The Canada Child Benefit (CCB) is a tax-free monthly payment. It helps Canadian parents offset the high cost of raising children under the age of 18. Moreover, the CCB provides a significant net cash boost to parents of different income levels.
Families with combined incomes under $66,000 will get more out of the program. But the maximum benefit per child targets low-income parents with an adjusted family income below $30,000.
The Child Tax Credit was a non-refundable tax credit claimed on a tax return. It was replaced, along with the Universal Child Care Benefit (UCCB) in July of 2016. That's when the liberal government made sweeping changes and rolled out the Canada Child Benefit (CCB) program.
Amounts paid under the UCCB program were taxable income reported by the parent. On the other hand, CCB payments are tax-free and payments aren't reported on your tax return or calculated in your tax payable calculation.
In a nutshell, by 2017, the CCB simplified federal Child and Family Benefit programs. It also replaced other measures like the confusing Fitness Amount Tax Credit. Once you apply for the CCB, the CRA calculates your benefit automatically every year based on the family income you declare. It then deposits your benefit monthly into your bank account, starting in July.
Provinces and territories offer many other benefits and credits. The CRA's comprehensive benefits calculator gives you a breakdown of the benefits you might be entitled to, depending on where you live. To use it, you'll need to answer a series of questions about your income and family situation.
For more information on these benefits in general, see the CRA's overview of child and family benefits.
Applying is simple. You can apply for the CCB in CRA's My Account or by mailing in Form RC66, Canada Child Benefits Application. Or, when you register your child's birth, using the CRA's Automated Benefits Application.
To be eligible for the CCB, you must meet all of the following conditions:
Each person who is primarily responsible for the care of a child can apply for the benefit. A grandparent or guardian who's fully or partially responsible is also entitled to the benefit.
Your children could also be eligible for the child disability benefit (CDB). If they're approved for the disability tax credit, you don't need to apply for the child disability benefit. You'll get it automatically.
Low-income families benefit most from the CCB. Benefit amounts can be substantial, so make sure you follow the application process. If you missed out or forgot to apply, you can request an adjustment for previous years if you were eligible.
Your 2017 family income determines the amount of your benefit for 2018-2019. If you earned less than $30,500 in 2017, your annual CCB and disability amounts for July 2018 to June 2019 will be:
Basic CCB Amount Basic CBD Amount Children under 6 $6,496 Children age 6 to 17 $5,481 For each eligible child $2,771
If your 2017 family income was between $30,450 and $65,975, you won't get the full CCB amount:
Number of Children Reduction Amount 1 child 7% of income less than $65,975 2 children 13.5% of income less than $65,975 3 children 19% of income less than $65,975 4 or more children 23% of income less than $65,975
Your CCB and CDB would have been even lower if your 2017 family income exceeded $65,975:
Number of Children Reduction Amount 1 child $2,487 + 3.2% of income less than $65,975 2 children 4,796 + 5.7% of income less than $65,975 3 children $6,750 + 8% of income less than $65,975 4 or more children $8,171 + 9.5% of income less than $65,975 CBD Reduction 1 child 3.2% of income greater than $65,975 2 or more children 5.7% of income greater than $65,975
Let's say you and your spouse live together and have 3 children, ages 4, 5 and 12. If your 2017 family income was under $30,500, here are your annual CCB amounts, paid monthly starting in July 2018:
The government recalculates your benefit payments annually, and the new rate takes effect in July. The 2019-2020 indexation factor of 2% the government projects could boost the basic CCB amount to $6,626.
According to Taxtips.ca calculations (2017 amounts), for a family with 2 children under the age of 6 and adjusted family net income (AFNI, i.e. family net income not including child benefit payments) of up to $30,000, the CCB was $12,800 per year from July 2017 to June 2018.
If AFNI was $65,000, the 2017 CCB reduction would have lowered the CCB from $12,800 (2 x $6,400) to $8,075. According to taxtips.ca, no benefit would be paid if AFNI exceeded $107,050. Use the CRA's benefits calculator to find out exactly how much you could get.
The differences between the Child Tax Credit, the UCCB, and the more recent CCB, are confusing. Before the CCB, various programs ran at the same time and had changed many times within a few years.
The good news is that almost all Canadian families get more benefits with the CCB than any other previous program. However, all subsidy programs depend on what elected governments do, so the CCB is far from set in stone.
The tax-free CCB payments go right into your bank account. What you spend the money on is up to you. You could use the money to top up or start an RESP. Or, to help pay for child care expenses, which are tax-deductible. Benefit payments like the CCB aren't reported as income. On the other hand, child-care costs are tax-deductible. They can lower the amount of income tax you have to pay.
Child care is a major expense for parents across Canada. Currently, Quebec is the only province to offer heavily subsidized child care. According to Peky Tsang, a senior business tax analyst with Intuit (makers of TurboTax software), you can claim childcare costs paid to daycare centres, day nursery schools, caregivers such as nannies, day camps, and overnight boarding schools and camps that provide lodging.
If you're self-employed or run a small business, you already know that reasonable business expense claims can help lower your income tax payable. These can be general business expenses or costs related to using your car for business purposes.
Likewise, parents can deduct some of the high costs of daycare to lower their income tax. They can claim up to $8,000 for children younger than 7, and $5,000 for kids aged 7 to 16. Disabled children could qualify for additional amounts. As you might expect, the CRA has rules for claiming child care expenses. Refer to the CRA's Line 214 Child-care expenses information to find out more.
Determining which parent gets what benefit depends on who has custody of the child. The CRA considers that both parents share custody when:
Each parent or guardian who's primarily responsible for the child's care would be eligible to receive an equal share of the benefit.
If you recently started sharing custody of your children, you need to apply for the CCB. But If you already receive it, the CRA needs to recalculate your benefit based on your new situation:
Your payments will be recalculated accordingly. If you have full custody, you'll get the full amount of the benefit.
Family tax benefits have come a long way in less than a decade. The CCB provides the best incentive that young Canadians looking to start a family have ever had. It also provides more help than ever before to most parents who have to deal with the costs of raising children.