The Canada Child Benefit Overview

Posted 06 Apr 2017 by Melissa Allan

Well it’s been a little over a year now since the Liberal government announced the end of the Universal Child Care Benefit (UCCB) and introduced the new consolidated program: Canada Child Tax Benefit (CCB).  The UCCB benefit was taxable and given to everyone regardless of their income based on the number of children you had and their age. 

What is the Canada Child Benefit?

The CCB is a 100% tax free monthly payment to parents/guardians of children under 18. The amount of your benefit is based on the income reported on your most recent tax return. One of the changes made to the system in 2016 raised the qualifying income thresholds so many families who didn’t qualify under Stephen Harper’s government now qualify. Most families earning under $150,000 in net income will receive the CCB however many families earning above this amount won’t get anything.  The highest benefit goes to families earning under $30,000.

Your benefit can change each year based on your income; once you’ve filed your 2016 income taxes the CCB calculated based on your net family income from this return will begin in July, 2017.

Who qualifies for the CCB?

I like the fact this calculation is based on your net income from line 236 on your income tax return.  This allows your RRSP & pension contributions along with child care expenses to be factored into the calculation (since these deductions are subtracted from your gross income before federal & provincial income taxes are calculated).  Other factors into the amount you qualify for are:

  • your marital status,
  • your province of residence,
  • the number of children you have,
  • the ages of your children and
  • your child’s eligibility for the disability tax credit.

Although the new CCB is tax free, with the 2016 budget we did lose some deductions on our federal and provincial tax schedules, such as the $2,048 dependent deduction and the child fitness credit (though the credit can be claimed at 50% on your 2016 tax return).  Depending on your personal situation, you may have been better off with the original credits and deductions than the CCB enhancements.

Getting the most of your CCB

Many families rely on the CCB for day to day expenses, however I do encourage families to direct all or a portion of this benefit into an RESP for your child.  The government will then give another grant (Canada Education Savings Grant) of 20% up to $500 a year for eligible children.  The government could literally pay for your child’s education if you started RESP contributions early enough, and it could certainly help reduce the national student debt levels if every parent were able to do this.  We have had some parents take a portion of their CCB and purchase a small whole life insurance policy for their child as well.  There are many strategies to consider to help create financial security for your children. 

To determine what plan is most suitable for you and your family, give us a call.