Spouse or Common-Law Partner

If you are married or in a common-law relationship, you may be able to claim a spousal tax credit for federal purposes. For example, in 2014, you could claim a spousal tax credit if your spouse earned less than $11,138.

How is the spousal tax credit calculated?

Using the 2014 example above, the spousal tax credit is calculated by subtracting your partner’s net income from $11,138 and multiplying the remainder by 15%, which works out to a maximum of $1,671 ($11,138 x 15%).

If your spouse earned $5,000, this would mean you would be eligible for tax savings of $921.

Does sexual orientation matter?

No. A few years back, the federal government extended the concept of a spouse to include same-sex couples living together.

What is the definition of common-law?

Two individuals living together are in a common-law relationship if they have cohabitated continuously for at least one year or have a child together.

Spouse or Common-Law Partner’s Unused Tax Credits

Can I claim my spouse or common-law partner’s unused tax credits?

If your spouse makes $11,138 or less per year in net income, you may be able to use some of their tax credits when completing your tax return. The tax savings could be substantial. This $11,138 amount only applies to 2014 and is increased for inflation each year.

There is a section (Schedule 2) on your income tax return, which outlines the tax credits that may be transferred from your partner to you. Some of the possibilities include:

  • age amount
  • disability amount
  • tuition, education and textbook amounts
  • pension income amount

To determine the amount of the federal income tax credit, the gross tax credits are subject to a 15% rate and this amount is available to reduce federal income taxes.

Don’t forget about provincial credits

The examples listed previously are some examples of federal non-refundable tax credits. There may also be further provincial credits available to help increase your tax savings.

Eligible Dependents

Are you supporting a child or dependent relative?

If so, you may be able to claim an amount for an eligible dependent if you were also either unmarried or separated from your spouse or common-law partner in the year.

What is an eligible dependent?

Typically, this is someone who:

  • is related to you
  • lives with you
  • is completely dependent on you or others in your household for support
  • is under 18 years of age

An eligible dependent can also be a child, parent or grandparent who is dependent on you due to a mental or physical impairment.

How much can I claim?

The maximum amount that can be claimed is 15% of $11,138 in 2014 (which is the same amount available to married or common-law taxpayers who support their spouse). This amount increases with inflation each year.

Other details

  • If you are claiming $11,138 because you support a spouse or common-law partner, you cannot claim $11,138 for an eligible dependent—and vice versa. You cannot claim both in the same year.
  • If the eligible dependent does have some income, you cannot claim the full $11,138. For example, if the dependent makes $5,000 in a year, you could only claim up to a maximum of $6,138 ($11,138 – $5,000) for 2014.

How do separations impact claiming an eligible dependent?

This is a common situation and occurs when you make support payments to your spouse and children. After the first year of separation, you cannot claim personal income tax credits for your spouse and children.

However, your spouse can claim the federal basic personal amount of $11,138, as well as up to an additional $11,138 for one child (assuming all other conditions have been met).

To determine the amount of the federal income tax credit, the gross tax credits are subject to a 15% rate and this amount is available to reduce federal income taxes.

Children Under 18

Do you have children living under your roof?

If so, you may claim a credit of $2,255 in 2014 for each child under 18. The amount of this credit is increased by inflation each year. The tax credit is not impacted by your child’s net income. Any unused portion of this tax credit may be transferred to your spouse or common-law partner.

What if the children are under 18 and dependent on me, but don’t live under my roof?

In this case, the parent who is eligible would be the one to make the claim. If both parents support the child financially, then one of the parents may make the claim, but not both.

When is the full amount of the credit available to be claimed?

It can be claimed in the year of the:

  • birth of the child
  • death of the child
  • adoption of the child

The credit does not need to be prorated in the year of birth, death or adoption.

To determine the amount of the federal income tax credit, the gross tax credits are subject to a 15% rate and this amount is available to reduce federal income taxes.

Children’s Fitness Tax Credit

Parents may be eligible to claim a federal non-refundable tax credit for certain children’s fitness programs. Eligible expenses must meet the following conditions and are defined as:

  • ongoing activities (must be at least a weekly activity which runs for at least eight weeks or, in the case of camps, the camp must run for at least five consecutive days)
  • supervised
  • suitable for children
  • including a significant amount of physical activity that contributes to cardio-respiratory endurance, plus one of the following: muscular strength, muscular endurance, flexibility or balance

What fees are generally considered as being eligible expenses?

Eligible expenses must meet the conditions mentioned above and include money spent on:

  • program administration
  • instruction
  • facility rentals

What are some exceptions?

Travel costs, meals and accommodations, as well as equipment purchased for your child, are not eligible for the tax credit.

