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Child Care Benefits: Spousal Amount, UCCB, and CCTB!





Some examples of child care benefits include the spousal amount, uccb, and cctb.  Last week, I answered a reader question regarding whether it was better financially for one spouse to stay at home with the kids, or for both parents to be working.

From within the answer that I put together, I mentioned the Spousal Amount, Day Care Expenses, Universal Child Care Benefit (UCCB), and the Canada Child Tax Benefit (CCTB). I didn’t get to explain these terms in any great detail, so for you new or soon to be parents, this may be the article for you!

Spousal Amount

  • The spousal amount is a tax credit that can be transferred to the higher income spouse providing that the low income spouse has very little or no income.
  • The maximum credit for 2006 is $7505 (net income < $751) but decreases as the amount of net income for the low income earner increases. When the low income spouse reaches $8,256 in net income, the spousal amount is eliminated.
  • This taxtips.ca calculator will account for the spousal amount.

Day Care Expenses

  • In the case that you and your spouse decide to go back to work and need to put your child in day care, it can get expensive. The bright side is that up to $7,000/child/year can be claimed under the lower income spouse.

Universal Child Care Benefit (UCCB)

  • The UCCB is the one of the Tory promises of universal child care. This taxable program provides $100/month/child for families with children under the age of 6.
  • UCCB income can be taxed in the hands of the lower income earner.

Canada Child Tax Benefit (CCTB)

  • CCTB is a tax free monthly payment to parents with children under the age of 18.
  • This amount received depends on the number of dependents, the province, the family net income and marital status.
  • You can use this nifty CCTB Calculator to figure out your situation.

NEW! Effective July 1, 2007, $2000 / child (under 18)/ family can be claimed.

  • This is a FEDERAL tax credit, meaning you get $2000 x 15.5% = $310/child/family. I haven’t’ seen any mention of the provinces matching this credit, if you hear anything, let me know!

I hope this helps some new parents out there, I know that I have learned a lot from the research. I guess it’s time to have kids now? :)





57 Comments, Comment or Ping

  1. No wonder why we are living a small babyboom!
    All those generous credit sure help!
    I also appreciate the 3 to 5 weeks off program for fathers! Taking some time off to help out your spouse with your newborn baby is a must!

    MDJ, after you will move in your new house, I’m sure you’ll start to feel the pressure;)

    Cheers,
    FB

  2. The parents are putting the pressure on now! Funny how parents get excited about turning into grandparents.

  3. I always thought the U.S. federal income tax system was one of the most complex things out there, but reading here, I’m quickly learning we may not be alone in that area :)

  4. AJ, when it comes to taxes, nothing is simple. :)

  5. FT – there’s no harm in trying!

    Mike :)

  6. 6. Fab

    Not easy to explain these tax terms in a few lines. You did it well ;) Thanks for these infos.

  7. 7. Jason

    What’s the 3 to 5 week off program for fathers? Are you talking about parental leave (35 weeks)?

  8. 8. Julien Nephtali

    Jason,
    He is talking about the Quebec Parental Insurance Plan (QPIP). Over here in Quebec, we replaced the federal parental leave program by the QPIP last year.
    The QPIP stipulates that financial benefits be paid to all eligible workers—salaried or self-employed—who take maternity leave, paternity leave, parental leave, or adoption leave.
    The Maternal leaves (exclusive to mother) varies between 15 to 18 weeks depending on whether you choose the special ( shorter but more money) or basic plan.
    The Paternal leave (exclusive to father) is between 3 to 5 weeks.
    The Parental leave is between 25 to 32 weeks and can be split between the father and the mother.
    Plus you receive between 55 to 75 % of your income capped at 59 000$ depending on which plan you choose.
    Its really cool and it has caused a little baby boom here in Quebec.
    Julien

  9. 12. Manny

    NEW! Effective July 1, 2007, $2000 / child (under 18)/ family can be claimed.

    This is a FEDERAL tax credit, meaning you get $2000 x 15.5% = $310/child/family.

    Hi FT,
    Could you please send me some info on how/where to apply for this credit? I have two kids under 18 .. and this would surely help ..:)

    BTW great site.. Just discovered it. Please keep it up. Thanks

    Manny

    Toronto

  10. One strategy that we are planning to implement is using the UCCB and the CTTB and putting them in an RRSP. With a 40% tax credit we take that back and place it into an RESP for our children which adds another 20% to the pot because of the government grants. So for us it is like taking the $100 the government and then turning it into $160 dollars.

  11. 15. Joe

    I have a fulltime live-in nanny who I pay full taxes for etc as an employee of mine.

    In a year when the wife is pregnant and delivering etc. her income does not actually go high enough to claim the nanny’s salary as child-care… and it goes to waste in terms of tax credit.

    I read that the higher income holder can claim this credit for the time that the lower income holder is disabled, in school, incapacitated… something thankfully not the case, other than pregnant and unable to work as much.

    Is there any way for me to make use of this potential 12K worth of childcare on my higher income?

