BVA Blog

Enhanced Universal Child Care Benefit

Wednesday, September 02, 2015

NEWLY INTRODUCED FAMILY BENEFITS

ENHANCED UNIVERSAL CHILD CARE BENEFIT
The new enhanced universal child care benefit is designed to put an extra $60 per child in the hands of parents each month. So, for those that have children under 6 years of age, the benefit has increased from $100/month to $160/month and those that have children between the ages of 6-17, they will now be receiving $60 per month. That works out to an additional $720 per year per child. But this newfound money may not be as enticing as it sounds.

Firstly, this $720 is taxable and depending on your tax bracket, tax on this could work out to be as much as $720 * 39% (Alberta) = $281. This only leaves an additional $439 in your hands at the end of the year.

Secondly, this benefit is replacing the existing child tax credit. In 2014, this worked out to $2,255 * 15% = $338.

When comparing the above figures, parents are only getting an extra $101 in our pockets with this new enhanced program.


Income levelsAdditional benefit
$0 - $43,953 (25% tax rate)

$202 extra

$43,953 - $87,907 (32% tax rate)

$152 extra
$87,907 - $136,270 (36% tax rate)$123 extra
Over $136,270 (39% tax rate)$101 extra

FAMILY TAX CUTS
Families will now be able to income split the same way seniors have for a while now. Starting in 2014, a higher-income spouse will be allowed to transfer up to $50,000 of taxable income to a spouse in a lower tax bracket, generating tax relief up to $2,000 for families with children under the age of 18. This $2,000 is a non-refundable tax credit and is based on the net reduction of federal tax that would have been realized if both individuals had equal incomes.

CHILD CARE EXPENSE DEDUCTION
The amount that parents can claim for child care expenses incurred for someone to look after your children while parents are working or going to school will be increased from $7,000 to $8,000 for children under 7 and $4,000 to $5,000 for children ages 7-16 and $10,000 to $11,000 for children who are eligible for the Disability Tax Credit. The maximum deduction allowed under this program is $21,000. These expenses still must be claimed by the individual with the lower net income.

CHILDREN’S FITNESS TAX CREDIT
This credit will increase from $500 to $1,000 per child in 2014 and in 2015, this credit will be made refundable at a rate of 15%. So, if you were to spend $1,000 on fitness activities for your child, starting in 2015, you will be entitled to receive a refund of $150 regardless of income levels.

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