The October 30th 2014, Canada Federal Government made 2014 announcement that included a proposal to introduce the Family Tax Cut, a new non-refundable tax credit of up to $2,000 for eligible couples with minor children based on the net reduction of federal tax that would be realized if up to $50,000 of an individual’s taxable income was transferred to the individual’s eligible spouse or common-law partner. This would take advantage of a spouse’s lower income tax bracket.
This new tax credit will be effective for the 2014 and subsequent tax years.
To be eligible, your spouse or common-law partner must be a resident of Canada on December 31 of the year (or on the date of death) and you were not, because of a breakdown in your marriage or common-law partnership, living separate and apart from each other at the end of the year and for a period of 90 days or more beginning in the year.
Either you or your eligible spouse or common-law partner can claim the Family Tax Cut for a year, but not both. This credit cannot be shared.
To claim the credit, complete new Schedule 1-A, Family Tax Cut, and enter the amount calculated on line 423 of the Schedule 1, Federal Tax