Beginning on July 20th, the Liberal Government is scrapping two existing child benefits and replacing them with one new benefit called the Canada Child Benefit. So will you win or lose when the new benefit kicks in?
According to the Liberals, about 9 out of 10 Canadian families will receive higher payments under the Canada Child Benefit than before.
Geoff Gravett
CPA, CA , LPA
Millards Chartered Professional Accountants
Geoff Gravett, CPA, CA and LPA from Millards Chartered Professional Accountants in Brantford, says that while the outcome depends on your taxable income as well as the number and age of your children, most Canadian families will see an average increase in child benefits of almost $2,300 each year.
“If your combined family income exceeds $150,00 per year, you’ll most likely see a clawback of the CCB benefits. However the majority of households will enjoy a benefit. Lower and middle income families will be especially happy.”
A single parent who earns $10,000 per year will now receive $1,630 more per year under the CCB for a maximum of $12,800 per year. Under the former CCTB and UCCB plan, the same parent would only receive a $11,170 benefit.
“Under the Liberal’s new CCB, a single parent, who earns $30,000 per year, with two children under the age of six would receive $12,800 each year. That’s an increase of $205 per month vs the old plans.”
The Liberals introduced the new benefit along with an announcement that they would eliminate the CCTB and UCCB.
“Canada’s existing child benefit system is complicated, consisting of a tax-free, income-tested Canada Child Tax Benefit with two components and a taxable
Universal Child Care Benefit received by all families, regardless of income. It is a system that is both inadequate and not sufficiently targeted to those who need it most.”
So how do families take advantage of the new benefit? Gravett says that there is no action required on the part of families and that the new benefits are automatic if your tax returns are in good standing.
“There is no need to apply if you already get child benefits, but you and your spouse or common law partner have to file a 2015 tax return. If you are eligible, you will automatically start receiving the new Canada Child Benefit as of July 2016.”
Gravett is directing Millards Chartered Professional Accountants clients and the public to the Government’s online calculator to get a better idea of the benefit they should receive.
“Simply choose which province you live in, input your family net income and the number of children you have under the age of 18.”
Click here to visit the Child Benefit Calculator.
Watch the video below for an overview of the new benefit revealed in Budget 2016.
Born and raised in Brantford, Geoff Gravett joined Millards in 2000 . His practice areas include accounting, taxation and management advisory services, estate and succession planning as well as business purchases and sales. He has a special interest in helping health care professionals, dental practices and high net worth individuals.
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