2017 UPDATE: This benefit has changed again and is now called the Canada Child Benefit. It is a non-taxable benefit payment that is indexed to your family income. Both parents must file tax returns to be eligible for payments. You will not receive a slip for 2017 because this is non-taxable income.
Previously, the Universal Child Care Benefit was a taxable benefit payment of $100 per child per month under the age of 6. Now, the UCCB has increased to $160 per month for each child under the age of six. The UCCB was expanded to children aged 6 through 17. Parents will receive a benefit of up to $60 per month for each child in their care aged 6 through 17.
While it’s great to have some extra money today, please note that you may end up paying more tax as a result of this change. First, because the UCCB is a taxable benefit and you are now receiving a higher amount. The second affect of this change is that the Child Tax Credit is now being terminated which is a credit that you were previously claiming, if not directly to your employer on your TD1 form, then at the end of the year when you filed your taxes. Unfortunately, you will no longer get that tax credit. Don’t despair – there may be other tax credits you are eligible for but not aware of! See a professional at Coastal Tax to make sure you are getting the most you are entitled to at tax time.
Will the income tax withholdings reflected on my pay cheque be affected as a result of the replacement of the Child Tax Credit with the enhanced UCCB?
If you claimed the Child amount on a previous TD1 form, your tax withholdings may be affected. You should complete a new TD1 and give this completed form to your employer. Depending on your circumstances, there may be a reduction to your net pay each pay period.
To continue receiving some of the child benefits, both parents have to file income tax returns every year, even if you have not received income in the year. Do not be embarrassed if you have fallen behind in filing your taxes – this is a very common situation! Coastal Tax can help you get caught up today!
Until next time!
-Alicia Loewen, Coastal Tax