Universal Child Care Benefit (UCCB) Enhancement – FAQ

What does the enhanced Universal Child Care Benefit (UCCB) mean for my family?

• The enhanced UCCB will benefit every single family with children under the age of 18 in Canada.
• Under these changes, parents will receive $1,920 for each child under 6 and $720 for every child 6 through 17 every year.
• This is not a tax credit, it is money directly into the pockets of hard-working Canadian families each month.

Is my family going to be worse off because of these changes?

• No. If you have children under the age of 18 there is no scenario whereby you will not be better off thanks to these changes.
• Everyone gets more money with the boosted UCCB.

Is the UCCB taxable?

• The UCCB is taxed in the hands of the lower-income spouse.
• Single parents are able to include the UCCB in the income of one of their children.

What are you doing the Canada Child Tax Benefit (CCTB)?

• The CCTB has not been changed at all.
• Parents who are eligible for this benefit will continue to receive it, alongside the enhanced UCCB.

Why are you eliminating the Child Tax Credit?

• The Government has merged the Child Tax Credit with the enhanced UCCB.
• Every single family with children under the age of 18 is better off because of this change.
• The Child Tax Credit provided non-refundable tax relief of up to $338 per child per year and only went to families that paid federal income tax.
o This means that low-income families with no taxable income did not benefit from the Child Tax Credit.
• The Child Tax Credit was not a “2255 non-taxable benefit”. It was a tax credit, so families would receive 15% of $2255 or $338.
• Everyone gets more money with the boosted UCCB.

Are you eliminating the ability to claim an eligible dependent?

• No. Parents who are eligible to claim this amount can continue to do so.


Universal Child Care Benefit (UCCB) Enhancement
-Examples-

Example 1 – Two-Earner Couple

Dale and Kelly are a two-earner couple with two children aged 7 and 3. Kelly earns $95,000 and Dale earns $25,000. For the 2015 taxation year, the family would receive a net federal benefit of $2,835 as a result of the proposed new measures. This is in addition to the $2,000 in tax relief the couple would be receiving in early 2015 when they claim the Family Tax Cut on their 2014 returns.

In 2015, the couple would begin receiving monthly Universal Child Care Benefit payments of $220, which includes $160 for their younger child plus $60 for their 7 year old (their first enhanced Universal Child Care Benefit payment would actually be received in July 2015 and would include a $720 catch-up payment for the January to June period). Previously, they had been receiving $100 per month for the younger child. Over a 12-month period, the Universal Child Care Benefit enhancement would represent a benefit of $1,440 for this family. Since the enhancements to the Universal Child Care Benefit would be taxable, and the Child Tax Credit would be repealed, the net federal benefit from the Universal Child Care Benefit for the family would be $536.

Since the younger child attends full-time daycare and the older one attends summer camp and after-school care, Dale and Kelly would fully benefit from the $2,000 increase in the amount they can claim under the Child Care Expense Deduction for the 2015 taxation year.  This enhancement to the Child Care Expense Deduction would provide $300 in additional federal tax relief.

For the 2015 taxation year, the family’s tax payable would be further reduced by $2,000 due to the new Family Tax Cut.

As a result of the tax relief and benefit measures introduced since 2006, including those announced on October 30, this family would be better off by about $7,285 in 2015.

Example 2 – One-Earner Couple

Isabelle and Marc are a one-earner couple earning $60,000.  They have two children aged 2 and 4.  As a result of the proposed new measures, this family would benefit from about $1,605 in federal relief for the 2015 taxation year. This is in addition to about $1,055 in tax relief they would receive in early 2015 when they claim the Family Tax Cut on their 2014 returns.

The Universal Child Care Benefit enhancement would represent a benefit of $1,440 over a 12-month period.  Since the enhancements to the Universal Child Care Benefit would be taxable, and the Child Tax Credit would be repealed, the net federal benefit from the enhanced Universal Child Care Benefit for the family would be $536 for the 2015 taxation year.

For the 2015 taxation year, the new Family Tax Cut would reduce the family’s tax payable by about $1,070.

As a result of the tax and benefit measures introduced since 2006, including those announced on October 30, this family would be better off by about $6,240 in 2015.

Example 3 – Single Parent

Alison is a single parent raising one child age 4 and earning $45,000.  As a result of the proposed new measures, Alison would benefit from about $420 in federal relief for the 2015 taxation year.

The Universal Child Care Benefit enhancement would represent a benefit of $720 over a 12-month period. Since the enhancement to the Universal Child Care Benefit would be taxable, and the Child Tax Credit would be repealed, the net federal benefit from the enhanced Universal Child Care Benefit for the family would be $268.

Since her child attends full-time daycare, Alison would benefit from the $1,000 increase in the amount she can claim under the Child Care Expense Deduction for the 2015 taxation year. The enhancement to the Child Care Expense Deduction would provide $150 in additional federal tax relief.

As a result of the tax relief and benefit measures introduced since 2006, including those announced on October 30, Alison would be better off by about $3,325 in 2015.

Example 4 – Two-Earner Couple with Equal Earnings

Thomas and Matty are a two-earner couple with two children aged 3 and 6. They each earn $60,000. For the 2015 taxation year, the family would receive a net federal benefit of $875 as a result of the proposed new measures.

In 2015, the couple would begin receiving monthly Universal Child Care Benefit payments of $220, which includes $160 for their younger child plus $60 for their 6 year old (their first enhanced Universal Child Care Benefit payment would actually be received in July 2015 and would include a $720 catch-up payment for the January to June period). Previously, they had been receiving $100 per month for the younger child. Over a 12-month period, the Universal Child Care Benefit enhancement would represent a benefit of $1,440 for this family. Since the enhancements to the Universal Child Care Benefit would be taxable, and the Child Tax Credit would be repealed, the net federal benefit from the Universal Child Care Benefit for the family would be $435.

?Since the younger child attends full-time daycare and the older one attends summer camp and after-school care, Thomas and Matty would fully benefit from the $2,000 increase in the amount they can claim under the Child Care Expense Deduction for the 2015 taxation year. This enhancement to the Child Care Expense Deduction would provide $440 in additional federal tax relief.

As a result of the tax relief and benefit measures introduced since 2006, including those announced on October 30, this family would be better off by about $5,475 in 2015.

Lastly, the fiscal table which shows, net of federal tax (so not counting provincial tax) and repeal of the CTC, the increase in cost is $2.6B.

http://www.fin.gc.ca/n14/data/14-155_1-eng.asp