    Thanks.

  12. 16. George

    One note here regarding the child care deductions – the cap of $7000 per year equates to about $583/month. Around here (Edmonton, Alberta), it’s extremely difficult to find any daycare (let alone a GOOD daycare) that charges less than $700/month (the cost for my 3-year old is nearly $800 per month, and for my newborn it’s over $1200/month).

    The $7000/year limit hasn’t changed since 1998 – ten years ago. Inflation has increased the cost of daycare massively in that time, especially here in Alberta.

  13. 18. Anne C

    Hi,
    You mentioned in the article that $7,000/child/year can be claimed under the lower income spouse for the daycare expenses. I have a daycare provider charging $700/mth BUT with no receipts issued versus one that charges $900/mth WITH receipts. I get to save $2400/year right off the bet with the outright cheaper daycare BUT I wondered how much difference it would make in the tax return if I go with the more expensive daycare with receipts so I get to claim the $7000 daycare expenses?

  14. Anne, it depends on the marginal tax rate of the lower income spouse.

    Say that the lowest income spouse has a 30% marginal tax rate. Therefore, $7000 x 30% = ~$2100 tax return. The higher the marginal rate, the bigger the benefit.

  15. 20. sdominaux

    this new $2000 federal tax credit fo child under 18 does that mean that you get the 310/child/family each month or are you talking about tax time!thanks.

  16. 21. George

    sdominaux: It’s a credit that you can apply to your taxes when you file them. It’s not $310 per month, it’s $310 per year ($2000 x the lowest marginal tax rate). The lowest marginal rate was dropped for 2007 to 15%, so the credit is actually now worth $300 per child, not $310.

  17. 22. sdominaux

    thank- you george!

  18. 23. Jason

    i just did my taxes on ufile and was wondering where you come up with 300 dollars per child??? We have a 2 year old and a 1 year old and my wife is pregnant.

  19. 24. George

    Jason: The credit appears on line 367 of schedule 1 to your tax return (you enter the number of children on line 366, and that is multiplied by $2000). The Federal non-refundable tax credits are totalled on line 335, and then the amount is multiplied by 15% (the lowest tax bracket) on line 338. If the credit is $2000 per child, then it’s worth $2000 x 0.15 = $300.

    A non-refundable tax credit helps to reduce the taxes you need to pay, but it won’t help you if your taxes are already zero (that’s why it’s not refundable).

  20. 30. Sabrina

    Our family situation is slightly complicated after spending 2 years in family court to get joint-custody of my stepson. He is now 21-month-old and has never been issued a birth certificate and this leads me to believe that the CTTB hasn’t been collected on his behalf since his birth. We have joint legal cutody as well as shared physical custody (he lives with us more than 40% of the time). I read on the CRA website that parents can have a shared eligibility but it is not clear how this will play out.

    Any insight on how to start the process as tax season is here?

  21. 31. Martin

    Hi,
    we had a grandmonther from overseas care for our toddler for almost a year. We paid her $400/month in cash, which is half of what we would have paid to a daycare in Toronto, plus we get the benefit of a blood relative looking after the child. My question is, can I claim that amount on my tax return as “Day Care Expenses” because I have no receipts? The grandmother can give receipts I guess but she is not registered in Canada nor does she have a SIN (foreign citizen, so no SIN or any Canadian documents).
    Thanks in advance,
    Martin

  22. 32. George

    @Martin: I’d suggest that you call CRA and ask. Chances are, though, that the deduction won’t be allowed since you don’t have receipts to back up the claim.

    From the CRA web site under child care expenses:

    “Receipts – The individual or organization who received the payments must give you a receipt showing information about the services provided. When the child care services are provided by an individual, you will need the social insurance number of the individual. The receipt can be in your name or that of your spouse or common-law partner.”

  23. 33. Nelly

    Hi,
    I finished a 3 year university program recently (2004 – 2007). When I filed my taxes last year for 2007 using ufile, I included my tuition of $5380 for the year 2006 only. Now I am trying to file my 2008 taxes using ufile again but I see unused tuition of 11900 automatically entered. I am not sure where that amount came from. Can you please help me understand the 11900 ? Again, how do I include the tuition for 2004 and 2005 ?

  24. 34. George

    @Nelly: I can only take a guess as to what happened, but you should probably talk to a tax accountant (or at least a tax preparer) to get further details.

    Chances are, you had tuition and education credits in 2007 that were large enough to reduce your tax payable to zero. Any extra credits beyond those that you could use can be carried over to future years. That’s likely where the 11900 came from, especially if you had ufile carry over the data from your previous year’s return.

    Your 2007 Notice of Assessment should list the amount of tuition/education credits available for carry-forward.

  25. 36. Andy

    Hi,
    I am filing my taxes right now with Ufile. I however cannot find where to enter my rent. I even tried to contact them but I got some automated responses and none answered my question. Can any of you help me? Nelly ? Goerge ? anyone at all?
    I will be very grateful. Great website
    Andy

  26. 37. Ray

    Andy: You enter your rent in the “Ontario tax credit” section under “tenant rental tax credit’ i think it’s called.

