Child Tax, Families, Tax Basics, Tips & Advice

Child Tax Benefits: Application and Restrictions

The ongoing expense of children can be stressful for many parents, but the Canada Child Benefit (CCB) may provide some relief.  This tax-free benefit helps eligible Canadian families with the cost of children who are under 18-years-old.

The Basics

There are 2 benefit programs available for Canadian parents, subject to eligibility:

CCB – Canada Child Benefit is there to assist in Canadian families raising children, and

CDB – Child Disability Benefit, is also a national benefit which assists families caring for eligible disabled children who have severe and long-term impairments.

Restrictions

A parent can apply for benefits any time after a child’s birth or upon meeting the qualifications for application.  To apply, parents must be permanent residents of Canada or temporary residents of Canada for at least 18 months.  That means parents who apply must have either Canadian citizenship or protected status, and the applicant must be the primary caregiver for the child.

Additionally, the child must reside with you and be under the age of 18.  In order to be eligible for the benefits, the government takes a look on an annual basis at the net family income (the income of both parents), and if the combined income does not exceed the threshold, then they would be eligible for the credit. That means in order to be considered, both parents have to file an income tax returns (T1), even if they earned no income during the year.

Parents who believe they won’t qualify to receive the benefits based on their income should also apply, as the family income level cutoff has changed significantly with the introduction of the CCB.

Those in shared custody or temporary living arrangements may also qualify for the benefits, depending on the length of time a parent is the primary caregiver. The best way to confirm your eligibility for benefits is to file your taxes annually.

Marital Status

If you become separated, widowed or divorced you should contact the CRA right away and have them update your personal tax account because if you are the sole parent responsible for a child who is qualified for the Disability Tax Credit, and you apply for the Child Disability Benefit, then you need the CRA to understand that it is just your income that they need to take into consideration.

The same hold true for when you add another child to your family, or there is a change to employment because the higher the family income, the lower the benefits; hence, the sooner you contact the CRA, the quicker your benefits are recalculated.

Furthermore, if you marry, advise the CRA immediately, and prepare for the possibility that you and your new partner’s combined adjusted net family income may reduce your payments or disqualify you from receiving the benefits at all.

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