BY: ANDREW STEWART
Think about the Canada Child Benefit (CCB) like this: what would you do if you found $100 bill on the sidewalk in front of your house every month? How happy would you be? Now for the philosophical question: would you spend it or save it?
If you’re like most people today, you’d likely be really tempted to spend it, and that’s ok. After all, it’s found money and it’s a great feeling since you weren’t expecting it, you didn’t have to work one hour extra to earn it and you don’t have to pay a single penny of taxes for it.
That’s the feeling I get every time we receive our Canada Child Benefit for our daughter Anisa. It’s free money from the Government deposited in our bank account every month until she turns 18. I didn’t have to work one day to earn it, there are no restrictions on how I use it and I don’t have to pay taxes for it.
The Canada Child Benefit (CCB) is a tax-free monthly payment made to eligible families to help them with the cost of raising children under 18 years of age. I understand how parents today are struggling to pay for life’s expenses, especially child care and other child-related expenses. Child-care costs in Canada rose faster than inflation in 2017. The biggest increases were seen in Toronto, both compared to last year and 2014. The Greater Toronto area has the highest infant care fees at $1,758 per month, while the suburbs of Mississauga and Vaughan follow closely at $1,400 per month.
The Canada Revenue Agency (CRA) uses information from your income tax and benefit return to calculate how much your CCB payments will be. To get the CCB, you have to file your return every year, even if you did not have income in the year. If you have a spouse or common-law partner, they also have to file a return every year.
The Canada Child Benefit you receive every month is just like finding free money that you weren’t expecting, every single month. What if you could use some of the money to cover daily expenses and invest for your child’s future? There are so many things you need to pay for today and this could really help.
Let’s say you are a family whose combined income is $95,000 per year and have your first baby. You will receive a Canada Child Benefit each month tax-free based on your family income $249 per month from newborn to age 6 and $166 from age 6 until they turn 18 which adds up over 18 years to $41,280 of free money for your child’s future completely tax-free!
What if the $41,280 Canada Child Benefit could set up your child’s entire future and you didn’t need to add one dollar of your own money? If you smartly invested that free money, when your child turns 20 and decides to study abroad it would be worth as much as $69,000. Or when they turn 35 and want to buy their own home, it would be worth $180,000. And what if the investment you set up for their future also paid your child a tax-free annual dividend for life? What an incredible opportunity for your child.
Your benefit payments are recalculated every July based on information from you and your spouse ’s income tax and benefit returns from the previous year. Your marital status affects how CRA calculates your benefits. If your marital status changes, you need to tell CRA before the end of the month after the month your status changed. For example, if your marital status changed in August, tell CRA about the change by the end of September.
We work hard for our money, paying all the taxes on income and then paying all our living expenses. Finding money somewhere to save for your child’s future? I can say from experience, it’s a fantastic feeling.