What is the Canada child tax benefit? – From Ask

What is the Canada Child Tax Benefit?

Today we will talk about Canada child tax benefit. Raising kids can be a drain on the wallet, but qualifying families can take advantage of monthly tax-free payments from the government to help relieve some of those costs. Known as the Canada Child Benefit, these funds are based on factors like household income, family size, and province or territory of residence. It might take time to gather all the necessary information, but applying for this assistance begins with filling out a straightforward online form that has step-by-step instructions you can follow along with along the way.

Fromask.com briefly describes Canada’s child tax benefit. In 2016, the government replaced an existing social security benefit with a new program to reward young families for having children. This is done by a monthly direct payment that goes directly into the bank accounts of Canadian parents with at least one child under the age of 18. The Federal government created this program to allow low-income families with kids to deserve more rewards and support than they were getting.

Read more: Child Tax Credit

What is the proposed Canada Child Tax Benefit?

The name of the budget is friendly: “the Canada Child Benefit” makes you think of cuddly, teddy bear creatures; it evokes a warm fuzzy feeling. That being said, the interesting part of this budget is that it replaces both UCCB and CCTB with a new program. The new Canada Child Benefit (CCB) will give strong benefits to families with incomes less than $150k kicking in at $190/month for all kids under six years old and decreasing by $1/month after that up until no benefit is given past family income greater than or equal to $185k (2017 figures).

  • A tax-free benefit paid monthly to eligible families;

  • Paid over 12 months from July of one year to June of the next year (starting with July 2016 to June 2017);
  • Phased out starting when adjusted family net income (AFNI) exceeds $30,000 (determined for the upcoming benefit year from the 2015 tax return); and

  • Automatically determined, subject to the phase-out, for Canadians who are currently receiving the UCCB or the CCTB.

How is the Canada Child Tax Benefit calculated?

The maximum annual benefit for any one child under the age of six is currently $6,400 and $5,400 for each child aged six through 17. This benefit will start to be reduced (phase out) when your adjusted family net income hits $30,000. The rate of reduction will depend on how many children you have that are eligible.

Phase-out Rates (%)
Number of eligible children     AFNI over $30,000  
and up to $65,000 
AFNI over $65,000

1 child

7.0

3.2

2 children

13.5

5.7

3 children

19.0

8.0

4 or more children

23.0

9.5

How to apply for the Canada Child Benefit

You should apply for the CCB as soon as any of these events happen:

  • Your baby is born
  • Your child starts to live with you after a period of living elsewhere
  • Your custody arrangements change, or you are granted custody of a child
  • You or your spouse or partner start to meet the criteria and become eligible

You can apply for the Canada child tax benefit as soon as a child is born, or if you start to meet the eligibility requirements. For example, you can apply for the Canada child tax benefit when you register the birth of your newborn child, usually at the hospital or birthing center. As long as you provide your consent and social insurance number (SIN), the CRA will get your information. If you didn’t apply when the child was born, you can apply online via My Account (your CRA account) or by mail. You remain eligible for CCB payments as long as you file your taxes every year and continue to meet the CCB eligibility requirements.

How much Canada child benefit will I get?

  • The number of children in your care.
  • The age of the children.
  • Your marital status.

You will also be required to submit your previous year’s tax return and a written explanation of the changes in income versus expenses over the previous year. Here is a breakdown of each age group. Under six years old: $6,833 per year ($569.41 per month) Six-17: $5,765 per year ($480.41 per month).

The CCB provides reduced payments to families if their AGI exceeds $32,028. Additionally, families are subject to a reduction in the CCB for each dependent child after the first. The CCB also decreases when your income increases above $189,548. Fortunately, using online software you can estimate how much money you will receive every month as part of the CCB program by inputting information according to your and your family’s specific situations. Payments are recalculated automatically by the government every year based on last year’s tax return filing.

After this is done, the government uses inflation rates to adjust maximum benefit amounts for the upcoming calendar year. To ensure the CCB remains available for years to come, it is paid out only to those who file taxes with a Canada Revenue Agency Identification Card number.

Will I receive CCB payments?

For a family to receive help from CCB, they must meet these conditions:

  • You need to live with the child, and the child must be under the age of 18
  • You need to be primarily responsible for the care and upbringing of the child
  • You have to be a resident of Canada
  • At least one parent/spouse/common-law partner must be a Canadian citizen, permanent resident, protected person, or temporary resident who has lived in Canada for the past 18 months

I had a baby but didn’t file my return this year. Will I receive CCB payments?

The CRA calculates eligibility for the Child Care Benefit in July, and it’s based on information that comes from your tax return. To qualify for CCB payments, parents need to file their returns every year to start or continue receiving this government benefit. If an eligible parent doesn’t file their return, even if they have no income to report, the CRA can’t calculate your CCB payments correctly so benefits will end and stop coming in August.

Can I save CCB payments for my child? Will they pay taxes on it?

If you receive the CCB payment in your bank account, you can then move it to an account in your little one’s name, and any interest or dividends earned would be reported by them when they’re mature enough to start filing tax returns. Most of the time, the money earned by the CCB payments will be less than what is considered their amount and will be tax-free (unless your youngster is employed). If you move the payment directly into their account first before depositing it into yours, it would still be considered your income, and they won’t be taxed on it.

Who can claim the Canada Child Tax Benefit

To qualify for the CCB, you and your household must be Canadian citizens, permanent residents, or protected individuals who have been living in Canada for at least 18 months. This can also include temporary residents with valid permits to remain in the country for another month.

  • You live with at least one child under the age of 18.
  • You’re the person primarily responsible for the child’s care.
  • You’re a Canadian resident for tax purposes.

Read more: Innocent Spouse Rule

If you’re caring for a foster child or helping to raise a relative’s child and you aren’t receiving additional help from the Children’s Special Allowances program, it makes sense to apply for the Canada child tax benefit. You’ll need to make sure someone is contacting the Canada Revenue Agency on your behalf. If you have two natural parents or guardians, that responsibility will naturally fall on one of them. But who should it be? To determine which of the two of you that should be:

  • Who takes care of the child’s daily activities and needs?
  • Who makes sure the child’s medical needs are met?
  • Who arranges child care when needed?

When two individuals share the responsibilities of a child equally, as one might expect the CRA will normally assume that each is responsible for this benefit in equal measure. Therefore, the primary beneficiary for purposes of Canada child tax benefit will normally be expected to be the female parent. The Mother can use her place within your joint custody arrangement to sign a statement of alleged entitlement from the other parent and thus opt to apply for it.

In an attempt to reduce any domestic tensions between you and your opposing half about providing financial support then it might be best if one person is solely responsible for the submission of any relevant paperwork so as not to confuse matters further. The CRA will determine which parent qualifies using your particular custodial situation.

Read more: Best High-Interest Savings Accounts

Overview of Canadian Provincial and Territorial Child Benefits

Overview of Canadian Provincial and Territorial Child Benefits

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