Canada Child Benefit

Last updated

The Canada Child Benefit (CCB), previously the Canada Child Tax Benefit (CCTB), is an income-tested income support program for Canadian families. It is delivered as a tax-free monthly payment available to eligible Canadian families to help with the cost of raising children. The CCTB could incorporate the National Child Benefit (NCB), a monthly benefit for low-income families with children, and the Child Disability Benefit (CDB), a monthly benefit for families caring for children with severe and prolonged mental or physical disabilities.

Contents

History

The CCTB was enacted in response to a commitment made by the Canadian parliament, in November 1989, to eradicate child poverty in Canada by the year 2000. [1]

Child Tax Benefit (CTB, 1993–1998)

The federal finance minister, Don Mazankowski, announced in the 1992 Canadian federal budget the introduction in January 1993 of a renewed and enriched Child Tax Benefit (CTB) that consolidates the family allowance, the child credit and refundable child tax credit into a unified benefit of $1,020 per child (with a supplementary benefit of $75 for the third child and following children). Unlike family allowance that it replaces, this monthly payment is not taxable for the recipient. This measure was estimated to increase benefits by $2.1 billions over a period of five years. [2]

Working Income Supplement (WIS)

The new benefit includes an earned-income supplement (referred to as the Working income supplement or WIS in future federal budgets) of up to $500 (per family) designed to deliver increased benefits for low-income working families with children. [3] The supplement phases-in at 8% of earned income above $3,750 ; reaches its maximum amount ($500) between $10,000 and $20,921 of earned income and is subsequently reduced by 10% of earning income above $20,921 (i.e. is fully exhausted at $25,921 of earned income). [L 1]

The law implementing the new benefit is adopted by the House of Commons in September 1992 and received royal assent on 15 October 1992. [L 2] The National Council on Social Welfare supported the reform as a step in the right direction but pointed out that most families receiving social assistance payments or unemployment insurance payments would not be eligible to the earned-income supplement, hence reducing the impact of the new benefit in reducing child poverty. [4]

However, it has been found that, due to cutbacks to social assistance, the impact of this program in reducing child poverty is negligible. [1]

Canada Child Tax Benefit (CCTB, 1998–2016)

The federal finance minister, Paul Martin, announced in the 1997 Canadian federal budget the gradual replacement of the Child Tax Benefit by a new Canada Child Tax Benefit (CCTB) that combines the CTB and the WIS into a single enhance payment to increase benefit levels for low-income families. The roll-out of the CCTB was scheduled in two steps: [5]

Enhancement of the WIS (1997)

The WIS was greatly enhanced following the passage of the 1997 Canadian federal budget: [L 3] [6]

  • The WIS is computed on a per-child basis rather than a per-family basis;
  • Maximum benefit level is raised to:
    • $605 for the first child;
    • $405 for the second child;
    • $330 for any additional child.
  • Phase-in is faster so that the income level at which the benefits are maximized remains $10,000.
  • Phase-out is also faster (12.1% for one-child families, 20.2% for two-child families and 26.8% otherwise) but the income level at which the benefits are entirely exhausted remains $25,921.

Enactment of the CCTB (1998)

Under the new system, the CCTB have two main components:

  • The base benefit (that replaced the CTB) that is available to families with income up to $67,000.
  • The NCB supplement (that replaced the WIS) targeted towards low-income families (up to $25,921).

Benefits under the CCTB are increased to provide up to $1,625 for the first child and $1,425 for each additional child (this level of benefits applies to family with income up to $20,921). [7]

The 1999 Canadian federal budget increased the NCB supplement by $350 ($180 in July 1999, $170 in July 2000) and the income level where the base benefit starts to phase out and the NCB supplement fully phases out increased from $25,921 to $29,590 by July 2000. [8]

The reform is part of a proposed National Child Benefit (NCB) System based on collaboration between federal, provincial and territorial governments whereas the federal government strengthen the federal benefit and provincial and territorial government can provide additional benefits and services to low-income families. [5]

Universal Canada Child Benefit (UCCB, 2006–2016)

Following the 2006 Canadian federal election, the new conservative government led by Stephen Harper created the Universal Canada Child Benefit (UCCB), a new benefit of up to $1,200 annually for children under 6. Unlike other benefits, the UCCB is a taxable payment that is included in the recipient income. [9]

The Universal Child Care Benefit Act received royal assent on 22 June 2006 and the UCCB was paid for the first time in July 2006. [L 4]

In the 2010 Canadian federal budget the UCCB was made shareable between shared-custody parents, and in that instance the payment was evenly split between parents (each receiving $50 per month). The measure entered into force in July 2011. [L 5] [10]

A significant expansion of the UCCB was announced in November 2014 in the Fall Fiscal Update: [11]

The changes were incorporated in the Economic Action Plan 2015 Act, No. 1 which received royal assent on 23 June 2015 and entered into force on 1 July 2015 (even though the new amounts were enacted as of 1 January 2015). [L 6]

