Bill C-57: An Act to amend the Income Tax Act and the Universal Child Care Benefit Act and to make related amendments to another Act

C-57 Second Session, Forty-first Parliament, 62-63-64 Elizabeth II, 2013-2014-2015 HOUSE OF COMMONS OF CANADA BILL C-57 An Act to amend the Income Tax Act and the Universal Child Care Benefit Act and to make related amendments to another Act first reading, March 27, 2015 MINISTER OF FINANCE 90765 RECOMMENDATION His Excellency the Governor General recommends to the House of Commons the appropriation of public revenue under the circumstances, in the manner and for the purposes set out in a measure entitled “An Act to amend the Income Tax Act and the Universal Child Care Benefit Act and to make related amendments to another Act”. SUMMARY Part 1 implements the income tax measures announced on October 30, 2014. It amends the Income Tax Act to increase the maximum annual amounts deductible for child care expenses, to repeal the child tax credit and to introduce the family tax cut credit. Part 2 amends the Universal Child Care Benefit Act to, effective January 1, 2015, enhance the universal child care benefit by providing $160 per month for children under six years of age and by providing a new benefit of $60 per month for children six years of age or older but under 18 years of age. It also amends the Children’s Special Allowances Act to, effective January 1, 2015, increase the special allowance supplement for children under six years of age from $100 to $160 per month and introduce a special allowance supplement in the amount of $60 per month for children six years of age or older but under 18 years of age. Available on the Parliament of Canada Web Site at the following address:http://www.parl.gc.ca TABLE OF PROVISIONSAN ACT TO AMEND THE INCOME TAX ACT AND THE UNIVERSAL CHILD CARE BENEFIT ACT AND TO MAKE RELATED AMENDMENTS TO ANOTHER ACTSHORT TITLE 1.       Support for Families Act PART 1INCOME TAX ACT 2–7.       Amendments PART 2UNIVERSAL CHILD CARE BENEFIT ACTAmendments to the Act 8–10.       AmendmentsRelated Amendments to the Children’s Special Allowances Act 11–12.       AmendmentsComing into Force 13.       July 1, 2015 2nd Session, 41st Parliament, 62-63-64 Elizabeth II, 2013-2014-2015 house of commons of canada BILL C-57 An Act to amend the Income Tax Act and the Universal Child Care Benefit Act and to make related amendments to another Act Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows: SHORT TITLE Short title 1. This Act may be cited as the Support for Families Act. PART 1 R.S., c. 1 (5th Supp.) INCOME TAX ACT 2. (1) Paragraphs (a) and (b) of the definition “annual child care expense amount” in subsection 63(3) of the Income Tax Act are replaced by the following: (a) $11,000, if the child is a person in respect of whom an amount may be deducted under section 118.3 in computing a taxpayer’s tax payable under this Part for the year, and (b) if the child is not a person referred to in paragraph (a), (i) $8,000, if the child is under 7 years of age at the end of the year, and (ii) $5,000, in any other case; (2) Subsection (1) applies to the 2015 and subsequent taxation years. 3. (1) Paragraph (b.1) of the description of B in subsection 118(1) of the Act is replaced by the following: Family caregiver amount for child (b.1) $2,000 for each child, who is under the age of 18 years at the end of the taxation year, of the individual and who, by reason of mental or physical infirmity, is likely to be, for a long and continuous period of indefinite duration, dependent on others for significantly more assistance in attending to the child’s personal needs and care, when compared to children of the same age if (i) the child ordinarily resides throughout the taxation year with the individual together with another parent of the child, or (ii) except if subparagraph (i) applies, the individual (A) may deduct an amount under paragraph (b) in respect of the child, or (B) could deduct an amount under paragraph (b) in respect of the child if (I) paragraph (4)(a) and the reference in paragraph (4)(b) to “or the same domestic establishment” did not apply to the individual for the taxation year, and (II) the child had no income for the year, (2) Subsection (1) applies to the 2015 and subsequent taxation years. For the purpose of making the adjustment provided under subsection 117.1(1) of the Act as it applies to paragraph (b.1) of the description of B in subsection 118(1) of the Act, as enacted by subsection (1), the amount to be used in the 2015 taxation year for the preceding taxation year is the amount under clause (b.1)(i)(B) of the