A Money Coach in Canada

Follow & Subscribe

Ask an Accountant is provided by YMbD’s favourite accountant, Mindy Abramowitz.  Today, she gives some good news to parents — payments from the gov’t for kids, and tax credits.   (hmm.  I wonder if they’d consider helping out parents of daschunds.)


babyHere is a roundup of the benefits and tax credits for parents of young children:

Canada Child Tax Benefit

The CCTB is a monthly, tax-free payment for any child under the age of 18. Payments begin in July and carry on through June based on the net income reported on your tax return from the previous year. Everywhere but in Alberta, the basic amount is $1,238/child/year (plus an additional $90 for third and each additional child). This amount is reduced by 2% of the family net income that exceeds $37,178 (4% for families with two or more children). Eligibility for the benefits tops out at a family income of approximately $101,328. But keep in mind that this figure is income net of RRSP contributions. You must apply to the federal government in order to receive this benefit.

Universal Child Care Benefit

The UCCB is available for each child under the age of 6. It is a flat payment of $100/month intended by the government to contribute to child care costs, though its use is left to the discretion of the recipient. The payments are taxable in the hands of the lower income earner in the family. Enrolment in the program is processed with the Child Tax Benefit application.

Child Care Expenses

The spouse with the lower income can deduct up to $7,000 in child care expenses for each child under 16. Eligible expenses include payments to: nannies, daycare centres, nursery schools, day camps, boarding schools and sleep-away camps. Advertising costs to locate a child care provider can also be claimed.

Proposed Children’s Fitness Tax Credit

Starting in 2007, parents are eligible for a tax credit for registering children under 16 in ongoing, supervised activities intended for children that improve cardio-respiratory fitness along with one of the following: muscular strength, muscular endurance, flexibility, balance. The maximum amount eligible for the credit is $500 per child, so the maximum credit is $77.50 per child ($500 x 15.5%). The fees must have been paid in 2007 in order to be eligible. You will need a receipt to document the claim, though you are not required to submit receipts with your tax return.

New Child Tax Credit

The 2007 budget introduced a new child tax credit based on $2,000 per child under 18. The credit is calculated using the lowest personal tax rate of 15.5% and works out to $310/child. Either parent can claim the credit when the child lives with both parents throughout the year. In other cases, the parent who is eligible to claim the child as a dependent can claim the credit.

About the Author

Imagine if Canadians were known for being all over their money. Engaged. Proactive. Getting out of debt. Savvy. Saving. Generous. Nancy wants to help. Nancy started her own journey with money over 15 years ago, and formed her company “Your Money by Design” in 2004 to help others along the same path. It’s not the usual financial advising/investment stuff. It’s about taking control of day-to-day finances –managing monthly cashflow effectively, spending appropriately, getting out of debt, saving. If you're ready to take control over your finances, pop by her business site, YourMoneybyDesign.com

Leave a Reply

CommentLuv badge