Canada Child Tax Benefit

The Canada Child Tax Benefit (CCTB) was a tax-free monthly payment available to eligible Canadian families to help with the cost of raising children. The CCTB could incorporate the National Child Benefit (NCB), a monthly benefit for low-income families with children, and the Child Disability Benefit (CDB), a monthly benefit for families caring for children with severe and prolonged mental or physical disabilities.

History

The CCTB was enacted in response to a commitment made by the Canadian parliament, in November 1989, to eradicate child poverty in Canada by the year 2000.[1]

Creation of the Child Tax Benefit in 1992

The federal finance minister, Don Mazankowski, announced in the 1992 Canadian federal budget the introduction in January 1993 of a renewed and enriched Child Tax Benefit that consolidates the family allowance, the child credit and refundable child tax credit into a unified benefit of $1,020 per child. Unlike family allowance that it replaces, this monthly payment is not taxable for the recipient. This measure was estimated to increase benefits by $2.1 billions over a period of five years.[2]

However, it has been found that, due to cutbacks to social assistance, the impact of this program in reducing child poverty is negligible.[1]

Replacement in 1997 by the CCTB

The federal finance minister, Paul Martin, announced in the 1997 Canadian federal budget the gradual replacement of the Child Tax Benefit by a new Canada Child Tax Benefit (CCTB) that combines the old Child Tax Benefit (CTB) with the Working Income Supplement (WIS) to better target low-income families. The first step of the replacement would take place in July 1997 with the increase of the Working Income Supplement, and the final step on July 1, 1998 with the enactment of the new Canada Child Tax Benefit.[3]

Under the new system, the CCTB have two main components:

  • The base benefit (that replaced the CTB) that is available to families with income up to $67,000.
  • The NCB supplement (that replaced the WIS) targeted towards low-income families (up to $25,921).

Benefits under the CCTB are increased to provide up to $1,625 for the first child and $1,425 for each additional child (this level of benefits applies to family with income up to $20,921).[4]

The 1999 budget increases the NCB supplement by $350 ($180 in July 1999, $170 in July 2000) and the income level where the base benefit starts to phase out and the NCB supplement fully phases out increased from $25,921 to $29,590 by July 2000.[5]

The reform is part of a proposed National Child Benefit (NCB) System based on collaboration between federal, provincial and territorial governments whereas the federal government strengthen the federal benefit and provincial and territorial government can provide additional benefits and services to low-income families.[3]

Replacement in 2016 by the Canada Child Benefit (CCB)

Canada Child Tax Benefit was eliminated in 2016 and replaced by the Canada Child Benefit (CCB), a tax-free payment targeting low- and middle-income families, and those with incomes higher than $150,000 will receive less than the previous system. In 2018-19 benefit year, the CCB payments are up to $6,496 per year per child under the age of 6, and up to $5,481 per year per child aged 6 to 17 in benefit year 2018-19. The CCB is income-dependent; the first income threshold for families to receive Canada Child Benefit is $30,450 and the second threshold is $65,975 in 2018-19. Since its inception, the Canada Child Benefit has lifted about 300,000 of children out of poverty[6], and has helped reduce child poverty by 40% from 2013 to 2017. The budget for Canada Child Benefit has been increased in 2019, increasing the annual benefit to a maximum of $6,639 for children under 6 and $5,602 for ages 6 through 17, allowing parents to provide more due to the increased cost of living.[7]

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See also

References
  1. Garcia, Miguel Roberto Sanchez (2002). Targeting child poverty in Canada (Ph.D. Dissertation) Wilfrid Laurier University
  2. Budget Papers 1992, p.136
  3. Working Together Towards a National Child Benefit System. February 18, 1997. p.18–22
  4. Budget Papers 1998. p.110
  5. Canada Child Tax Benefit: Update. February 1999. p.3–4
  6. "Backgrounder: Strengthening the Canada Child Benefit". Department of Finance Canada. 2018-03-27. Retrieved 019-09-18. Check date values in: |access-date= (help)
  7. Canada, Employment and Social Development (2016-05-12). "Canada Child Benefit". aem. Retrieved 2019-09-18.
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