When we decided to have kids, I had no idea the government gave out tax free monthly benefits to help support raising children. The program that supports families is called the Canadian Child Tax Benefit (CCB).
It was easy to apply for because the nurses gave me all the papers in the hospital room after our first child was born.
What is it?
The Canadian Child Tax Benefit (CCB) provides tax free monthly benefits to families. This means you don’t pay any tax on the money. It’s meant to support families with raising kids. If you have kids, you know how much work it is and all the added expenses that come with raising them.
People without kids might think we are lucky, but with the high taxes we pay combined with high child care costs, every bit of support helps.
Who receives it?
Basically, any person or couple that has a child receives CCB. You should apply as soon as your child is born, adopted, or in your custody. If your child is born in a hospital, the staff there will probably give you forms to fill out along with a birth certificate application.
How much do you get?
In a nutshell, the less money your family makes, the more CCB you will receive. Also, the more kids you have, the more money you get. If you have 4 kids under 6 (yikes!) and make less than $33,000, you will get the maximum payment of $27,988.
That’s a lot of money considering it is tax free. Plus, you can still make up to $32,797 and not lose any of your benefits. If you have one kid and make loads of money, you’ll hardly get anything.
Payments are based on your family adjusted net income. What does that mean?
Adjusted net income is your gross income minus any deductions. Common deductions are RRSP contributions, medical expenses, union dues, moving expenses, donations, and child care expenses.
All those deductions can lower gross income to arrive at your adjusted net income or also known as your taxable income. The CRA uses Line 23600 on your income tax return to determine the amount you will receive for the CCB.
The CRA uses three income brackets to determine CCB payments. Children under 6 receive more money because, well, they are a lot more work.
Less than $32,797 – You’ll receive the maximum amount
- 1 Child Under 6- $6997/year or $583/month
- 1 Child Over 6 – $5903/year or $492/month
- 2 Children Under 6 – $13,994/year or $1166/month
- 2 Children Over 6 – $11,806/year or $983/month
- 3 Children Under 6 – $20,991/year or $1749.25/month
- 3 Children Over 6 – $17,709/year or $1476/month
- 4 Children Under 6 – $27,988/year or $2332/month
- 4 Children Over 6 – $23,612/year or $1968/month
Between $32,797 and $71,060 – You’ll receive the maximum amount minus a percentage of your income over $32,797.
- 1 Child – reduced by 7%
- 2 Children – reduced by 13.5%
- 3 Children – reduced by 19%
- 4 Children – reduced by 23%
Over $71, 060 –
- 1 Child: Max Amount – ($2678 + 3.2% of income over $71,060)
- 2 Children: Max Amount – ($5166 + 5.7% of income over $71,060)
- 3 Children: Max Amount – ($7270 + 8% of income over $71,060)
- 4 Children: Max Amount – ($8801 + 9.7% of income over $71,060)
When do you receive payments?
Families receive payments once a month on the 20th. If the 20th lands on a weekend, the payment will be made on the Friday. The exception is December. This payment is always made a week earlier. I assume this is so families can buy their children Christmas presents.
How to increase your CCB?
There are a fews ways that you can lower your adjusted net family income. Obviously, there isn’t a one size fits all answer here. You need to decide what works best for your family.
Work less – by working less or having one spouse taking time off work, this could dramatically lower your adjusted net income.
RRSPs – Lower your net income by maxing out your RRSPs. Not only do you receive a larger tax refund by contributing to your RRSPs, you also receive more CCB.
Claim Childcare expenses – Do you pay someone else to look after your kids(s)? Then you have childcare expenses. Claim this expense when you file your income tax return.
Healthcare expenses – Did you pay out of pocket for dental cleaning/work, prescriptions, glasses, and insurance premiums? Claim these expenses when you file your income tax return.
What should you use it for?
The CCB is meant to help raise your kids but only you can decide where the money goes.
Childcare – childcare is one of the greatest expenses when raising kids. It can often be more than a mortgage payment depending on the city you live in.
Food – Food and formula are expensive.
Clothing – Children constantly need new clothes because they grow so quickly. You can spend $100 month on clothes or $0 by joining parents groups or buy nothing groups.
RESP – Registered Education Savings Plan. If you invest money into this registered account, the government will give you an additional 20%. It’s hard to beat that return!
Activities – As children get older, their activities become more expensive. But depending on the activity, prices can range from free to $100s or even $1000s.
Conclusion and Recommendation
After reading this article, I encourage you to also read the CRA website for additional information. Thanks for reading and take good care of your kids. This money is meant for them and their future.