# The gov't giveth...and the gov't doesn't deliver



## carverman (Nov 8, 2010)

The latest news on the family tax cut...sorry, wait a few months, the CRA may have a gift for you by Christmas.

Election promises ? The new tax cuts will be approved..when the gov't gets around to it in June (when Parliament usually adjourns for summer recess). 



> Those who claim the new tax credit on their 2014 return will get any benefit that's coming to them, but anyone who has already filed a return without making use of the income-splitting measure and wants to claim it retroactively will have to wait until the tax cut is formally approved by Parliament.





> The new measure allows two-parent families with at least one child under the age of 18 to transfer up to $50,000 of income from the higher-income spouse to a lower-earning partner. The tax cut takes the form of a non-refundable tax credit that can be claimed by either spouse, with a cap of $2,000.





> According to an internal Canada Revenue Agency memo obtained by CBC News, *tax officials are being instructed not to process requests for tax reassessments claiming the new credit before the amendments to the tax code make it through Parliament even though they are proceeding as if the changes have been passed into law for those who claim the credit the first time around.*





> *"Based on existing reassessment policy, we do not reassess a tax return that is correct under existing law for the purpose of allowing a proposed measure," the memo notes.*
> "As a result, we are not permitted to be pro-active on the requests until after the proposed measure receives royal assent, which will likely be in June 2015."





> Agency confirms delay
> The memo advises officials to "stockpile" reassessment requests until the agency informs that the tax cut has passed into law, "*at which point the returns can be reviewed for a possible adjustment*."


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## Guban (Jul 5, 2011)

The family tax cut is just a *proposed* bill? It hasn't been approved yet?! What happens if it is not approved? Do all of those people have to give it back?!


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## Davis (Nov 11, 2014)

It's kind of an odd twist: I understand that CRA does administer proposed changes on the basis of announcement, do anyone who claims the credit when they file will have their taxes calculated on that basis. But if you don't claim it when you file your return, and later decide to claim it by filing an afjustment, they will sit on your application until the amendments receive Royal Assent.

As the Tories have a majority filled with lapdogs, there is almost no danger of the bill not passing. In theory, if the government fell and the amendments were not reintroduced in the next parliament, CRA would have to reassess to recover the amounts claimed without legislative basis.


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## carverman (Nov 8, 2010)

Davis said:


> I
> As the Tories have a majority filled with lapdogs, there is almost no danger of the bill not passing. In theory, if the government fell and the amendments were not reintroduced in the next parliament, *CRA would have to reassess to recover the amounts claimed without legislative basis*.


That would be a cruel joke to those families that filed with that tax perk, but from what I read, CRA is going to exclude any refund related and based on just this proposed tax credit, until it is approved by parliament and the senate. 

The 2014 return (Schedule 1) does mention "family tax cut" Line 423 , which says attach Schedule 1A. 
So they can pull out Sched 1A, stackpile them for taxpayers that have filed with this form, and continue with the rest of the tax return as if the family tax credit doesn't exist.


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## Davis (Nov 11, 2014)

carverman said:


> That would be a cruel joke to those families that filed with that tax perk....


And all those who believed the adverstisiong about it that we the taxpayers paid for.


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## sags (May 15, 2010)

Most people don't get any benefit from it, so it doesn't matter to them.

For the few who do benefit, they will disappointed to learn that it is very small compared to the "up to $2000" that is being advertised.

We received $0 benefit, and my son who earns $45,000 a year while his spouse earned $10,000 received a whopping $200.

The main beneficiaries are..............very high income earners with a stay at home spouse and children under the age of 18.

It will cost 2-3 Billion a year to give them the tax break.


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## carverman (Nov 8, 2010)

sags said:


> Most people don't get any benefit from it, so it doesn't matter to them.
> 
> It will cost 2-3 Billion a year to give them the tax break.


Smoke and mirrors? If it is estimated to cost that much, the Harper gov't will find some way of delaying it.
After all, Harper's war on terror and the probable extension to bomb ISIS in Syria, may take more precedence and
the money that might have been returned to those who qualify can be used for the continuing war effort.
Those smart bombs cost a lot of money!


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## Oldroe (Sep 18, 2009)

Harper must be afraid of Trudeau. Never remember the PC giving anything to family's. Big biz and farmers yes.