The UCCB remained unchanged until 30 June 2016 when the benefit was terminated and replaced by the Canada Child Benefit. [L 7]

Canada Child Benefit (CCB, since 2016)

Canada Child Tax Benefit was eliminated in 2016 and replaced by the Canada Child Benefit (CCB), a tax-free payment targeting low- and middle-income families; those with incomes higher than $150,000 will receive less than the previous system. In 2018-19 benefit year, the CCB payments are up to $6,496 per year per child under the age of 6, and up to $5,481 per year per child aged 6 to 17 in benefit year 2018-19. The CCB is income-dependent; the first income threshold for families to receive Canada Child Benefit is $30,450 and the second threshold is $65,975 in 2018-19. Since its inception, the Canada Child Benefit has lifted about 300,000 children out of poverty, [12] and has helped reduce child poverty by 40% from 2013 to 2017. The budget for Canada Child Benefit has been increased in 2019, increasing the annual benefit to a maximum of $6,639 for children under 6 and $5,602 for ages 6 through 17, allowing parents to provide more due to the increased cost of living. [13]

Canada Child Benefit payment dates in 2022

The Canada Child Benefit is a tax-free monthly payment made to eligible families. The benefit is paid to the primary caregiver, which is usually the mother, and is based on the number of children in the family and the family’s income. Families can use the benefit to help pay for child care, food, clothing, and other expenses. [14]

The payment dates are:

See also

Related Research Articles

A tax credit is a tax incentive which allows certain taxpayers to subtract the amount of the credit they have accrued from the total they owe the state. It may also be a credit granted in recognition of taxes already paid or a form of state "discount" applied in certain cases. Another way to think of a tax credit is as a rebate.

Unemployment benefits, also called unemployment insurance, unemployment payment, unemployment compensation, or simply unemployment, are payments made by authorized bodies to unemployed people. In the United States, benefits are funded by a compulsory governmental insurance system, not taxes on individual citizens. Depending on the jurisdiction and the status of the person, those sums may be small, covering only basic needs, or may compensate the lost time proportionally to the previous earned salary.

Child benefit or children's allowance is a social security payment which is distributed to the parents or guardians of children, teenagers and in some cases, young adults. A number of countries operate different versions of the program. In most countries, child benefit is means-tested and the amount of child benefit paid is usually dependent on the number of children one has.

Welfare reform is the process of proposing and adopting changes to a welfare system in order to improve the efficiency and administration of government assistance programs with the goal of enhancing equity and fairness for both welfare recipients and taxpayers. Reform programs have various aims: empowering individuals to help them become self-sufficient, ensuring the sustainability and solvency of various welfare programs, and/or promoting equitable distribution of resources. Welfare reform is constantly debated because of the varying opinions on a government's need to balance the imperatives of guaranteeing welfare benefits and promoting self-sufficiency.

Guaranteed minimum income (GMI), also called minimum income, is a social-welfare system that guarantees all citizens or families an income sufficient to live on, provided that certain eligibility conditions are met, typically: citizenship; a means test; and either availability to participate in the labor market, or willingness to perform community services.

A means test is a determination of whether an individual or family is eligible for government assistance or welfare, based upon whether the individual or family possesses the means to do without that help.

In 2004, the New Zealand Labour government introduced the Working for Families package as part of the 2004 budget. The package, which effectively commenced operating on 1 April 2005, had three primary aims: to make work pay; to ensure income adequacy; and to support people "into work".

Social security, in Australia, refers to a system of social welfare payments provided by Australian Government to eligible Australian citizens, permanent residents, and limited international visitors. These payments are almost always administered by Centrelink, a program of Services Australia. In Australia, most payments are means tested.

Poverty in Canada refers to the state or condition in which a person or household lacks essential resources—financial or otherwise—to maintain a modest standard of living in their community.

<span class="mw-page-title-main">Canada Learning Bond</span>

The Canada Learning Bond (CLB) is a grant paid by the government of Canada to assist low-income families with saving money for their children's post-secondary education. The CLB relies primarily on the National Child Benefit (NCB) program to determine which families may be eligible and the tax regulations for the Registered Education Savings Plan (RESP) to guide the eventual use of the CLB funds. As of 1 July 2005, the CLB is legislated by the Canada Education Savings Act.

<span class="mw-page-title-main">Welfare Reform Act 2012</span> United Kingdom legislation

The Welfare Reform Act 2012 is an Act of Parliament in the United Kingdom which makes changes to the rules concerning a number of benefits offered within the British social security system. It was enacted by the Parliament of the United Kingdom on 8 March 2012.

Child benefits in the United Kingdom are a series of welfare payments and tax credits made to parents with children in the UK, a major part of the welfare state.

<span class="mw-page-title-main">Social Security Scotland</span>

Social Security Scotland is an executive agency of the Scottish Government with responsibility for social security provision.