  27. 38. George

    @Andy: It depends on whether it’s the rent you’re paying (i.e. for the place you live) or rental income (i.e. renters who pay you so that they can live in a place that you own).

    Rent that you pay for your shelter doesn’t have any impact on your taxes, so it doesn’t get reported anywhere. If it’s rental income you’re asking about, see the CRA web site, as there is plenty of info on the topic: http://www.cra-arc.gc.ca/E/pub/tg/t4036/

  28. 39. Jo

    Hi I have a question and need help.

    We will be putting my son in a home daycare next week, paying cash, no receipts.
    Daycare provider said that she will not charge me for her sick days, stat holidays and 3 weeks vacation if I pay her cash. So for this remainder of tax year, I will be saving at least $770 in child care.

    I will be paying her $700/mth (which is $35/day).

    Is this worth it for us? The lower income spouse has a marginal rate in 2008 of 22%.

    Please help as I don’t want to make a mistake.

  29. Jo, providing that the lower income spouse is well into the 22% MTR, the $7000 expense will result in a $1540 tax return. You’ll have to weigh the $1540 against the savings by paying cash.

    It tax return may be lower depending on if the $7k drops you into the next bracket below.

  30. 41. George

    Jo: it’s a bad plan. As FT notes, you’ll be spending an extra $1540 on child care (because of the lost tax deduction) in exchange for a “savings” of $770. On top of that, you’ll be assisting your child care provider in committing tax fraud.

    If I were you, I’d look for alternate child care. $700/mo sounds quite high to me for a dayhome – around here a dayhome spot through a licensed agency (one that is 100% legitimate and legal) costs $500-$600.

  31. 42. Neal

    Does anyone know if the higher income earner in a divorced (shared custody) family can claim the child as a dependant, even if the spouse is the recipient of the Universal Child Care Benefit? Thanks in advance for the insight!

  32. 44. stefphie

    can someone help me to understand the benefit of claiming child care reimbursement through work. I am new to all of this.

  33. I know this posting is rather old but I was reading through it and wanted to correct some misinformation given by George to Andy back in post 38.

    “Rent that you pay for your shelter doesn’t have any impact on your taxes, so it doesn’t get reported anywhere. If it’s rental income you’re asking ”

    Actually, rent can have a huge tax impact, depending on your income. At least in Ontario. Rent is entered on Form 479 and generates a refundable tax credit along with the ONtario sales tax credit. For higher income this credit is eliminated. However, for lower income and students away at school, this can generate $600 to $800 of refund.

  34. 46. Alex

    My 18 years old son provided before/after school care for my daughter and I paid him in cash monthly. He turned 18 in August 2009. Does anyone know if I can claim all amount for the full year I paid as child care deduction or should I prorate it based on the fact that the caregiver was immediate family member and turn 18 only in August 2009?

  35. 47. Val

    Hello, I am sponsoring my husband who currently has no SIN number or any other documentation. We are married with 2 children. Does CRA take any benefits away if a spouce has no SIN. As I am sponsoring my husband he has no world income and is not assisting me financially in any way as he lives with me.

  36. 48. crystal

    I would like to know the answer to question 42

  37. 49. Nanny Fan

    Is it possible to use the CCTB for a nanny? If possible I would like my children to be cared for at my home rather than with a bunch of other kids at a daycare. I guess I am wondering if the credit under the CCTB is up to me regarding what kind of childcare I’d prefer. Does anyone know?

  38. 50. kim

    hi!
    i was wondering if cctb is starting to decrease the cctb they give out? i have been receiving a $290 amount each month since my son was born and i have recently sent them a change in marital status. i sent them the change in august and still received the same amount until september but it decreased this october. my husband lives outside the country and is unemployed. i only received a total of 140 this month and am wondering what might have happened to the 150? my child is just turning two this january and i use his money for his day care. i only work part time and my annual salary is less than $12,000. im very confused what is happening.

  39. 51. Wagner

    Ok so any idea why I get 150 dollars for the last 2 years for 2 kids on my UCCB ???

  40. 52. Wagner

    Ok so any idea why I get 150 dollars for the last 2 years for 2 kids on my UCCB ?

  41. @Wagner, how old are your kids? UCCB starts to taper once they reach 6.

  42. 54. Wagner

    @FrugalTrader They are 3 and 1 and the youngest one its going to be 2 on feb 27 in the next year and my oldest just turn 3 Oct 7.

  43. 55. Wagner

    @Frugaltrader
    Born 1: October 7 2010
    2: February 27 2012

    So 3 and 1 years old

  44. 56. Lucian

    Do you know if daycare expenses can be claimed by the higher income if the spouse is going to a full time PhD program?
    Thanks,
    Lucian

  45. 57. Soro

    @Lucian
    Yes, take a look at form T778 in your tax software and enter the number of weeks/months that the lower-income spouse was studying part/full-time at an educational institution.

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