Banka: Canada Child Benefit and other tax child matters

…it has been CRA’s policy to allow back payments for the last two years once you bring your tax filings up to date.

Gabriele BankaThe kids are heading back to school and the New Canada Child Benefit (CCB) information has been published by the Canada Revenue Agency (Guide T4114).

The difference with this benefit is that it’s non-taxable and it replaces the Canada Child Tax Benefit, the National Child Benefit supplement and the Universal Child Care Benefit.

As a result, there will be a couple of differences to your 2016 tax return from previous years.

One is that the Universal Child Care Benefit you received from January to June 2016 is taxable and must be included in your income. The next is that line 367, which used to be the deduction for children, is now the deduction for the family caregiver amount which really has nothing to do with children unless they are disabled.

Even though the new Canada Child Benefit is non-taxable, it will still be based on adjusted income levels from the filing of your tax returns.

So if you require the benefit, you still need to stay current with your personal tax returns in order to receive the benefit. The amount of the benefit is based on the income of the parent primarily responsible for the child(ren) plus the income of the other spouse, but not the income of the child(ren).

If this income is more than $30,000 a year, then the amount of benefit is gradually phased out.

If you share custody on an almost equal basis, both parents can apply to share the benefit at 50 per cent each by filling out form RC66, Child Benefits Application with proof of the custody arrangements such as a court order, separation agreement or letters from daycare, school, club or person in a position of authority.

Equal basis custody would be if the child is living with one person three days a week and the other four, or if the child lives at one home for a week and then the other home for a week, or any other regular cycle that alternates between the parents.

In B.C. we have two related programs. One is the B.C. early childhood tax benefit for families with children under six.  The other is the B.C. family bonus available to help low-income families with children under 18. If you qualify for both, their payments will be added to your CCB amount.

If you have children and have never applied for the benefit, it has been CRA’s policy to allow back payments for the last two years once you bring your tax filings up to date.

There were rumours at election time the Liberals would do away with the fitness and arts amounts for children, but that has not happened so rules regarding the deductibility of these amounts are the same as in 2015.