By Carolyn Norris CPA, CA
Wealth Advisor
Assante Capital Management Ltd.
The journey of raising kids is undoubtedly fulfilling, but let's face it – it comes with its financial challenges. That's where the Child Tax Benefit steps in as a crucial support system. Below we will explore the ins and outs of this valuable resource – understanding how it's calculated, estimating potential amounts, and discovering ways to maximize it.
Understanding the Child Tax Benefit
The Child Tax Benefit is a tax free monthly payment designed to ease the financial strain of raising children. It acknowledges that every family's situation is unique, and support should be tailored accordingly. Here's a closer look at its key components:
How It's Calculated:
Family Net Income: Your family's net income is a major factor. The benefit is designed to provide more substantial assistance to families with lower incomes, recognizing the additional challenges they may face. The CRA uses the ‘Adjusted Family Net Income’ from the previous tax year to determine this amount. Keep in mind that payments are recalculated every July based on the family net income from the previous year. Some provinces and territories offer additional assistance to assist with the costs of raising children.
Number of Children: The benefit increases with the number of children under the age of 18 in your care. It's a way of acknowledging the added expenses associated with each child.
Child's Age: The age of your children matters. The benefit recognizes that the costs of raising younger children might differ from those of older kids.
Estimating Your Potential Benefit:
The Canada Revenue Agency (CRA) provides an online calculator, allowing you to input your family's information and get an estimated benefit amount. Keep in mind that this is a rough estimate, and your unique circumstances may influence the actual amount. Find the calculator here.
Ways to Maximize Your Benefit:
The key to maximizing your families CCB is to lower your families net income. Some deductions that may be available to your family include:
RRSP deductions
Employment expenses such a union or professional dues
Childcare expenses
Moving expenses
Carrying charges and interest
What to do with your CCB Payments:
As a caregiver, there are no rules for how the monthly payment is to be used. Most caregivers first use it towards essentials for their children such as food, clothes, childcare. If you find you have some leftover after the basics some great ideas for the payment would be to contribute to an RESP or invest it. If you are in a position to do so, it could provide your children with a meaningful financial benefit.
Raising kids is undoubtedly an incredible journey, but it comes with its share of financial hardships. The Child Tax Benefit is here to offer support, recognizing the financial commitment you've made to your family. By understanding how it's calculated and exploring ways to maximize it, you can ensure that this resource works effectively for your unique situation. Remember, the goal is to provide the support your family needs. Here's to navigating the Child Tax Benefit and ensuring your family receives the financial assistance it deserves!
Carolyn Norris is a Wealth Advisor with Assante Capital Management Ltd. The opinions expressed are those of the author and not necessarily those of Assante Capital Management Ltd. Please contact her at (780) 450-3311 or cnorris@assante.com to discuss your particular circumstances prior to acting on the information above. Assante Capital Management Ltd. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.
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