Area of Law: Tax Law
Answer # 1701
Child benefits and tax creditsRegion: Ontario Answer # 1701
Canada Child Benefit (CCB)
The Canada Child Benefit (CCB) is a federal government tax-free monthly payment made to eligible families to help with the cost of raising children under the age of 18. To receive the CCB, you and your spouse or common-law partner must file an income tax and benefit return every year, even if you have not received income in the year. The CCB might include the Child Disability Benefit (CDB) and any related provincial and territorial programs.
Who is eligible for the CCB?
To be eligible for the CCB, an individual:
- must live with the child, and the child must be under 18 years of age,
- must be the primary caregiver of the child,
- must be a resident of Canada for tax purposes,
- or their spouse, or common-law partner must be a Canadian citizen, or permanent resident, protected person or temporary resident (as defined in the Immigration and Refugee Act) who has lived in Canada 18 months or more, or an Indian (as defined in the Indian Act).
Although Canada Revenue Agency (CRA) usually considers mothers, or a female guardian to be the ‘person primarily responsible for the child’, fathers, grandparents and other guardians could also be considered to be primarily responsible.
How much will the CCB pay?
The CCB maximum basic benefit amount for the period July 2020 to June 2021 is:
- $6,765 per year per child under the age of 6, and
- $5,708 per year per child aged 6 through 17
CRA calculates the amount of benefit you will receive based on the following:
- the number of children who live with you,
- the ages of the children,
- your adjusted family net income, and
- whether your child is eligible for the Child Disability Benefit.
Benefits begin to decrease when net family is over $31,120. Low and middle-income families will receive more benefits, while higher income families (generally over $150,000) will receive less.
Child Disability Benefit (CDB)
The Child Disability Benefit (CDB) is an additional monthly tax-free benefit included in the CCB to help low-income families who care for children under 18 with mental or physical disabilities.
For the period of July 2019 to June 2020, the annual maximum amount, per child who qualifies, is $2,832. The CDB will be reduced when an adjusted net family income is above $67,426.
To be eligible for the CDB:
- the child must be under age 18, and
- a qualified practitioner must certify (using form: T2201 Disability Tax Credit Certificate) that the child has a severe and prolonged impairment in physical or mental function. A prolonged impairment means the impairment has lasted for a continuous period of at least 12 months.
CRA must approve the certification. For more information on the Child Disability Benefit, visit CRA.
Ontario Child Benefit (OCB)
The Ontario Government also offers a program to help reduce child poverty. It is called the Ontario Child Benefit (OCB). This program, administered by Canada Revenue Agency, is for low-income to moderate-income families. If you qualify for this benefit, you will receive payments whether you work or not.
For the period from July 2019 to June 2020, you may be eligible to receive up-to $119.50 per month, per child. The OCB will be reduced when an adjusted net family income is above $21,887.
The OCB is available to people who:
- are the primary caregiver of a child under the age of 18,
- are Ontario residents,
- have filed a tax return for the previous year (this includes both spouses, whether legally married or common-law), and
- have registered their child for the federal Canada Child Benefit.
Those who qualify for the Ontario Child Benefit will receive their payment as part of the federal CCB monthly payments.
How to apply for child benefits
An application for all federal and provincial child benefit programs is made by filing one form with CRA, called the Canada Child Benefits Application.
Parents (or guardians) should apply for child benefits as soon as the child is born, begins living with them, or the applicant becomes a Canadian resident.
Applications can be filed in one of three ways:
- For mothers of a newborn, apply using the Automated Benefits Application to register the birth of your child, and at the same time apply for benefits.
- For individuals with a CRA account, apply online using the Apply for Child Benefits Service in My Account; or
- Download a Canada Child Benefits Application from the CRA website. The completed application must then be sent to your local tax centre (a list of centres is available online and on the back of the application).
CRA will process the application in about three months and determine which federal and provincial programs you qualify for. You will then be sent a CCB notice that will tell you the amount of your payments, if any, and what information the CRA used to calculate the amount.
Ontario child care tax credits
The Ontario government has also announced the new Ontario Child Care Tax Credit, which focuses on low- and moderate-income families. The tax credit allows parents to claim up-to 75% of their eligible childcare expenses, allowing families to access a broad range of child care options, such as care centres, homes and camps.
The new credit supports families with incomes of up-to $150,000. Families could receive:
- up-to $6,000 per child under seven,
- up-to $3,750 per child between the ages of seven and 16, and
- up-to $8,250 per child with a severe disability.
Federal Child Care Expense Deduction (CCED)
To claim the Ontario Child Care Tax Credit, you must be eligible for the federal Child Care Expense Deduction (CCED), created to “provide some relief for taxpayers who incur child care expenses in order to work, carry on a business or undertake certain educational activities” according to Canada Revenue Agency. The maximum child care expenses that can be claimed per child each year, depending on the circumstances, is limited to $5,000, $8,000 or $11,000.
For more information about the Ontario Child Benefit, visit the Ontario Ministry of Children, Community and Social Services website.
For additional information about the Canada Child Benefit and how to apply, visit Canada Revenue Agency.
For legal advice and assistance with tax planning, a CRA tax dispute, or other tax issues, contact Tax Chambers LLP
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