If you’re married with kids, there are lots of tax breaks you can claim that most Canadians can’t, including income splitting, spousal Retirement Savings Plan (RRSP) contributions, and benefits for raising children. Whether you’re married, have children, or both, you can take advantage of these tax breaks. In this article, I will explore five such tax breaks/benefits that you can claim in 2024.
Spousal RRSP contributions
A spousal RRSP contribution is when the higher-earning spouse in a married/common-law couple gives money to the lower-earning spouse’s RRSP. In this case, it is the higher-earning spouse whose contribution room is eaten up. So, the lower-earning spouse still has all of their contribution remaining and can lower their taxes accordingly.
Dividend tax credit
The dividend tax credit is a tax credit on dividends you receive from stocks. The stocks need to pay “eligible dividends” for you to receive the credit.
Let’s imagine that you held $10,000 worth of Suncor Energy (TSX:SU) stock at the beginning of last year. Suncor pays $0.54 in dividends per share on a $49.50 stock price. $0.54 works out to $2.16 per year, so we’ve got a 4.40% dividend yield.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Suncor Energy | $49.50 | 202 | $0.54 ($2.16 per year) | $436 per year | quarterly |
Suncor’s 4.4% dividend yield produces about $436 per year in dividends on a $10,000 position. The dividend tax credit is grossed up by 38% to $602. The 15% tax credit on that amount is $90. If you or your spouse is a full-time parent (i.e., doesn’t work outside the home), then you might not have enough taxes owing to claim the full dividend tax credit. If your income is $20,000 or below, your taxes are already near zero, and the dividend tax credit is non-refundable. What you can do is claim the credit on your higher-earning spouse’s tax return and generate more tax savings that way.
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Canada Child Benefit
The Canada Child Benefit is a cash benefit you can get if you are a low-income earner who supports a child. You can get up to $619.75 per month ($7,437 per year) for each child under the age of six and $522.9 per month ($6,275 per year) for each child from six to 17. You need to meet an income test (i.e., earn less than a certain amount) before you can qualify for the Canada child benefit. The amounts you receive start being clawed back at $34,863 in family income and are clawed back for every dollar you earn up to $75,537. These are family incomes, not individual income. If you earn $0 and your spouse earns $150,000, you can’t get the Canada child benefit.
Pension income splitting
Pension income splitting is a tax break that you get from sharing income with your spouse. What you do is you take the income you get from your RRSP or any other pension and claim it evenly between you and your spouse. If your spouse has a lower marginal tax rate than you do, then you enjoy a lower tax rate by sharing your income with him/her.
Spouse or common-law partner amount
You may be eligible to claim the spouse or common-law partner amount if your spouse is financially dependent on you. You can claim the difference between your spouse’s income and your basic personal amount. This tax credit isn’t all that valuable for most people, but it can be worth something if your spouse earns no income or next to no income.
