Canadian families will benefit from the increase in the Universal Child Care Benefit, more commonly referred to as the UCCB. The increase benefit moves form $100per month to $160 per month and it is retroactive to January 1, 2o15. This means that parents of children under the age of 6 will be receiving a bit of a bonus in their next benefit payment. Not only will parents with 5 years olds or under be receiving the benefit but also so will parents that have children from the age of 6-18 years of age, albeit a smaller amount ($60 per month).
The UCCB is given to parents but….yes there is a BUT…the income is included when you file your taxes each year. As such, you may be paying some of this benefit back when you file your taxes next April. The percentage of payback depends on all your other income sources and their amounts. Each person’s potential payback will vary. In an intact family household (not divorced) the lower income spouse would apply for the benefits as this would lessen or even negate the payback amount. Single parents have the option of claiming the benefit as their child’s income and, as children under the age of 6 don’t earn additional income, the tax would be negated completely.
What’s the catch? The government took away the $2,225 non-taxable deduction. In other words the child deduction was taken away and the UCCB, which is taxable income, was increased. In the end, this benefits lower income families and penalizes higher income families.
To qualify for the UCCB you must apply. Often, hospitals will give the application to the parents shortly after the delivery of their newest family member. If you don’t deliver in a hospital, no worries, the forms are available through the CRA website. http://www.cra-arc.gc.ca/E/pbg/tf/rc66/ or go to your nearest CRA office and ask for Form RC66. You must also be a Canadian citizen and live with your child. If you apply late then the benefits office will only give you retroactive payment for 11 months.
Divorced Parents who have joint or shared custody can apply to have the UCCB benefit split between them. Canadian families, overall, will definitely benefit from the new Universal Child Care Benefit and the next payment will reflect the retroactive payment back to January 2015.