Family Tax Cut – Don’t Waste Credits

The Family Tax Cut can change the way we think about which spouse should make the RRSP contribution. 

This week we’ll look at another unexpected result of the Family Tax Cut.

In a family situation where the non-refundable credits claimed by the higher-income spouse exceed the “adjusted taxable income” after splitting, the extra credits can be wasted.  In such situations, claiming credits that could be saved or claimed by another taxpayer may be a bad idea.  One such credit is the transfer of the tuition, education, and textbook amounts which could be carried forward by the student if not transferred.

When preparing returns for couples that qualify for the Family Tax Cut and have significant non-refundable credits, check for negative amounts on line 10 of S1A and zero on Line 17.  In these circumstances, check if any non-refundable credits can be utilized by another taxpayer and who will benefit the most from the credit.

In addition, optimizing non-refund credits is an important new outcome of the Family Tax Cut.