Child benefits in shared custody situations

The new Canada Child Benefit program replaced both the Universal Child Care Benefit (UCCB) and the Canada Child Tax Benefit (CCTB) programs, effective July 1, 2016.
The UCCB provided families with monthly payments of $160 for each child under the age of six, and $60 for each child ages six to 17. The benefit was taxable, generally to the lower income earning spouse or common-law partner, and was not income-tested. The CCTB paid non-taxable benefits to low and middle-income families.29

The new Canada Child Benefit program is non-taxable, income-tested, with payments made to eligible families on a monthly basis. It provides a maximum benefit of $6,400 per child under the age of six and $5,400 per child ages six to 17. Benefits begin to be phased out once family net income exceeds $30,000, but the family net income level at which benefits are phased out completely depends on the number of children, their ages and the amount of income earned by each spouse. For example, for a one income-earning family with one child under the age of six and one child over the age of five (but under age 18), benefits are phased out when net income exceeds approximately $189,000.

There is an additional benefit of up to $2,730 for each child that is eligible for the disability tax credit. This supplemental benefit begins to be phased out once family net income exceeds $65,000. Entitlement to the Canada Child Benefit for the first benefit year, July 2016 to June 2017, is based on family net income for the 2015 taxation year.

Unlike payments under the UCCB, amounts received under the Canada Child Benefit are not taxable or included in income for the purpose of other federal income-tested benefits. To be eligible for the Canada Child Benefit, an individual must be a Canadian resident for tax purposes, reside with the child and be the parent who primarily fulfils the responsibility for the care and upbringing of the child (or be a shared-custody parent).

Although low- and most middle-income families will be better off under the new Canada Child Bene t program, higher- income families will often receive less, or even no benefits at all, as the new program is income-tested. The break-even point in respect of family net income, when comparing the amount of benefits received under the existing programs with the new program, will depend on the number and age of the children, the amount that each spouse earns and the province of residence.

Exemple : Steve and Ellen have three children, ages three, six and nine. Steve’s taxable income is $65,000 and Ellen works part-time, earning $25,000 per year. Under the CCTB and UCCB programs, they would receive a total of $5,472 (on an after-tax basis), but they will receive $8,550 per year under the Canada Child Benefit, a $3,078 increase.

The government has prepared a calculator at the following website, http://www.budget.gc.ca/2016/tool-outil/ccb-ace-en. html, that can be used to determine the monthly benefit that you can expect to receive starting in July 2016.

 


29 For the July 2015 to June 30, 2016 period, benefits were phased out completely when family net income reached $118,251 for families with one or two children, and $157,601 for families with three or more children.