New child benefits may not be worth as much as advertised, experts say
Published Tuesday, July 21, 2015 9:56PM EDT
Last Updated Tuesday, July 21, 2015 11:22PM EDT
The federal government has begun mailing its new monthly Universal Child Care Benefit cheques to parents, but some experts say the benefit isn’t worth as much as advertised.
The UCCB has been promoted in television ads as providing nearly $2,000 annually for each child under age six, and $720 yearly for children aged six to 17.
However, some parents may not realize that the UCCB is not only taxable, but also coincides with the elimination of the Child Tax Credit.
A typical family with two children under the age of six will get $320 per month, but high-and middle-income earners will lose roughly a third of that through taxes. Another $30 per child will be clawed back through the elimination of the child tax credit.
“On the one hand they’re giving more money, on the other hand they’re taking it away,” said tax expert Fred O’Riordan of Ernst & Young LLP.
Liberal finance critic John McCallum said the Conservative government’s decision to roll out the cheques now and then tax them later was “purely political.”
“It’s purely intended to make people think they’re getting more than they really are,” McCallum said.
“A lot of Canadians won’t think about tax,” he added. “They hear a bigger dollar amount so they think more money.”
McCallum said the Liberals’ proposed child benefit would be tax free. It would provide up to $6,400 annually for every child under six and up to $5,400 annually for children aged six to 17. The benefit would vary depending on the family’s income, and 90 per cent of families would get it. A typical family of four earning $90,000 a year would receive a tax-free monthly cheque of $490 under the Liberal plan.
Instead of sending out cheques, the NDP has proposed creating one million daycare spaces that cost parents no more than $15 per day.