The new year brings changes to tax laws that will affect separating couples and their settlements. Here is a quick summary:
1. Canada Child Benefit. Maximum annual benefit of $6,400.00 per child under the age of six, and $5,400.00 per child ages 6 to 17. This benefit is tax free, and is calculated based on your income. Shared custody arrangements will result in both parents receiving 50% of the payment that would have been received had the child resided with one parent only.
2. Children’s Fitness and Arts Tax Credits. These credits permitted you to claim a maximum tax credit of $150.00 per child for fitness expenses and $75.00 per child for art expenses. These credits will not be available in 2017.
3. Education and Textbook Tax Credits. Permitted a student to claim an amount each month they are enrolled in a post-secondary education program, which can be transferred to parents. These credits will not be available in 2017.
4. Goodwill and Trademarks. These assets when sold used to permit a tax-free dividend from a company. They are now fully taxable.
5. British Columbia’s medical services plan premiums are being eliminated for children and young adults attending school.
Keep these in mind when negotiating your separation agreement.