description of B in subsection 118(1) of the Act that would, but for subsection 117.1(3) of the Act, be the amount to be used under that clause for the 2014 taxation year. 4. (1) Section 118.92 of the Act is replaced by the following: Ordering of credits 118.92 In computing an individual’s tax payable under this Part, the following provisions shall be applied in the following order: subsections 118(1) and (2), section 118.7, subsections 118(3) and (10) and sections 118.01, 118.02, 118.03, 118.031, 118.04, 118.05, 118.06, 118.07, 118.3, 118.61, 118.5, 118.6, 118.9, 118.8, 118.2, 118.1, 118.62, 119.1 and 121. (2) Section 118.92 of the Act is replaced by the following: Ordering of credits 118.92 In computing an individual’s tax payable under this Part, the following provisions shall be applied in the following order: subsections 118(1) and (2), section 118.7, subsections 118(3) and (10) and sections 118.01, 118.02, 118.031, 118.04, 118.05, 118.06, 118.07, 118.3, 118.61, 118.5, 118.6, 118.9, 118.8, 118.2, 118.1, 118.62, 119.1 and 121. (3) Subsection (1) applies to the 2014 taxation year. (4) Subsection (2) applies to the 2015 and subsequent taxation years. 5. (1) The Act is amended by adding the following after section 119: Definitions 119.1 (1) The following definitions apply in this section. “adjusted base tax payable”« impôt payable de base rajusté » “adjusted base tax payable”, of an individual for a taxation year, means the amount that would be the individual’s tax payable under this Part for the year, if (a) the individual’s taxable income for the year were the individual’s split-adjusted income for the year; and (b) no amount were deductible under this Division other than the individual’s adjusted non-refundable tax credits amount for the year. “adjusted non-refundable tax credits amount”« montant de crédits non remboursables rajustés » “adjusted non-refundable tax credits amount”, of an individual for a taxation year, means the amount determined by the formula A + B where A      is the total of all amounts, each of which is an amount claimed by the individual — not exceeding the amount that may be deducted by the individual — under any of subsections 118(2), (3) and (10) and sections 118.01 to 118.07, 118.1 to 118.3, 118.5 to 118.7 and 118.9 in computing the individual’s tax payable for the taxation year; and B      is the amount that would be deductible by the individual under subsection 118(1) in computing the individual’s tax payable for the taxation year if (a) the dollar amount set out in the formula in subparagraph (a)(ii) of the description of B in that subsection were nil, and (b) the amount determined for the description of C.1 in that subparagraph were determined by the formula C – D where C      is the income of the individual’s spouse or common-law partner for the year, and D      is the dollar amount set out in subparagraph (a)(i) of the description of B in that subsection. “base tax payable”« impôt payable de base » “base tax payable”, of an individual for a taxation year, means the amount that would be the individual’s tax payable under this Part for the year if no amount were deductible under this Division other than an amount deductible under any of sections 118 to 118.9. “combined adjusted base tax payable”« impôt payable de base rajusté réuni » “combined adjusted base tax payable”, of a qualifying individual for a taxation year, means the total of the qualifying individual’s adjusted base tax payable for the year and the adjusted base tax payable for the year of the qualifying individual’s eligible relation. “combined base tax payable”« impôt payable de base réuni » “combined base tax payable”, of a qualifying individual for a taxation year, means the total of the qualifying individual’s base tax payable for the year and the base tax payable for the year of the qualifying individual’s eligible relation. “eligible relation”« proche admissible » “eligible relation”, of a particular individual for a taxation year, means an individual who (a) is resident in Canada, (i) if the individual dies in the year, at the time that is immediately before the individual’s death, and (ii) in any other case, at the end of the year; and (b) is at any time in the year, married to, or in a common-law partnership with, the particular individual and not, by reason of the breakdown of their marriage or common-law partnership, living separate and apart from the particular individual at the end of the year and for a period of at least 90 days commencing in the year. “qualifying individual”« particulier admissible » “qualifying individual”, for a taxation year, means an