.

"I see no reason why I should pay higher taxes so a double-income family can pursue a yuppie lifestyle. "

This doesn't make sense - a two income household will pay a lot more tax than 1 income household so they are paying for their own lifestyle.


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## MoneyGal

Nah, FP; that's the contentious issue. A two-income family with total gross income of $80,000 (say, $40K salaries each) will pay less in tax than a single-income family with the same gross income. 

2 incomes of $40K each = $5920 tax payable each or $11,840 total (in Ontario, quick estimate, I didn't include any kids)

1 income of $80K = $16,891 payable (again, I used Ontario rates, no other deductions)

The issue is more complicated than this, though. If the idea is to "make it (more) affordable for families to keep one parent home," and we change the tax system to tax household, not individual, income; doesn't that mean that single-income, NO kid families get a break for the costs of raising children they don't have? Or...do we say the break is available to all, but is *intended* for families with children?


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## andrewf

Indeed. If we're trying to make it more attractive to have kids, raise the refundable tax credits we have for kids. If we want to improve fairness between dual income, single income/stay at home, and single income/single parent, then we should reduce the broad subsidies for child care but beef up the subsidies for single income/single parents. Making it attractive for wealthy families with no kids to have one spouse stay at home seems regressive and it will lower labour force participation, which is bad for the economy.


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## MoneyGal

Thumbs up. 

But as for reducing the "broad subsidies available for child care" - as a parent with two small kids, let me just comment that:

- the child care deduction ceilings have not been raised in years, making them progressively more regressive (now there's a phrase) and

- it is impossible to get full-time child care for the amount which is deductible. For example: the max deduction for a child under 7 is $7,000. Childcare for an infant or preschooler (those that will never be included in full-day learning) is over $1000 a month, and typically closer to $1,200 - $1500/month. 

I'm not complaining. I am happy with my choices. But I think the childcare deduction is portrayed like a rosier situation than it actually is (or perhaps people in smaller towns are able to get childcare at those rates, and this is another example of an opportunity cost for me living in a big city?!)


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## Four Pillars

MoneyGal said:


> Nah, FP; that's the contentious issue. A two-income family with total gross income of $80,000 (say, $40K salaries each) will pay less in tax than a single-income family with the same gross income.
> 
> 2 incomes of $40K each = $5920 tax payable each or $11,840 total (in Ontario, quick estimate, I didn't include any kids)
> 
> 1 income of $80K = $16,891 payable (again, I used Ontario rates, no other deductions)
> 
> The issue is more complicated than this, though. If the idea is to "make it (more) affordable for families to keep one parent home," and we change the tax system to tax household, not individual, income; doesn't that mean that single-income, NO kid families get a break for the costs of raising children they don't have? Or...do we say the break is available to all, but is *intended* for families with children?


I understand that. The situation I thought he was talking about when referring to "yuppies" was where you have 2 income earners ie both making $80k each) vs 1 income earner (making $80k each). In that case the choice to work doesn't not cost the taxpayer any more money.


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## Four Pillars

MoneyGal said:


> Thumbs up.
> 
> But as for reducing the "broad subsidies available for child care" - as a parent with two small kids, let me just comment that:
> 
> - the child care deduction ceilings have not been raised in years, making them progressively more regressive (now there's a phrase) and
> 
> - *it is impossible to get full-time child care for the amount which is deductible. For example: the max deduction for a child under 7 is $7,000. Childcare for an infant or preschooler (those that will never be included in full-day learning) is over $1000 a month, and typically closer to $1,200 - $1500/month. *
> 
> I'm not complaining. I am happy with my choices. But I think the childcare deduction is portrayed like a rosier situation than it actually is (or perhaps people in smaller towns are able to get childcare at those rates, and this is another example of an opportunity cost for me living in a big city?!)


A small point - have a deduction for part of your day care is still a decent incentive. Sure it's less than if the entire amount is covered but it is more than zero (no incentive).

Another thing - if you do increase incentives for child-care - won't that promote 2 income families which seems to be against the whole logic of this issue? 

I have to say my brain is progressively regressing on this issue  But thanks for all the great points, I've learned a lot.


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## MoneyGal

No doubt; an incentive is an incentive (or a distortion, depending on how you want to frame your argument). My only issue was with characterizing it as a "broad subsidy." In my case, it is a partial, not complete, incentive.


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## OhGreatGuru

MoneyGal said:


> Thumbs up.
> 
> 
> - it is impossible to get full-time child care for the amount which is deductible. For example: the max deduction for a child under 7 is $7,000. Childcare for an infant or preschooler (those that will never be included in full-day learning) is over $1000 a month, and typically closer to $1,200 - $1500/month.


One may equally argue that a stay-at home parent cannot provide childcare for the $2089 per year credit allowed under Line 367. This is not much compensation for the loss of income and for not burdening the taxpayer with providing subsidized day care.


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## ghostryder

OhGreatGuru said:


> One may equally argue that a stay-at home parent cannot provide childcare for the $2089 per year credit allowed under Line 367. This is not much compensation for the loss of income and for not burdening the taxpayer with providing subsidized day care.


Well, there is always the spousal credit too.


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## ChrisR

The problem I have with the study is that comparing a two-income family making $80,000 per year to a single-income family making $80,000 per year is unrealistic. It makes it sound like families are actually CHOOSING between the two cases. I'm sure that some people do take lower paying jobs so that they can share household duties with a working partner, but this has to be the exception, rather than the rule!

A far more likely case is a couple deciding whether to be a two-income family earning $80,000 per year (2 x $40,000) or a single-income family earning $40,000 per year (1 x $40,000). I mean, most people don't get a pay-raise because their partner decided to stay home and raise the kids.

If you compare the tax burden between the two-income family making $80,000 and the single-income family earning $40,000, I think you'll find that there is no tax penalty for having one partner stay home. In fact, the couple that chooses to both work, pays a great deal more in taxes!


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