Many Canadian parents not making the most of available tax
savings: RBC poll
Only half of parents currently saving for their child's
TORONTO, March 10, 2010 — Four-in-ten (42 per
cent) Canadian families with children under the age of 12
are not taking full advantage of tax savings, including 17
per cent who say they are not aware of what options are available
to them, according to a new RBC Tax Planning Poll.
"When you are raising a family, it's important to stretch
every dollar and making the most of available tax savings
can make a big difference," said Patricia Domingo, Investment
& Retirement planner, RBC. "By taking advantage of
available tax credits and incentives, parents can maximize
their tax returns and put that money toward their saving priorities."
The RBC poll also found that just over half (56 per cent)
of young families are currently saving for their child's post-secondary
education. Of the 44 per cent who are not currently saving,
nine per cent feel they won't need to, but the majority (84
per cent) of the rest said that they would like to, but are
unable due to their current financial situation.
The top financial challenges for parents are having money
left over from paycheque-to-paycheque (30 per cent), followed
by paying down debt (28 per cent).
"It can be challenging for young families to balance
savings priorities, but starting with putting aside just a
small amount on a regular basis can make a meaningful difference
in financing your child's education," said Domingo. "A
Registered Education Savings Plan (RESP) is a good option
for parents to consider as there are tax advantages and government
matching programs to help make your child's education goals
RBC highlights the following tips for young families looking
to make the most of tax savings and their financial planning:
Open a Registered Education Savings Plan - RESPs are
flexible savings plans that allow money deposited for your
child's post-secondary education to grow tax-free until they
attend university or college.
The federal government supplements RESPs through the Canada
Education Savings Grant (CESG), which matches contributions
by 20 per cent up to an annual maximum of $500 or $7,200 over
the life of a plan. Upon withdrawal, the income is taxed in
the child's hands, so there should be little or no tax payable
given the child will be in a lower tax bracket. Additional
federal grants are available for lower-income families and
Alberta and Quebec also offer provincially-based savings incentives
to boost education savings.
Open a Tax-Free Savings Account - A TFSA allows you
to grow your money tax-free, up to $5,000 per year. Also,
room from your allowed unused contribution can be carried
forward to future years and any money withdrawn will be added
to unused contribution room so you can re-contribute that
money starting the following year.
Take advantage of child care deductions - Child care
expenses, such as daycare, nannies, summer camp and before
and after- school programs are eligible for a deduction against
income. The claim amount is actual cost of expenses, up to
a specific dollar amount, and is claimed by the parent with
the lowest taxable income.
Take advantage of the Child Amount Tax Credit - This
credit allows you to claim a tax credit on your income tax
return based on an amount of $2,089 for each child under the
age of 18. This can also be applied against tax deducted at
source by your employer.
Take advantage of the Children's Fitness Amount Tax Credit
- This credit entitles you to claim up to $500 per child to
cover costs of enrolment in a qualifying fitness program.
To claim the credit on your 2009 tax return, payments must
have been made on or before Dec. 31, 2009.
Parents can find more information about money management,
simplifying finances and helping families achieve their financial
goals, by visiting rbc.com/couplesandfamilies.
Get the advice you need and download your own personalized
Guide to Everyday Finance.
The RBC Tax Planning omnibus was conducted by Ipsos Reid
between January 29 and February 5, 2010. This online survey
of 517 young Canadian families with children 12 years or younger,
was conducted via the Ipsos I-Say Online Panel, Ipsos Reid's
national online panel. The results are based on an unweighted
probability sample of this size, with 100 per cent response
rate. With a representative sample of this size, the results
are considered accurate to within ±4.3 percentage points,
19 times out of 20. Margins of error for subgroups will be
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Jill Quinn, RBC, (416) 313-8121
Suzanne Willers, RBC, (416) 974-2727