Income Splitting Credit

Notice to the reader

This measure has received Royal Assent.

Currently, a non-refundable income splitting tax credit (Family Tax Cut) of up to $2,000 is available for couples with children under the age of 18. For 2016 and subsequent taxation years, Budget 2016 proposes to eliminate this income splitting tax credit.

1. What is the income splitting credit (Family Tax Cut)?

The income splitting credit is a federal non-refundable tax credit of up to $2,000 for eligible couples with minor children. It is based on the net reduction of federal tax that would be realized if up to $50,000 of an individual’s taxable income was notionally transferred to the individual’s eligible spouse or common-law partner. Refer to the Family Tax Cut for more information.

2. What is Budget 2016 proposing for the income splitting credit?

For the 2016 and subsequent taxation years, Budget 2016 proposes to eliminate the income splitting tax credit. The income splitting tax credit remains effective for the 2014 and 2015 taxation years.

3. Are any changes proposed for pension income splitting?

Pension income splitting continues to be available and it remains unchanged.

4. Where can I get more information on the proposed elimination of the income splitting credit?

The CRA is committed to providing taxpayers with up-to-date information. The CRA encourages taxpayers to check its webpages often. All new forms, policies, and guidelines will be posted as they become available.

In the meantime, please consult the Department of Finance Canada's Budget 2016 documents for details.

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