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## CPA Candidate (Dec 15, 2013)

There is a lot of moaning about the family tax cut in the news, but ask yourself if you think two different households should pay differing amounts of tax on the same total household earnings that has to support the same number of people and same cost of living? How is that equitable? It's not supposed to benefit everyone because it is addressing an issue of over taxation of a specific group, that is one high earner and one low/no earner households. The point sails over the heads of the media.

Furthermore, dual income households with children in daycare already get a deduction of childcare expenses that a stay a home caregiver family doesn't get. 

Here is a super easy example that show the discrepancy in take home pay by households.

Manitoba: 
two earners making $50k each and spending $5k on daycare per year, tax payable $20,334 (only basic personal tax credit included for each earner)
One earner making $100k and stay at home caregiver, tax payable $28,758 (basic and spousal credit included).

Two earner household has significantly more after tax income, but the costs for each family are no different. I think capped income splitting in this situation is completely appropriate and fair.

The fact is, if income splitting benefits you, you probably like it and if it doesn't, you probably don't like it. People think and have opinions that align with their self-interest.


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## bgc_fan (Apr 5, 2009)

I'm not a fan of the income splitting and dislike this argument that it's unfair that dual middle income earner families pays less taxes than a single high income earner. The obvious counter argument is that for dual income families, they have to pay for some sort of child care while they work. 

If one really wants to be "fair" then I see two "fair" options:
1) Make income tax based on household income like they do in the USA, and modifying the tax rates to accommodate. Chances are dual income earners lose out on this one. 
2) Scrap all these boutique tax credits and cuts an reduce the 2nd tax rate down to 15%. You can take the Fraser Institute's study on income tax rates and work from there, though they are a bit more harsh on their cutting tax credit: http://www.fraserinstitute.org/research-news/display.aspx?id=22098 . By reducing the 2nd tax rate down to 15%, essentially anyone making up to $89,401 in taxable income would be paying the same rate the two dual income earners. Yes the single worker would be paying some more income tax, but the differential would be somewhat less (save up to $3129.07).


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## carverman (Nov 8, 2010)

bgc_fan said:


> 2) Scrap all these boutique tax credits and cuts an reduce the 2nd tax rate down to 15%. You can take the Fraser Institute's study on income tax rates and work from there, though they are a bit more harsh on their cutting tax credit: * By reducing the 2nd tax rate down to 15%, essentially anyone making up to $89,401 in taxable income would be paying the same rate the two dual income earners.* Yes the single worker would be paying some more income tax, but the differential would be somewhat less (save up to $3129.07).


Well that sounds like a educated guesswork proposal from a think tank . 

They are even suggesting to scrap the in between tax rates (22/26%) and have just two rates.. 15% for 98% of the "working class" out there and 29% for the "well to do" with higher incomes.



> More ambitious options could include increasing the income threshold at which the top rate applies from $136,271 to $250,000 and lowering the top rate from 29% to 25%.


I can't see how this tax scheme would be sustainable with just the top earners

I think Ontario, for one would have something to say about that, with the mountains of debt this province has and trying to supplement a provincial budget that has been a train wreck for several years, takes more than just consumer taxes to keep the provincial treasury topped up.


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## nathan79 (Feb 21, 2011)

Oldroe said:


> Harper must be afraid of Trudeau. *Never remember the PC giving anything to family's.* Big biz and farmers yes.


Children's fitness tax credit?

It seems to me that families get a lot more than single individuals. Single people earning an average income get screwed the worst. Here in BC it actually pays to keep income below 30K (via RRSP or other deductions). As soon as you get above 30K you lose most tax credits.


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## sags (May 15, 2010)

If the government really wants to help the "middle class"..........it would be simpler to increase the personal exemptions for everyone to $20,000.


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## RBull (Jan 20, 2013)

^this seems like a sensible approach to me as well.


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## KaeJS (Sep 28, 2010)

How about some tax breaks for the people who are single? (You know, the people who don't take but are always giving?)

Can we at least get $40 to buy a case of beer and drown our lonely sorrows?


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## bgc_fan (Apr 5, 2009)

carverman said:


> Well that sounds like a educated guesswork proposal from a think tank .
> 
> They are even suggesting to scrap the in between tax rates (22/26%) and have just two rates.. 15% for 98% of the "working class" out there and 29% for the "well to do" with higher incomes.
> 
> ...


