Parents with children between the ages of six to 17 may have noticed a new payment in their bank account this month as part of the federal government’s promise to champion low to middle-class families.
In Prince Rupert, there were 1,100 payments issued in July as part of the Canada Child Benefit, as reported by the Canada Revenue Agency. For a population of more than 13,000 residents with nearly 2,000 between the ages of six to 17, there is a significant number of families benefitting from the new tax-free income.
The City of Prince Rupert’s Go Plan Population Survey from 2015 found that the average household has 2.61 people. However, families considered low-income, meaning a family would need to spend a larger share of its income on food, shelter or clothing than an average family, have an average family size of 3.47 people. In the survey, the city found that 22 per cent of all households were below the low income cut-off for their family size.
Prime Minister Justin Trudeau announced that this will put money in the pockets of nine out of ten families and his government estimates that 300,000 fewer children will be in poverty with this new benefit.
Parents who were receiving the benefit under the former system and are up to date with their taxes are automatically eligible for the payments. Parents with newborns can apply through the automated benefits application service.
The former system, under Stephen Harper’s government, had a mixed bag of benefits with the Canada Child Tax Benefit, the Universal Child Care Benefit and income splitting. The new federal government promised to make the system less complicated and by giving out one big tax-free benefit.
The payments are scaled per household and low-income families that make less than $30,000 a year will get the maximum benefit while high-income families may see their benefits disappear.
Here is how it works: families can receive as much as $6,400 a year for a child under six years, and $5,400 for children aged six to 17. There is a payment for each month of the year. The government has created the Canada Child Benefit Calculator to show parents exactly how the Canada Revenue Agency will estimate the monthly payments.
For example, if a family has one five-year-old child, a ten-year-old child and a household income of $30,000 they will be handed $983 a month — or $11,796 a year — as part of the Canada Child Benefit. The Trudeau government hopes this support will help the low-income and middle-class families save and invest this money for their children and to grow the Canadian economy.
Northern Savings Credit Union branch manager Stefan Delloch offered some advice to parents who may be wondering how they can responsibly benefit from the Canada Child Benefit.
“If you are a family who will be receiving an increase in government credits and you have the ability to invest a portion of these funds, consider a Registered Education Savings Plan (RESP) for your child. An RESP will allow you to take advantage of other government credits such as the Canada Education Savings Grant, and a visit to a financial advisor is a great place to receive advice on investing in your child’s post-secondary future,” Delloch said.