Understanding The Transfer of Some Tax Credits
Everytime the yearly budget is released by the Government the public in general is only caught up in the big issues that the government wants to focus on. What many don’t realize is that there are tons of potential changes in the budget that go grossly unnoticed yet can play a big part in an individual taxpayer’s obligation. There are not too many average citizens that take the time to read the budget through from top to bottom.
Then as the budget year rolls along news flashes and information pertaining to some of the budget contents appears. It may be just a notice that something has received royal assent which is a necessity if something in the budget is to become law.
Now one of the latest budget tid bits to rear up is the transfer of education credits, and what kind of effect this is going to have on the family tax cut.
The 2015 budget introduced a change concerning this. The change focused on how the family tax cut is to be calculated for the allowance of the education, textbook and tuition amounts from themselves to their spouse or common law partner.
The family tax cut:
This is the new Federal non-refundable tax credit which amounts to $2,000 for couple who qualify and have minor children.
The current situation:
Under the family tax cut a person may be able to transfer up to $50,000. of their taxable income to their spouse or common law partner. This allows the individual receiving the amount to claim Federal non refundable tax credits that they may have not otherwise been able to use. These transferred amounts cannot be used in the calculation of the family tax cut. This prevents double use of the credits.
The new situation:
For the 2014 tax years and those following there was a change in how the family tax cut was to be calculated. This was done to allow for the transfer of the textbook, education and tuition amounts that an individual was eligible to transfer to their spouse or common law partner. There was such confusion over this that many filed their 2014 tax return without realizing the benefits of this.
The personal tax return has become so complex that it can be near impossible for the average person to file and get all the potential tax breaks that may be available to them. Fortunately quality and experienced accountants are more than willing to complete personal tax returns in an affordable manner.