I agree that it is very unlikely that drastic reductions would be sustainable. There is always going to be resistance to eliminating the boutique tax credits as well. 
On a slight tangent, John Oliver had a show on neglected infrastructure. It is just not sexy to have money set aside for maintenance, but building new infrastructure is great because of the photo ops. 
It is the same situation with income tax. How many people give the Liberals credit for indexing the income tax levels? How many people remember that the Conservatives effectively increased the lowest rate to 15.5% when they won the election(cancelling the Liberal reduction to 15%) but then later reducing the rate? All people remember is the GST cut and these new tax credits.


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## sags (May 15, 2010)

3 Billion dollars to the wealthiest Canadians ?.............Meh, .......should give full funding to our military veterans instead.


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## Guban (Jul 5, 2011)

sags said:


> If the government really wants to help the "middle class"..........it would be simpler to increase the personal exemptions for everyone to $20,000.


Do they really want to help the middle class, or just get re elected?

This increase in personal exemption would be fiscally irresponsible without a decrease in government spending. Think of how much tax revenue this would cause the country. It would have to be covered with borrowed money. More debt? No thanks.


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## 5Lgreenback (Mar 21, 2015)

KaeJS said:


> How about some tax breaks for the people who are single? (You know, the people who don't take but are always giving?)
> 
> Can we at least get $40 to buy a case of beer and drown our lonely sorrows?



Haha Amen!:biggrin:


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## smihaila (Apr 6, 2009)

CPA Candidate said:


> There is a lot of moaning about the family tax cut in the news, but ask yourself if you think two different households should pay differing amounts of tax on the same total household earnings that has to support the same number of people and same cost of living? How is that equitable? It's not supposed to benefit everyone because it is addressing an issue of over taxation of a specific group, that is one high earner and one low/no earner households. The point sails over the heads of the media.
> 
> Furthermore, dual income households with children in daycare already get a deduction of childcare expenses that a stay a home caregiver family doesn't get.
> 
> ...


+1. Very valuable post.


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## MrMatt (Dec 21, 2011)

CPA Candidate said:


> There is a lot of moaning about the family tax cut in the news, but ask yourself if you think two different households should pay differing amounts of tax on the same total household earnings that has to support the same number of people and same cost of living? How is that equitable? It's not supposed to benefit everyone because it is addressing an issue of over taxation of a specific group, that is one high earner and one low/no earner households. The point sails over the heads of the media.
> 
> Furthermore, dual income households with children in daycare already get a deduction of childcare expenses that a stay a home caregiver family doesn't get.
> 
> ...


$5k for daycare? In fantasyland maybe.


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## protomok (Jul 9, 2012)

CPA Candidate said:


> There is a lot of moaning about the family tax cut in the news, but ask yourself if you think two different households should pay differing amounts of tax on the same total household earnings that has to support the same number of people and same cost of living? How is that equitable? It's not supposed to benefit everyone because it is addressing an issue of over taxation of a specific group, that is one high earner and one low/no earner households. The point sails over the heads of the media.


+1

A tax break fixing a blatant unfairness in our tax code is not intended to reduce _everyone's_ taxes...the idea is to fix the over taxing of couples with different incomes! I for one support this...just need to get a kid so I can qualify


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## peterk (May 16, 2010)

You mean the government wants to reward responsible, successful families?? High earning men (and a few women) who have taken on the greatest responsibility of deciding to marry a woman who wants to have children, be a good mother and raise those children instead of going to work as an administrative assistant for a company that doesn't give a crap about her?!? Oh the humanity! This is so unfair!

They need to stop this nonsense and start giving more tax credits to twenty somethings who work 30 hours a week and complain that it's too hard!!! Or dual income parents who decide to have 1 child in their mid 30s because they might as well get it over with, and keep working two crappy jobs at 60 hours/week while sending their kid to daycare. This is what a modern progressive individual or family looks like, and they need to be encouraged.

This government is trying to ruin our modern, progressive, inclusive, enlightened society with out-dated thinking and tax policies that try to keep women out of the workplace, and reward evil companies who's only objective is to abuse their employees with unfair amounts of work and compensation. They must be stopped.



:biggrin:


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## OnlyMyOpinion (Sep 1, 2013)

^ Well said.:eagerness:


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## CalgaryPotato (Mar 7, 2015)

As someone who would have benefited a lot from this over the past 8 years, and probably not as much over the rest of my life, I'm strongly in favor of this policy.

Like others have mentioned, it's only fair. There shouldn't be a punishment to families who make their income through one person rather than split it over two people.


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