There can be many reasons why you haven't filed your tax return yet. Maybe you forgot, you’re missing documents, you’re disorganized, or maybe you owe money. But if you have children living in your home, here’s one good reason to get it done: the Canada Child Benefit.
The costs related to raising children are slowly rising. Parenting experts estimate that parents can spend nearly $50 per week ($2,448 per year) on diapers, formula, and baby food alone. Add in the cost of other needs, such as furniture, clothing, and childcare, and parenthood starts to look very pricy.
How does the Canada Child Benefit (CCB) work?
In order to help ease the burden of the essential costs of parenting, the federal government offers the Canada Child Benefit (CCB): a tax-free monthly payment for families with children under 18 years old. The amount of money a family receives depends on their net income (after-tax income) and how many children they have.
The program pays up to $6,400 per child under the age of six and up to $5,400 per child for those aged six through seventeen. However, the amount of money begins to decrease once a family’s net income reaches $30,000.
As an example, the Canada Revenue Agency (CRA) website outlines the following:
- A family with one child under the age of six and a net income of $30,000 would get a tax-free benefit of $6,400 per year ($533 per month).
- A family with a net income of $90,000 with one child under the age of six would get a benefit of $3,150 per year ($262 per month).
You can visit the CRA website to calculate what your family’s CCB might be.
Submit your taxes on time every year
The CRA calculates your family’s adjusted net income based on information reported on your income tax returns. In order to receive the benefit, you need to file your taxes every year, even if you didn’t make any income in the year. If you have a spouse or common-law partner, they also need to file a tax return each year, or you could stop receiving CCB for your children.
The CRA then distributes monthly payments by cheque or direct deposit. The benefit period is from July of one year to June of the next year. If you are currently receiving CCB and don’t complete your 2016 tax return, you will stop receiving payments at the end of June.
When to apply for CCB and how to stay eligible
You should also apply for CCB as soon as possible if your circumstances change in one of the following ways:
- You give birth to a child
- A child starts to live with you
- You or your spouse/common-law partner meet the eligibility conditions
Once you’ve completed the application process, you don’t have to reapply for CCB every year, but you need to do the following:
- Complete your taxes on time every year, even if you have no income. Your spouse or common-law partner must also file their taxes annually.
- Make sure your personal information is up to date with the CRA.
- Keep all supporting documents in case the CRA needs to confirm your personal information.
A lower net income increases your child benefits
The lower your family’s household net income, the more CCB you will receive. Keep all receipts, including childcare, moving expenses and even union dues, as these costs can be deducted from your household income.
As of the current 2017 tax year, you will no longer be able to claim children’s fitness and tax credits, as these credits have been eliminated. If you haven’t filed your 2016 return, this is the last opportunity to claim the costs of eligible children’s activities.
However, there have been no changes to the childcare expense claim model. Depending on the age of your child, you can claim up to $8,000 in childcare expenses in one year.
For more information about CCB and filing taxes, visit the CRA website.
