All you should know about Canada Child Benefit (CCB)

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Chapter 1: Tax breaks for newcomers in Canada

Chapter 2: Are you required to file an income tax return?

Chapter 3: Taxes for new Canadians: Step-by-step guide for filing your taxes

Chapter 4: 20 popular Canadian tax deductions and credits in 2023

Chapter 5: How to apply for GST/ HST credit in Canada?

If you are raising a child or children under the age of 18 years, you can get tax-free payments under the Canada Child Benefit (CCB) program.

It is true that raising a child can be really expensive and a significant part of your income can go into their care, education, and healthcare. It is really important that as a parent in Canada you should be aware of the benefits that you can avail and one of the most beneficial one is Canada Child Benefit.

What is Canada Child Benefit?

The Canada Child Benefit (CCB) is a tax-exempt monthly allowance extended by the Canadian government to qualifying families having children below the age of 18. Its purpose is to assist families in managing the expenses related to raising children, serving as a pivotal initiative aimed at alleviating child poverty within Canada.

In 2016, the CCB was introduced as a replacement for various pre-existing child benefit programs, merging them into a unified and more efficient payment system. The amount of the CCB payment is based on factors such as family income, the number of children in the family, and the age of the children. Families with lower incomes receive higher payments, and the benefit is gradually reduced for higher-income families.

To receive the Canada Child Benefit, parents or guardians need to file their income tax returns, even if they have no income to report. This is because the eligibility and payment amount are determined based on the family's reported income. The CCB aims to provide financial support to families to help cover expenses related to raising children, such as clothing, food, housing, education, and other basic needs.

Eligibility criteria for Canada Child Benefit program

In order to qualify for the Canada Child Benefit, either you, your spouse, or your common-law partner need to have the status of a Canadian citizen, permanent resident, protected person, or an individual acknowledged as Indigenous under the Indian Act. Alternatively, you might meet the criteria as a temporary resident if you have lived in Canada for the past 18 months and hold a valid permit indicating residency status for the following month.

You must also meet these requirements –

• Reside with at least one child under 18 years old
• Be primarily responsible for the child's care
• Maintain Canadian tax residency status

If you are looking after a foster child or providing care through a kinship or close relationship program, you would be eligible for the Canada Child Benefit only if you are not already receiving funds from the Children’s Special Allowances (CSA) program. In a household with two parents or guardians, only one individual who holds primary responsibility for the child's care should apply for the Canada Child Benefit. To determine this, consider the following –

• Who attends to the child's daily needs and activities?
• Who ensures the child's medical needs are addressed?
• Who arranges child care when required?

In cases where two individuals share responsibilities equally and one of them is female, the Canada Revenue Agency (CRA) assumes that the female parent is primarily responsible for the child's care. Therefore, the female parent should apply for the CCB. Nevertheless, if the primary responsibility lies with the other parent, the mother can offer a letter verifying this, and the other parent would then apply for the CCB. In cases of same-sex parents, one of them should seek the Canada Child Benefit for all the children.

When dealing with joint custody scenarios, the CRA advises you to determine the duration each parent dedicates to caring for the child and utilize this data to individually apply for the Canada Child Benefit.

Advantages of Canada Child Benefit

The Canada Child Benefit (CCB) offers several benefits to eligible families –

• Financial Support

The Canada Child Benefit (CCB) offers tax-free monthly disbursements to families to assist them in managing the expenses linked to child-rearing. The payment's value is calculated considering elements like family income, the count of children, and their respective ages.

• Reduction of Child Poverty

The CCB is designed to reduce child poverty by providing targeted financial assistance to families with lower incomes. This helps ensure that all children have access to essential needs such as food, clothing, and education.

• Simplicity and Consolidation

The CCB consolidated several previous child benefit programs into a single, streamlined payment system. This makes it easier for families to receive and manage their benefits.

• Tax-Free

The CCB payments are tax-free, meaning that families do not need to pay taxes on the amount they receive. This helps families keep more of the support they receive.

• Universal Coverage

The CCB is available to eligible families regardless of whether they are employed or unemployed. This makes it accessible to a wide range of families, including those facing temporary financial challenges.

• Indexed to Inflation

The CCB payments are indexed to inflation, which means that the benefit amount is adjusted each year to account for increases in the cost of living.

• Encourages Work

The CCB is designed to provide greater benefits to families with lower incomes, which can help incentivize parents to work while still receiving the support they need.

• Flexibility

Families can use the CCB payments to cover a variety of expenses related to raising children, such as housing, childcare, education, extracurricular activities, and more. This flexibility allows parents to allocate the funds where they are most needed.

• Support for Various Family Structures

The CCB supports a variety of family structures, including single-parent households, two-parent households, and same-sex couples, ensuring that a wide range of families can benefit from the program.

• Positive Impact on Child Well-being

By providing financial support to families, the CCB contributes to improving the overall well-being of children by ensuring they have access to basic necessities and opportunities for growth and development.

How to apply for Canada Child Benefit?

To apply for Canada Child Benefit, you need to fill the Canada Child Benefits Application (RC66) form.

If you're submitting an application for the first time, you might be required to furnish supporting documents. These could include evidence of your immigration status in Canada and documentation confirming the birth of –

• Children born outside of Canada, or
• Children born in Canada who are aged 1 year or older

For specifics on acceptable proof, you can refer to the details provided on the CCB application form. It's recommended to send photocopies of these documents rather than the originals.

What is the maximum amount that I can receive through CCB?

If you satisfy the criteria for the CCB, you might potentially receive a maximum of $6,997 per child on an annual basis. The precise amount is determined by the Canada Revenue Agency (CRA), taking into account various factors, including the following –

• The number of children residing in your household
• The age of your children
• Your family's overall net income
• Eligibility for the child disability benefit for your child or children
• Your family's combined net income, which includes your own net income and that of your spouse or common-law partner, if applicable

The highest amount is achievable when all your children are under the age of 6. For each child aged between 6 and 17, you could receive an annual sum of up to $5,903.

The CRA recalculates your payment amount every July, leading to slight variations between your payments in June and July each year.

Regarding the Child Disability Benefit (CDB), those who have submitted a completed Form T2201 Disability Tax Credit Certificate to the CRA can potentially receive a maximum of $2,985 for the year 2022.

Frequently Asked Questions (FAQs)

1. When will I get my Canada Child Benefit payments?

Beginning in July of the benefit year, your benefit payments are spread out across a duration of 12 months, concluding in June of the subsequent year. By consistently reapplying annually and meeting the criteria for the CCB, you can anticipate a continuous stream of payments without interruptions.

2. Where should I submit my CCB application?

After completing your CCB application in full, proceed to send it, along with any required supplementary forms or documents, to a tax services office situated in your local area.

3. What occurs after I submit my application?

Approximately within 80 calendar days from the submission of your CCB application, you should anticipate receiving a Canada Child Benefit Notice. This notice will furnish you with information regarding the amount of your benefit (if eligible) and the calculation method employed.

To retain eligibility for the CCB, it's crucial for both you and your spouse or common-law partner to file separate tax returns each year, even if there is no income to report.

4. Does my marital status matter if I want to claim CCB payments?

Ensuring your marital status is current and promptly notifying the CRA of any changes is of utmost importance. This is crucial because alterations to your marital status can potentially affect your benefit payments.