individual who (a) has an eligible relation for the year who has not deducted an amount under this section for the year; (b) has a child who (i) is under the age of 18 years at the end of the year, and (ii) ordinarily resides throughout the year with the individual or the individual’s eligible relation for the year; (c) is resident in Canada, (i) if the individual dies in the year, at the time that is immediately before the individual’s death, and (ii) in any other case, at the end of the year; and (d) is not confined to a prison or similar institution for a period of at least 90 days during the year. “split-adjusted income”« revenu rajusté par fractionnement » “split-adjusted income”, of an individual for a taxation year, means (a) if the individual’s taxable income for the year is greater than the taxable income for the year of the individual’s eligible relation, the amount that is the individual’s taxable income less the individual’s split adjustment for the year; (b) if the individual’s taxable income for the year is less than the taxable income for the year of the individual’s eligible relation, the amount that is the individual’s taxable income plus the individual’s split adjustment for the year; and (c) in any other case, the amount that is equal to the individual’s taxable income for the year. “split adjustment”« rajustement par fractionnement » “split adjustment”, of an individual for a taxation year, means the lesser of $50,000 and one half of the absolute value of the positive or negative amount determined by the formula A – B where A      is the individual’s taxable income for the year, and B      is the taxable income for the year of the individual’s eligible relation. Family tax cut credit (2) For the purpose of computing the tax payable under this Part by a qualifying individual for a taxation year, there may be deducted the lesser of $2,000 and the amount determined by the formula A – B where A      is the qualifying individual’s combined base tax payable for the year; and B      is the qualifying individual’s combined adjusted base tax payable for the year. Deduction not available (3) No amount is deductible under subsection (2) in computing an individual’s tax payable under this Part for a taxation year if the individual or the individual’s eligible relation (a) does not file with the Minister a return of income in respect of the taxation year; (b) becomes bankrupt in the calendar year in which the taxation year ends; or (c) makes an election for the taxation year under section 60.03. Taxation year deeming rules (4) For the purpose of applying the definition “qualifying individual” in subsection (1), in determining whether a child ordinarily resides throughout a taxation year with an individual or the individual’s eligible relation, the taxation year is deemed not to include (a) in the case of a child who is born or is adopted in the year, the portion of the year before the child’s birth or adoption; (b) in the case of an individual who marries or becomes a common-law partner at any time in the year, the portion of the year before that time; (c) in the case of an individual, an eligible relation of an individual or a child who dies in the year, the portion of the year after the death; and (d) in the case of an individual or an eligible relation of an individual who becomes resident in Canada in the year, any portion of the year in which the person is non-resident. (2) Subsection (1) applies to the 2014 and subsequent taxation years. 6. (1) Clause 128(2)(e)(iii)(A) of the Act is replaced by the following: (A) under any of sections 118 to 118.07, 118.2, 118.3, 118.5, 118.6, 118.8, 118.9 and 119.1, (2) Subsection (1) applies to the 2014 and subsequent taxation years. 7. (1) Subsection 153(1.3) of the Act is replaced by the following: Reduction not permitted (1.3) The Minister shall not consider either of the following circumstances as a basis on which a lesser amount may be determined under subsection (1.1): (a) a joint election made or expected to be made under section 60.03; or (b) a deduction or an intention to claim a deduction under section 119.1. (2) Subsection (1) applies to the 2014 and subsequent taxation years. PART 2 2006, c. 4, s. 168 UNIVERSAL CHILD CARE BENEFIT ACT Amendments to the Act 8. The definition “qualified dependant” in section 2 of the Universal Child Care Benefit Act is replaced by the following: “qualified dependant”« personne à charge admissible » “qualified dependant” means a person who is a qualified dependant for the purpose of Subdivision a.1 of Division E of Part I of the Income Tax Act. 9. Section 3 of the Act is