Married? Have Kids? Grab These 5 CRA Tax Breaks

You can transfer dividend income from stocks like Suncor Energy Inc (TSX:SU) to your spouse and enjoy tax savings that way.

| More on:
Dad and son having fun outdoor. Healthy living concept

Image source: Getty Images

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.

Suncor Energy$49.50202$0.54 ($2.16 per year)$436 per yearquarterly
Suncor Energy

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.

  • We just revealed five stocks as “best buys” this month … join Stock Advisor Canada to find out if Magna made the list!

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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Andrew Button has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Close up shot of senior couple holding hand. Loving couple sitting together and holding hands. Focus on hands.
Dividend Stocks

Here’s the Average CPP Benefit at Age 70 in 2024

Canadian retirees can supplement their CPP payout by investing in blue-chip dividend stocks such as Enbridge.

Read more »

Gas pipelines
Dividend Stocks

Is Enbridge the Best Dividend Stock for You?

Enbridge now offer a dividend yield of 8%.

Read more »

Dividend Stocks

How Long Would It Take to Turn $20,000 Into $100,000 With TSX Dividend Stocks?

Here's how a historical investment in TSX dividend stocks would have fared.

Read more »

edit Businessman using calculator next to laptop
Dividend Stocks

Passive Income: How Much Should You Invest to Earn $100 Every Month

Want to earn an extra $100 per month in investment passive income? Here's how much cash you would need to…

Read more »

Canadian Dollars
Dividend Stocks

Buy 1,430 Shares of This Super Dividend Stock for $1,000/Year in Passive Income

Here's how to generate $1,000 in annual passive income with Dream Industrial REIT (TSX:DIR.UN) stock.

Read more »

A worker gives a business presentation.
Dividend Stocks

Ranking Inflation Rates in Canada: How Does Your City Stack Up?

Inflation rates stoked higher for some cities, but dropped for others. So let's look at how your city stacked up,…

Read more »

Doctor talking to a patient in the corridor of a hospital.
Dividend Stocks

Inflation Is Up (Again): What Investors Need to Know

Inflation ticked higher in Canada this month, but core inflation was lower. Here's how investors can take advantage during this…

Read more »

Happy family father of mother and child daughter launch a kite on nature at sunset
Dividend Stocks

Want to Make $10,000 in Passive Income This Year? Invest $103,000 in These 3 Ultra-High-Yield Dividend Stocks

Can you earn $10,000 in passive income in 2024? You can by investing $103,000 in these ultra-high-yielding stocks.

Read more »