Some costs eligible for the fitness tax credit may also be eligible for the child care expense deduction. This would occur in a situation where it can be demonstrated that the primary purpose behind a fitness activity is to provide child care, thereby enabling you to work.

If this is the case, you must first claim the respective amount as a child care expense. Any unused part can be claimed for your child’s fitness amount, as long as the other requirements are met.

How much is the Children’s Fitness Tax Credit?

You may be eligible to claim a non-refundable tax credit of 15% up to $500 for each child who is under 16 at the beginning of the tax year.

If you have a child for whom you can claim a disability tax credit for the year, the age restriction is raised to under 18 at the beginning of the tax year. As well, if you make at least a $100 claim for a disabled child under the Children’s Fitness Tax Credit, you will receive an automatic additional credit of $500.

Does Nova Scotia offer any programs in addition to the federal Children’s Fitness Tax Credit?

Yes, Nova Scotia offers the Healthy Living Tax Credit which allows you to add up to $500 for each child who has not reached the age of 18 by the end of the taxation year.

What expenses does the Healthy Living Tax Credit cover?

The credit covers money spent on registering your child in sport or recreation activities.

The credit is a provincial one and applies to your provincial income taxes, so it is in addition to the federal Children’s Fitness Tax Credit.

Children’s Art Tax Credit

The children’s art tax credit encourages the participation of children in artistic, cultural, recreation and development programs.

What does the Children’s Art Tax Credit cover?

The credit covers a wide variety of activities, which include:

  • fine arts
  • music
  • performing arts
  • wilderness training
  • language training
  • studying a culture
  • tutoring

How much is the credit?

You can claim 15% of up to $500 in eligible fees for enrolling a child who is under 16 at the beginning of the tax year.

If your child has disabilities, you can claim an additional $500 if the child is under 18 at the beginning of the tax year.

Disability Tax Credit

If you suffer from a severe and prolonged impairment, you may be eligible to claim a disability tax credit on your personal income tax return. As well, if your child or an eligible dependant qualifies for the disability tax credit, the credit can be transferred to you.

What constitutes a severe and prolonged impairment?

There are three conditions which must be met:

  1. a severe and prolonged mental or physical impairment
  2. the impairment must restrict your ability to carry out a basic daily living activity, or you must dedicate a certain amount of time getting therapy for this impairment. The impairment should last at least one year or be expected to last a year.
  3. a doctor must sign a certificate to certify both conditions 1 and 2

What has the credit traditionally covered?

While the credit has traditionally been used by people who are blind or have mobility difficulties, the courts have issued rulings for conditions such as attention deficit disorder, celiac disease and gluten-free diets.

How much is the Disability Tax Credit?

For 2014, you are eligible for a credit equal to 15% of $7,766.

Adoption Expense Tax Credit

If you adopted a child under 18 in 2014, you will be entitled to a 15% tax credit for eligible adoption expenses incurred during the adoption period, up to a maximum of $11,774. This amount is increased every year because of inflation.

The tax credit is allowed in the year the adoption is finalized or recognized under Canadian law.

 What qualifies as eligible expenses?

Eligible expenses include:

  • court, legal and administrative expenses
  • reasonable travel and living expenses
  • fees paid to an adoption agency licensed by a provincial or territorial government and any other reasonable expenses required by such an agency
  • mandatory fees paid to a foreign institution and document translation fees

When must the adoption expenses be incurred?

The expenses must be incurred during the adoption period, meaning when the file is opened with the provincial ministry responsible for the adoption or when the application is made to a Canadian court. The period ends when the adoption is finalized or the child begins living with you.

Family Caregiver Tax Credit

The caregiver amount provides tax relief to caregivers of infirm dependent relatives, including parents, spouses, common-law partners and children.

The tax credit is 15% of $4,530. You may be able to claim a maximum amount of $4,530 for each dependant.

What other conditions must be met?

The dependant must meet all of the following conditions. The person must have:

  • been 18 or older at the time he or she lived with you
  • had a net income of less than $19,824 in 2013
  • been dependant on you due to an impairment in physical or mental functions, or, if he or she is your or your spouse’s or common-law partner’s parent or grandparent, born in 1948 or earlier

What if I had to make support payments for a child?

If you had to make support payments for a child, then you cannot claim the caregiver amount for that child.

However, if you were separated from your spouse or common-law partner for part of the tax year in question due to a breakdown in your relationship, you can still claim an amount for that child if you do not claim any support amounts paid to your spouse or common-law partner.

How does it work if I split the claim with my spouse or common-law partner?

If you and another person support the same dependant, you can split the claim for that dependant. However, the total of the two claims cannot exceed the maximum amount allowed for that dependant.