How much is the Canada Child Benefit?
The CCB is a tax-free monthly payment made by the Canadian government to parents or guardians of children under 18. The amount of your benefit is based on your net family income reported on your most recent tax return. The highest benefit goes to families earning under $32,000.
Your benefit will change each year based on your income. Once you’ve filed your 2020 income taxes, your CCB payments will begin in July 2021.
Who qualifies for the Canada Child Benefit?
The calculation is based on your net income on your income tax return. This allows your registered retirement savings plan (RRSP) and pension contributions along with child care expenses to be factored into the calculation (since these deductions are subtracted from your gross income before federal and provincial income taxes are calculated). Other factors that affect the amount you qualify for are:
• your marital status
• your province of residence
• the number of children you have
• the ages of your children
• your child’s eligibility for the disability tax credit
How do you get the CCB?
Getting the most of your CCB
Many families rely on the CCB for day-to-day expenses. However, we do encourage families to direct all or a portion of this benefit into an registered education savings plan (RESP) for your child. When you have an RESP, the federal government adds money from the Canada Education Savings Grant (CESG) to it. For each eligible child, the CESG provides 20% of your RESP contributions of up to $2,500, meaning it adds a maximum of $500 to an RESP each year up to lifetime maximum of $7,200 for each child. We have had some parents take a portion of their CCB and purchase a small whole life insurance policy for their child as well. There are many strategies to consider to help create financial security for your children.
To determine what plan is most suitable for you and your family, give us a call.
The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. This article was produced by Advisor Stream for the benefit of Rick Irwin, Financial Advisor at Trinity Wealth Partners, a registered trade name with Investia Financial Services Inc. The information contained in this article does not necessarily reflect the opinion of Investia Financial Services Inc. and comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any securities.
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