The Family Allowance Act is an Act of the Parliament of Canada, legislated in 1944 and initiated in 1945, as the first universal welfare program implemented in Canada, passed under the leadership of Prime Minister William Lyon Mackenzie King. As a governmental Income Security Expenditure, payments were transferred directly to the individual who qualified for them, in this case the mother of the children concerned. As is characteristic of some Security Expenditures, the benefits were approved for qualified families regardless of overall income, or any other factors related to need.

Elterngeld is a transfer payment dependent on net income as compensation for concrete disadvantages in the early phase of starting a family and thus a parent-related, temporary compensation payment. The parental allowance replaces the previous child-raising allowance. Parents who are not or not fully employed due to the care of a child or who interrupt their employment for the care of their child are entitled to parental benefit. It is intended to support parents in securing their livelihood and is therefore designed as a compensation payment.

The Canadian federal budget for fiscal year 1988–1989 was presented to the House of Commons of Canada by finance minister Michael Wilson on 10 February 1988. It was the fourth budget after the 1984 Canadian federal election and would be the last before the 1988 Canadian federal election.

The 1992 Canadian budget was a Canadian federal budget for the Government of Canada presented by Minister of Finance Don Mazankowski in the House of Commons of Canada on 25 February 1992. It was the fourth budget after the 1988 Canadian federal election. It is the first budget presented by Don Mazankowski.

<span class="mw-page-title-main">1991 Canadian federal budget</span>

The Canadian federal budget for fiscal year 1991-1992 was presented by Minister of Finance Michael Wilson in the House of Commons of Canada on 26 February 1991.

The United States federal child tax credit (CTC) is a partially-refundable tax credit for parents with dependent children. It provides $2,000 in tax relief per qualifying child, with up to $1,400 of that refundable (subject to a refundability threshold, phase-in and phase-out). In 2021, following the passage of the American Rescue Plan Act of 2021, it was temporarily raised to $3,600 per child under the age of 6 and $3,000 per child between the ages of 6 and 17; it was also made fully-refundable and half was paid out as monthly benefits. This reverted back to the previous in 2022. The CTC is scheduled to revert to a $1,000 credit after 2025.

Child poverty in Canada declined since 2015, with the number of children who were living in poverty decreasing 71% by 2020.

References

Acts of Parliament

  1. ↑ C and D parameters of section 122.61(1) of the Income Tax Act, as read after the changes brought forward by S.C. 1992, ch. 48.
  2. ↑ An Act to amend the Income Tax Act, to enact the Children's Special Allowances Act, to amend certain other Acts in consequence thereof and to repeal the Family Allowances Act, S.C. 1992, ch. 48. Canada Gazette, Part III, vol. 15 (1992), n°4. (pages 1351 and following)
  3. ↑ Budget Implementation Act, 1997. S.C. 1997, ch. 26, s. 80
  4. ↑ Universal Child Care Benefit Act. S.C. 2006, c. 4
  5. ↑ Sustaining Canada’s Economic Recovery Act. S.C. 2010, c. 25, s. 74 and 75.
  6. ↑ Economic Action Plan 2015 Act, No. 1. S.C. 2015, c. 36, s. 36-37 and 40.
  7. ↑ Budget Implementation Act, 2016, No. 1. S.C. 2016, c. 7, s. 53

Other references

  1. 1 2 Garcia, Miguel Roberto Sanchez (2002). Targeting child poverty in Canada (Ph.D. Dissertation) Wilfrid Laurier University
  2. ↑ Budget Papers 1992, p.136
  3. ↑ Budget Papers 1992, p.92
  4. ↑ Dubuisson, Philippe (1992-09-25). "La nouvelle prestation pour enfants ne favorise pas les plus pauvres". La Presse. p. B4. Retrieved 1 December 2020.
  5. 1 2 Working Together Towards a National Child Benefit System. February 18, 1997. p.18–22
  6. ↑ Budget Papers 1997. p.192
  7. ↑ Budget Papers 1998 Archived 2019-04-27 at the Wayback Machine . p.110
  8. ↑ Canada Child Tax Benefit: Update. February 1999. p.3–4
  9. ↑ Universal Child Care Benefit, Information Sheet, Canada Revenue Agency, 2006.
  10. ↑ "2010 Federal Budget Personal Tax Changes - Impact on Families affected by Disability". RDSP. 17 January 2011.
  11. ↑ "Update of Economic and Fiscal Projections" (PDF). Department of Finance. 2014-11-12. p. 11.
  12. ↑ "Backgrounder: Strengthening the Canada Child Benefit". Department of Finance Canada. 2018-03-27. Archived from the original on 2018-05-14. Retrieved 2019-09-18.
  13. ↑ Canada, Employment and Social Development (2016-05-12). "Canada Child Benefit". aem. Archived from the original on 2021-06-06. Retrieved 2019-09-18.
  14. ↑ "Important Dates". Clever Banker. Retrieved 2022-11-15.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.