Family Law Update: Important Tax Changes Coming for Parents
Effective July 1st 2016 the Government of Canada will issue a new Canada Child Benefit (“CCB”) to replace the current Canada Child Tax Benefit (“CCTB”) and the Universal Child Care Benefit (“UCCB”).
The CCB is a non-taxable benefit that will be paid monthly to custodial parents and is based on adjusted family (or single parent) net income and the number of children in the family. The maximum benefit is $6,400 per child for children under the age of 6 and $5,400 per child aged 6 to 17. The maximum benefit is achieved where family net income is less than $30,000. The benefit starts to decline when income goes above $30,000 and further erodes when income exceeds $65,000.
Generally, benefits under the new CCB will be higher for Canadians with incomes of approximately $150,000 or less. It is only when the recipient’s income exceeds $150,000 that the new CCB benefits drop below the old CCTB/UCCB levels. It is noteworthy that the CCB will automatically be shared between the parties in shared custody situations. Each eligible parent will get 50% of the payment that he/she would have received if the child lived with him/her all of the time. There is no option to change this, even if both parents agree.
Parents should also note that effective the Government of Canada has reduced the Child’s Fitness credit to $500 and the Child’s Art Credit to $250 in 2016 and will eliminate both of these credits entirely in 2017.