replaced by the following: Purpose 3. The purpose of this Act is to assist families by supporting their child care choices through direct financial support to a maximum of (a) $1,920 per year in respect of each of their children who is under six years of age; and (b) $720 per year in respect of each of their children who is six years of age or older but who is under 18 years of age. 2010, c. 25, s. 75(1) 10. (1) The portion of subsection 4(1) of the Act before paragraph (a) is replaced by the following: Amount of payment — child under six years 4. (1) In respect of every month before January 1, 2015, the Minister shall pay to an eligible individual, for each month at the beginning of which he or she is an eligible individual, for each child who, at the beginning of that month, is under six years of age and is a qualified dependant of the eligible individual, (2) Section 4 of the Act is amended by adding the following after subsection (1): Child under six years — January 1, 2015 (1.1) In respect of every month as of January 1, 2015, the Minister shall pay to an eligible individual, for each month at the beginning of which he or she is an eligible individual, for each child who, at the beginning of that month, is under six years of age and is a qualified dependant of the eligible individual, (a) a benefit of $80, if the eligible individual is a shared-custody parent of the qualified dependant; and (b) a benefit of $160 in any other case. Other children — January 1, 2015 (1.2) In respect of every month as of January 1, 2015, the Minister shall pay to an eligible individual, for each month at the beginning of which he or she is an eligible individual, for each child who, at the beginning of that month, is six years of age or older and is a qualified dependant of the eligible individual, (a) a benefit of $30, if the eligible individual is a shared-custody parent of the qualified dependant; and (b) a benefit of $60 in any other case. 1992, c. 48, Sch. Related Amendments to the Children’s Special Allowances Act 2006, c. 4, s. 170 11. Section 3.1 of the Children’s Special Allowances Act is replaced by the following: Monthly special allowance supplement 3.1 (1) There shall be added to a special allowance that is payable under section 3, for a child who, at the beginning of the month for which that allowance is payable, (a) is under six years of age, (i) a special allowance supplement in the amount of $100, in respect of every month before January 1, 2015, or (ii) a special allowance supplement in the amount of $160, in respect of every month as of January 1, 2015; and (b) is six years of age or older, a special allowance supplement in the amount of $60, in respect of every month as of January 1, 2015. Payment out of Consolidated Revenue Fund (2) The supplement is to be paid out of the Consolidated Revenue Fund. 2006, c. 4, s. 171 12. Paragraph 4(4)(d) of the Act is replaced by the following: (d) reaches 18 years of age. Coming into Force July 1, 2015 13. This Part comes into force, or is deemed to have come into force, on July 1, 2015. Published under authority of the Speaker of the House of Commons Explanatory NotesUniversal Child Care Benefit Act Clause 8: Existing text of the definition: “qualified dependant” means a person who has not attained the age of six years and who is a qualified dependant for the purpose of Subdivision a.1 of Division E of Part I of the Income Tax Act. Clause 9: Existing text of section 3: 3. The purpose of this Act is to assist families by supporting their child care choices through direct financial support to a maximum of $1,200 per year in respect of each of their children who has not attained the age of six years. Clause 10: (1) Relevant portion of subsection 4(1): 4. (1) The Minister shall pay to an eligible individual, for each month at the beginning of which he or she is an eligible individual, for each child who is a qualified dependant of the eligible individual at the beginning of that month, (2) New. Children’s Special Allowances Act Clause 11: Existing text of section 3.1: 3.1 If a special allowance is payable under section 3 for a child under the age of six, there shall be added to that special allowance a special allowance supplement in the amount of $100 to be paid out of the Consolidated Revenue Fund. Clause 12: Relevant portion of subsection 4(4): (4) A special allowance ceases to be payable with the payment for the month in which the child in respect of whom the special allowance is payable ... (d) reaches eighteen years of age or, in the case of a special allowance supplement paid under section 3.1, reaches six years of age.