Canadian Child Care Supplements

So, you’re looking forward to the birth of a new child. Did you know that the Canadian government has various programs to financially help with the cost burden of raising children in Canada?

The Universal Child Care Benefit is a program that pays $100/month per child under the age of 6 to Canadian families. These payments can start from the month after the child is born, to the month the child turns 6 years old. Interestingly, there are NO financial eligibility conditions for the UCCB – everyone can receive it, no matter what the family’s income is. Assuming you are a legal resident of Canada and live with child, as well provide the primary care for the child, you can be eligible. See http://www.cra-arc.gc.ca/bnfts/uccb-puge/pplctn-eng.html for a complete list of eligibility criteria.

It is important to note that these payments are taxable. In other words, when you do file your annual tax return, the UCCB payments you received in the taxable year will be reported in your line 150. There is no option to deduct income tax at source for the UCCB payments, so make sure you will be able to pay the taxes on the UCCB when they become payable!

Applying for the UCCB program is relatively simple. You can (and should!) apply as soon as possible after the birth of the child, although it may be possible to retroactively collect various child care benefits for past months (up to 11 months I believe) where payments were missed because an application wasn’t sent in. The UCCB application is included in the Canada Child Tax Benefit application. What’s that?!

The Canada Child Tax Benefit is another program that can help a family with the cost of raising a child. The CCTB program differs from the UCCB in that CCTB payments are non-taxable, and are based on net income of the parent(s)/guardian(s) applying. The CCTB is actually made up of 3 separate benefits:
1)Basic Benefit – The basic benefit pays $112.33/month for each child (up to a maximum of 2 children) under the age of 18, and $7.83/month for your third and each additional child. These amounts are reduced for recipients with a family adjusted net income of over $40,970. For a family with one child, the amounts are reduced by 2% of net income that is over $40,970, and for a family with 2 or more children, the amounts are reduced by 4% of net income that is over $40,970.

2)National Child Benefit Supplement – The NCBS payments are: $174/month for the first child, $154/month for the second child, and $146.50/month for each additional child. NCBS payments will be reduced as follows:
a)For a family with one child, the reduction is 12.2% of the amount of the adjusted family net income that is more than $23,855.
b)For a family with two children, the reduction is 23% of the amount of the adjusted family net income that is more than $23,855.
c)For families with three or more children, the reduction is 33.3% of the amount of the adjusted family net income that is more than $23,855.

Another benefit of the NCBS is that if you do receive NCBS payments, your child may qualify for the Canada Learning Bond which contributes funds to your child’s RESP(s)– see last post for more information on the Canada Learning Bond.

3)Child Disability Benefit – the CDB provides financial assistance for families with children who have severe and prolonged impairment in physical and/or mental functions. The benefits pay a maximum of $205.83/month, and starts being reduced when the adjusted family net income is over $40,970.

Wait, there’s more!

Most Canadian provinces have their own programs that help parents cope with the financial burden of raising a child. The Ontario Child Benefit pays up to a maximum of $92.61/month per child, and begins to be reduced for adjusted family net incomes over $20,000.

Not bad, eh? The key here is to take advantage of these government benefits! Later in life, you will likely be paying high amounts of taxes on your income in order to support these very same programs for younger, lower income earning parents. Your own parents, relatives, and friends are probably paying a good amount of taxes which help support these programs. Now is your time to benefit from these programs, so don’t miss out!

Having trouble figuring out what your family’s total CCTB payments will be? You can check out the CRA’s on-line calculator to determine the approximate amount of the benefit at http://www.cra-arc.gc.ca/benefits-calculator. Just to give you an idea of the monthly benefits you may be eligible to receive, I tested the calculator for a married couple with an adjusted family net income of $30,000, with one child who does not qualify for the disabled benefits supplements. The results are:
Basic monthly amount = $112.33
National Child Benefit Supplement monthly amount = $123.72
Ontario Child Benefit Monthly Amount = $33.00
Total monthly amount = $269.05
On top of this amount is the $100/month UCCB payment.

There are no restrictions for where these funds can go – you can turn around and invest them in an RESP or gamble them away in Las Vegas, for all the government cares (I am not necessarily suggesting either!).

Information regarding applying for the CCTB program, as well as the UCCB and OCS, can be found here: http://www.cra-arc.gc.ca/E/pub/tg/t4114/t4114-e.html#P142_7327.
Essentially, you will need to fill out the Canada Child Benefits Application – Form RC66 (http://www.cra-arc.gc.ca/E/pbg/tf/rc66/README.html) or apply on-line if you have an e-account with the CRA.

There are various other programs that the federal and provincial governments run to help with the cost of raising children, especially tax credits/deductions from income. You should definitely talk to your accountant regarding those potential tax benefits.