This is How to Maximize Your Canada Child Benefit

The Canada Child Benefit (CCB) is a monthly payment made to eligible families to help them with the costs of raising children who are the age of 18 years or under. To determine yours and your family’s eligibility, the Canada Revenue Agency (CRA) takes information from your income tax and benefit return and calculates the amount of your CCB payments. It’s important to note that your CCB eligibility is based on your (and if applicable, your spouse or common-law partner) filing your income tax returns every year, even if you did not have income that year. If you’re taxes are in order, you are ready to apply using the CRA’s Automated Benefits Application.

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Good news parents, starting July 20 the CCB will be receiving an increase to help with the ever-increasing cost of living. Minister of Families, Children and Social Development Jean-Yves Duclos relayed in the announcement back in May, “The cost of raising children keeps increasing. If we want our children, our beautiful children to have a fair chance in life, to have the best possible start in life, then their parents need to have the support they need and deserve. And that cost which is high and increasing needs to be acknowledged by the federal government.” This works out to a maximum benefit of $6,639 for each child under the age of six and $5,602 for each child between the ages of six and 17. Increasing roughly 3 per cent, parents could potentially receive a few hundred more dollars annually, based on how many children you have and your child’s age.

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The CCB is tax free, which is an added bonus of the benefit. It means that when you claim it on your annual income tax return you don’t have to pay anything back. Other Canadian tax free benefits that you could be eligible for include the Child disability benefit, the Working income tax benefit, and the children’s Special allowances benefit.

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For financial safety, any financial advisor will suggest to set up an emergency fund. You never know when a financial emergency will hit you and your family such as unexpected travel or the cost of replacing your furnace, so it’s a great idea to set money aside exactly for this purpose. If you do not require its entire amount for basic living childcare costs, using a big or small portion of your CCB and putting it in an emergency fund is a great way for you to set money aside without making a further dent in your monthly budget.

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Did you know you can use the already free CCB and get more free money? By setting up a Registered Education Savings Plan (RESP) you are proactively saving money for your child’s future educational career. When you use your CCB in your child’s RESP, and throw in the Canada Education Savings Grant, the government will put in 20 per cent of your contribution to a maximum of $500 annually. Free money making free money? Yes please!

A good way to put the increased CCB to use is to consider giving your child a weekly allowance. So long as your child is old enough to understand the exchange of currency with goods (or, lollipops, in this case), giving your child an allowance is a great way to teach them money management. The sooner you start teaching your children fiscal literacy, the better off they will be in making sound financial decisions in adulthood.

Again, if you don’t require the full CCB monthly payment for the cost of living, this could be a good way to start paying off your debt. The best strategy to employ is to pay off those debs which incur the highest interest rates, and then move on to other debts accordingly.

Of course, there are ways to make the most of a tight budget as you recover financially.