The 2016 federal budget consolidates the Canada Child
Tax Benefit (the CCTB) and the Universal Child Care Benefit (the UCCB) into a
single acronym with one less letter: the
CCB (which stands for Canada Child Benefit).
The CCB will be non-taxable and will provide a maximum
benefit of up to $6,400 per year ($533.33 per month) per child under the age of
6 and $5,400 per year ($450 per month) per child aged 6 through 17. An additional amount of $2,730 per year
($227.50 per month) is paid for a child who qualifies for the disability tax
credit. The CCB amounts depend on the
family net income, however, and are gradually reduced if family income for the
previous taxation year exceeds $30,000.
The new benefit system will start in July 2016. To see how your family will fare under the
new system, use the CCB calculator at
http://www.budget.gc.ca/2016/tool-outil/ccb-ace-en.html.
When using the calculator, you will have to manually
take into account the following forms of tax relief eliminated by the 2016 Budget.
- The budget eliminates the income-splitting tax credit for couples with a child under the age of 18. This is effective for 2016. The credit allowed a higher-income spouse or common-law partner to notionally transfer up to $50,000 of taxable income to the lower-income spouse or common-law partner for the purpose of reducing the couple’s total income tax liability by up to $2,000.
- The budget will phase out the children’s fitness and arts tax credit. For 2016, the maximum eligible amount will be halved. For the fitness tax credit, the eligible amount will be reduced to $500. For the arts tax credit, the eligible amount will be reduced to $250. The supplemental amount for a child who qualifies for the disability tax credit will remain at $500 for 2016. However, the credits will be eliminated for the 2017 and subsequent taxation years.
- The budget will eliminate education and textbook tax credits for the 2017 and subsequent taxation years. As a result, unused portions of those credits will no longer be transferable to a supporting individual. The tuition tax credit will remain in place.
Elimination of very specific tax credits (such as the
fitness and arts tax credits) in favor of more generally-based financial
assistance is generally preferable from a tax policy perspective. Having said that, elimination of the fitness
and arts tax credits may reduce the number of children participating in fitness
and arts programs. We will have to wait
and see how this plays out.
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The above article provides general commentary of an educational nature. It does not constitute advice for any specific person or any specific set of circumstances. Because circumstances vary, readers should consult professional advisers in order to obtain advice that is applicable to their specific circumstances.