A new addition to your family not only means more to love, but also much to learn. Of course, every relative, friend and stranger will be eager to share their words of wisdom (and often unsolicited advice) on how to properly raise your kids. However, when it comes to your personal finances, you might be left on your own wondering how your bundle of joy will impact your budget and if you qualify for subsidies like the Canada Child Benefit (CCB).
What is the Canada Child Benefit?
The CCB was created to assist lower income families with a tax-free monthly payment based on their household income to help support the cost of having children. While figures vary between sources, the average total for raising a child in Canada from diapers through diploma can add up to approximately $225,000 — or between $10,000 to $15,00 per year for 18 years.
In a world where incomes often do not increase at the same rate of inflation, these can be some daunting figures. Therefore, the CCB provides qualifying families with some much-needed financial reprieve. Trust that you’ll be having enough sleepless nights those first few years of parenthood (and maybe through those turbulent teens, too) – worrying about how you can afford to make ends meet should not add to them.
You can use your CCB payment however you see fit. Some families use it to help cover their children’s basic needs such as groceries, clothing, or school supplies. Others choose to have it directly deposited into their child’s bank account for future savings. Because the money earned via CCB is less than the personal basic amount, rest assured that your child will not be required to pay any tax on it, unless they begin working.
Am I eligible to receive the Canadian Child Benefit?
There are a few determining factors for families to be eligible to receive the CCB.
- Your child must be under the age of 18
- Your child must live with you, or you share custody more-or-less equally
- You must be primarily responsible for the child’s care and upbringing
- You must live in Canada and at least one parent/spouse/common-law partner must be any of the following:
- A Canadian citizen
- A permanent resident
- A protected person
- A temporary resident who has lived in Canada for the past 18 months
- An individual who is registered, or entitled to be registered under the Indian Act
You may qualify for the CCB if you are living with and caring for a child under a kinship or close relationship program, so long as no Children’s Special Allowances are currently payable.
You do not qualify for the CCB for foster children during any months when Children’s Special Allowances are payable.
How much is the Canada Child Benefit?
To determine how much you are eligible for via the CCB, the Canada Revenue Agency (CRA) looks at factors such as the number of children in your household, their ages, and if any of them qualify for the child disability amount. For eligible families, the CCB provides up to $553.25 per month ($6,639 per year) for every child under the age of six, and up to $466.83 per month ($5,602 per year) for each child between the ages of 6 to 17. These figures are expected to increase in July 2022.
To see if you qualify and to calculate your payment, you can use the CRA’s Child and Family Benefits Calculator.
The benefit is recalculated annually based on your family’s adjusted net income from the previous year to determine how much you will receive. So, if there was a change to your income in 2021, those changes will be reflected in July 2022.
Do I need to file my tax return to receive the Canada Child Benefit?
The short answer is yes. The CRA calculates the amount you are eligible for in July based on the information in your tax return. Therefore, both parents will need to file their returns each year to start or continue receiving the benefit. The good news is that even if you file your return late, your CCB payments will be paid retroactively so you don’t miss a beat.
How is the Canada Child Benefit calculated for shared custody?
Sometimes life happens, love fades, and shared custody can be complicated; however, the CRA tries to keep things relatively straight-forward to ensure that parents are supported accordingly. If there is a change in your relationship status, both parents must let the CRA know about the shared custody arrangement as soon as possible.
If you share custody equally, the CRA will calculate the CCB amount separately for each parent, based on your respective adjusted family net income. Each parent will receive 50% of what they would have been eligible for if they had full custody.
If the child is mostly with you or the other parent, the CRA will consider the primary caregiver to have full custody, and that individual will be the one to receive the benefit.
When should I apply for the Canada Child Benefit?
You should apply for the CCB as soon as your baby makes their grand entrance into the world or as soon as you become their primary caregiver. You do not want to miss out on any payments you may be eligible for.
Building a family is one of life’s most rewarding and challenging experiences. The CCB is just one small way you can help to reduce the challenges and reap the rewards. Feel free to call anytime to talk about other tax savings for your growing family.