Canada Child Tax Benefits

Anyone with kids can gain a lot from the Child Tax Benefit.

Not only do children need constant attention, but they also need financial support. Children may be cute, but they cost a bundle. This may deter some couples from having children.

To help encourage more couples to have children, the government offers many tax breaks to parents.

In this article, we’ll look at the Canada Child Benefit (CCB), which replaced the Universal Child Care Benefit (UCCB), some years ago. We’ll also look at other child and family benefits for parents to see if they qualify.

Everything you wanted to know about the Canada Child Benefit

Are you the parent of children under 18 years of age? If so, you may be receiving the CCB direct deposited into your bank account. The CCB replaced the former Canada Child Tax Benefit (CCTB), the National Child Benefit Supplement (NCBS) and the UCCB effective July 2016.

Depending on your household’s income level, you may earn more or less than you had been receiving from the UCCB. The idea of the CCB is to help with the cost of raising children to make it more affordable for Canadians.

You don’t need to apply for the CCB on an annual basis. As long as you file your tax return, you should continue to receive CCB payments if you remain eligible. You must file your tax return because the government uses your net family income to determine your eligibility.

Each month of the benefit year (July to June in the following year), CCB payments are adjusted. The adjustments are made based on:

• How many children you’re caring for
• The children’s ages
• Marital status
• Net family income from the prior year’s tax return

How much your family will receive in CCB payments depends on your family’s net income. Low income families with children making less than $31,120 are eligible to receive the maximum for each of your children. Your CCB payments start decreasing once your net family income is more than $31,120.

Families with children under six years of age would be eligible for a maximum CCB payment of $6,639 annually or $553.25 per month. Meanwhile, families with children between the ages of six and 17 would be eligible for a maximum CCB payment of $5,602 annually or $466.83 per month.

A critical difference between the CCB and UCCB is that the CCB is tax-free. That means you don’t need to pay any income tax on your CCB payment. You also don’t need to include any CCB income on your tax return.

Are you looking to make the most of your CCB payments? Here’s some advice on making the best use of this tax credit.

The expenses of raising children

Children may be cute, but raising them isn’t cheap. The average cost of raising a child to 18 years old is $243,660, according to MoneySense.ca. In case you’re wondering, that averages out to $12,825 per year or $1,070 per month for every child that you have. And that’s before you send them off to college. Yikes!

Make the most of the CCB payments by using them specifically for your kids. Whether it’s for child care, clothing, food, sports or extra-curricular activities, by using the CCB payments to help cover these expenses, you’ll feel less of a pinch on your monthly cash flow.

Pay down debt

Once you have your monthly cash flow taken care of, you can use the CCB payments for other purposes like paying down debt. Focus on paying off high-interest debt first; for most families, that’s credit card debt. Pay down the debt with the highest interest rate or the small balance, whichever you find most motivating. You’ll be amazed how much of a difference an extra $100 here and there can go towards helping you reach debt freedom that much sooner.

Help with post-secondary education costs

Attending college and university doesn’t come cheap these days. The average expense of attending a year of post-secondary education in Canada is $19,498.75, according to a Maclean’s survey.

With many careers requiring a university education, unless you want your child to find themselves up to their eyeballs in debt, it’s smart to plan ahead. You can do that by setting up and contributing a portion of your CCB payments to a Registered Education Savings Plan. You’ll get the bonus of a 20 percent top up from the government for any money you contribute. The money you’re saving for your child’s education will also grow tax-free inside the account.

Cash instead of credit

When do you find yourself usually reaching for your credit card? When you’re shopping? How about when you’re dining out? Transfer some of your CCB money to a savings account so that you can keep your debt load in check.

Child tax credits to be familiar with

Raising children can be costly. Luckily there are chances to save money. The government offers tax credits to low and moderate-income families to help with the expense of raising children. Do you qualify for these tax credits? Are you taking full advantage?

We’ve already talked about the CCB in great depth. Below is a list of other child tax credits and benefit programs you’ll want to be aware of and apply for if you’re eligible.

Ontario Child Benefit

The Ontario Child Benefit supports low and moderate-income families in Ontario. It provides financial assistance to parents with the cost of raising a child. It supports a million children in over 500,000 families in Ontario. Under the Ontario Child Benefit, you should receive $1,434 per year for each child, regardless of whether you’re working or not.

Temporary Care Assistance

Are you temporarily looking after a child in financial need and you’re not their birth or adoptive parent? If that’s the case, you may be able to get financial assistance from the government under Temporary Care Assistance. You may receive money under this benefit program if the child is not your legal dependent, needs financial support and isn’t under the care of the Children’s Aid Society.

Transition Child Benefit

If you’re not receiving the Ontario Child Benefit, you’re getting less than the maximum amount, or you’re waiting for the payment dates to commence, and you have a child that’s less than 18 years old, you may qualify to receive the Transition Child Benefit.

The purpose of the Transition Child Benefit is so that the incomes of families on social assistance who aren’t getting the maximum benefit from the Ontario Child Benefit and Child Benefit Supplement don’t fall. The Transition Child Benefit pays monthly.

Ontario Child Care Subsidy

The Ontario Child Care Subsidy is to help families pay for the high cost of childcare. You’re able to apply for the Ontario Child Care Subsidy if your child is:

• Younger than 13 years old (or up to 18 years old if your child has specials needs)
• Enrolled in an approved recreation program, a before or after school program run by the school board, or
• Enrolled in a licensed child care program

Claim Eligible Child Care Expenses

Are you a parent, spouse or common-law partner who incurred child care expenses for someone to look after your child? If you were earning an income from employment or you were attending school, you may be able to claim child care expenses on your tax return if you qualify.

Child Disability Benefit

Do you have a child with a disability? The government recognizes that there are often extra expenses in raising a child with a disability. The Child Disability Benefit is a tax-free monthly payment to help families looking after a child with disabilities. To qualify, your child must be under the age of 18 and suffer from “severe and prolonged impairment in physical or mental functions.” You’re able to receive the Child Disability Benefit if your child is eligible for the CCB and the Disability Tax Credit. (Note: If you’re already receiving the CCB and your child qualifies for the Disability Tax Credit, you don’t need to apply. You should automatically get the Child Disability Benefit.)

You can expect to receive up to $2,832 per year or $336 per month under the Child Disability Benefit. The Benefit decreases when you have a net family income of more than $67,426.

Healthy Smiles Ontario

Although Canada has a reputation for having free healthcare, something that isn’t free is trips to the dentist. Unless your child is under your employer’s dental benefits program, you must pay for these expenses out of pocket yourself. Problems arise when you earn a low income and may not be able to afford to pay for a visit to the dentist for your child.

Healthy Smiles Ontario provides dental care services to children under 17 years old. The program is for low-income families who need financial support. The Ontario government funds the program and provides free preventative, routine, and emergency dental services to qualifying children. Costs covered under the plan include check-ups, cleaning, fillings, scaling, x-rays and more.

If you’re in Alberta, look into the Alberta Family Employment Tax Credit (AFETC) for more financial assistance during tax season.

If you’d like to check your eligibility on the above and more, head over to the Ontario Tax Credit Calculator and Child Benefits Calculator to check.

Does the high cost of living and raising kids have you turning to debt to cover your expenses? Paying down your debt can actually help you improve your cash flow, and we can help. Call one of our trained credit counsellors at 1-888-294-3130 or check out our free online debt analysis.