Expect a nasty surprise come next tax season, warns Yukon accountant

Tax season next year might bring some unpleasant surprises to Yukoners.

Tax season next year might bring some unpleasant surprises to Yukoners.

“I think there’s going to be an awful lot of unhappy people come February, March and April when they’re going to do their taxes,” said Judi Erickson, owner of Liberty Taxes in Whitehorse.

That’s partly because the overhauled federal Universal Child Care Benefit is taxable and Yukon’s own child tax credit disappeared.

But another part of the equation is that the Yukon’s own expanded child benefit, which gives eligible families a monthly payment. This spring the benefit grew to $820 from $690 per year, and the income threshold moved to $35,000 from $30,000.

But the benefit is income-based. “As always, the government never explains the downside of it,” said Erickson.

To get the full benefit, a combined family income must be under $35,000. Families earning $51,400 would get half, and those earning $67,800 won’t get any break from the benefit.

Two partners with one child earning $30,000 each, which Erickson defines as a low-income family, would only get $195 of the $820. With two children or more, they wouldn’t get any benefit.

“For a lot of people up here where both parents are working, they’re in a high income tax bracket, they’re going to feel the pinch, I think,” she said.

“Those that are working in minimum wage jobs, both parents have to work, they’re penalized because there’s a combined family income,” she said.

According to figures from the Yukon Bureau of Statistics, the average income per Yukon taxpayer was $50,707 in 2011.

When asked about Yukon tax credits earlier this week, Premier Darrell Pasloski said changes to the territory’s income tax policy will leave “more money in the pocket of all Yukoners.”

He pointed to the Yukon child benefit. He also mentioned changes to the Yukon child fitness tax credit, which is now refundable. That means families whose income is too low to pay taxes will still receive the credit.

Pasloski also said his government’s cuts to income tax will lead to significant savings for Yukoners “across the board.”

The premier announced the changes to the child benefit and the child fitness tax credit during speeches he made in the legislative assembly this spring. At the time, he also announced the cancellation of a low-income family tax credit – different from the lost Yukon child tax credit – which he argued was largely ineffectual. He said the average credit people received was just $42, and that less than two per cent of taxpayers that claimed the credit had children.

Pasloski said he articulated all of these changes “quite clearly” in the legislative assembly.

But in those speeches, he never made reference to the disappearance of the Yukon child tax credit that accompanied the upgrade to the UCCB.

The News has yet to find an official document where that change was mentioned.

Pasloski was not available for a follow-up interview about how the child benefit threshold impacts low-income families, because he was on his annual hunting trip, his office told the News.

– with files from Maura Forrest

Contact Pierre Chauvin at pierre.chauvin@yukon-news.com