New Canada Child Benefit program payments start today

Starting today, most Canadian families with children under 18 can expect to see a bigger child benefit payment, as money starts flowing in one of the most ambitious social policies to be implemented in Canada in decades.

The new Canada Child Benefit (CCB) is expected to push tens of thousands of Canadian children above the poverty line, and could help stimulate an economy that could use a jolt in the arm.

“This is an initiative that’s going to help Canadian families in a significant measure,” Prime Minister Justin Trudeau told the CBC’s Rosemary Barton in an interview Wednesday, and noted it is a “more generous and tax free” system than its predecessor, he said later at a press conference.

But it’s pricey: the benefit is expected to cost $22.4 billion over five years. It also won’t be indexed to inflation until 2020.

Still, the vast majority of Canadian families will see a boost to their bottom line.

“At the end of the day, based on the models we have looked at and based on what the government has said, about 90 per cent of families that have kids under the age of 18 will actually have more money than they did under the old system,” says Jamie Golombek, managing director of tax and estate planning for CIBC Wealth Strategies Group.

Take from the rich, give to the poor

The poorest of those families will see the biggest boost while the wealthiest will see their child benefit payment disappear altogether.

Under the old system, families could receive both the Canada Child Tax Benefit (CCTB) and the Universal Child Care Benefit (UCCB). The CCTB was tied to income but the UCCB was, as its name implies, universal.

The UCCB provided $160 per child per month for children under six and $60 per month for children aged six to 17. That money was paid out to families regardless of income level.

The new program combines the CCTB and UCCB into one payment that is entirely income tested. The new payment is also tax-free.

Under the new CCB, families with children under the age of six will receive as much as $6,400 per child per year. Families with kids between six and 17 will receive a maximum of $5,400 annually under the new plan.

Families with net income below $30,000 per year will receive the maximum and families earning more than $200,000 per year will see their payments eliminated.

The extra money and the fact that it’s tax-free could have a stimulative effect on the economy, at least initially.

“It’s theirs to spend,” said Stephen Poloz, governor of the Bank of Canada, earlier this week at a news conference in Ottawa.

“Of course when they spend it, it has secondary effects.”

CBC

~Wakenya Canada