Beginning this summer, changes are being made to child benefits received by Canadian parents.
Previously, eligible Canadians would receive a non taxable benefit every month, which was based on the family’s income. In addition, they would also receive the Universal Child Care Benefit, which was a taxable benefit received by every parent with an eligible child, regardless of the family’s income.
These changes will see both payments merged into one non-taxable benefit. Most Canadians should see an increase in the amount of the benefit. However, higher income taxpayers are the most likely to see their benefits decreased, as this is an income based benefit.
A parent can receive up to $6,400 per year from the federal part of the program for children under the age of 6, and $5,400 per year per year for children 6 to 17.
If the adjusted family net income (AFNI) is less than $30,000, the taxpayer will qualify for the maximum benefit. The benefit will be reduced by 13.5% of income between $30,000 and $65,000. Income above $65,000 will reduce the benefit by 5.7% of the amount that is above the threshold. Using these calculations, a family with two children under the age of 6, having and AFNI of $80,000, will receive annual benefits of $7,220.
If a taxpayer was eligible for either of the original benefits, but did not receive them, they can still apply for those benefits.They must file an application within 10 years from the month that they should have received the benefit.
AFNI includes the amounts reported on Line 236 of both spouses’ tax returns, less any Universal Child Care Benefits and any taxable Registered Disability Plan income. Any income earned by children is not included in the calculation.
Income received from these benefits will not affect eligibility for the Goods and Services tax credit, or any other income tested programs outside of the income tax system, such as the Canada Education Savings Grant.