On March 22, 2016, Finance Minister Bill Morneau delivered his first budget wherein he discussed about the introduction of the new Canada Child Benefit—a simpler, tax-free and more generous one. The current child benefit system is complicated, consisting of a tax-free, income-tested Canada Child Tax Benefit with two components (the base benefit and the National Child Benefit supplement) and a taxable Universal Child Care Benefit received by all families, regardless of income.
Starting in July of 2016, nine out of ten families will receive more money than they did under the existing Child Tax Benefit and Universal Child Care Benefit.
Accordingly, the amount of new child benefit payments will be based on a family’s total income and will be more generous, specifically for families with income less than $150,000 a year. The new Canada Child Benefit will provide a maximum annual benefit of up to $6,400 per child under the age of 6 and up to $5,400 per child for those aged 6 through 17. Families with less than $30,000 in net income will receive the maximum benefit.
In summary, the Canada Child Benefit will be:
- simpler—families will receive a single payment every month;
- tax-free—families will not have to pay back part of the amount received when they file their tax returns;
- better-targeted to those who need it most—low- and middle-income families will receive more benefits, and those with the highest incomes (generally over $150,000) will receive lower benefits than under the current system; and
- much more generous—families benefitting will see an average increase in child benefits of almost $2,300 in the 2016–17 benefit year.
A benefit calculator may be found in www.budget.gc.ca which provides calculation illustration of the child benefits that a family could receive, this calculator could underestimate how much a family will receive under the Canada Child Benefit. This amount represents federal child benefit amounts only. It does not include any provincial/territorial child benefits to which you may be entitled.
Economic and Fiscal Overview- The Path Forward, Chapter 1 Help for the Middle Class, retrieved May 30, 2016.