The Government of Canada had a pretty great celebration in store for the Child Care Benefit’s (CCB) seventh birthday. Introduced in 2016, the tax-free income source provides low to middle-income families with children with help for the cost of raising children.
Yet this year, things got even better. So, if you’re a parent, make sure to keep an eye out on August 18. A new, higher benefit is coming your way. Again.
The CCB had a major increase for the 2023 to 2024 year. Starting in July, Canadian families can receive up to $6,275 per child each year from aged six to 17 and up to $7,437 per child under six. This was a huge move and one the government decided on to keep pace with inflation.
The 6.3% increase from the year before comes out on a monthly basis. Therefore, if you have one child, with a maximum of $7,437, that comes to $619.75 each and every month! That being said, not every Canadian will receive the benefit.
How much you could get
The CCB is calculated based on how many children you have, their ages, and how much your household earned in the last tax year. If you made it under the adjusted family net income (AFNI) of $34,863, you will receive the maximum benefit for your children.
However, if you make above that amount but below $75,537, you will receive 13.5%Â lower than the income that is greater than $34,863. Make higher than $75,537, and it’ll be even lower, with a reduction of $5,491 plus 5.7% of your income greater than $75,537.
For this article, let’s go with the averages. Canadian households earn an average of $66,800 as of 2022. The average family has two children. Let’s say you have one child below six and one over. Here is what you would earn below.
|Household Income||Amount Over $34,863||Deduction of 13.5%||First Child Under Six||Second Child Over Six||Total Amount||Total Annual Payment After Deduction|
How to use it!
The best way to use this cash is to invest what you can into your child’s future. That would be through a Registered Education Savings Plan (RESP). Even if your child doesn’t go to secondary education, they can still use it later on. What’s more, parents can take advantage of the Canada Education Savings Grant. In this case, for the first $2,500, the government pays an additional 20%. So, $2,500 could bring in an additional $500 for your child!
With this amount, you could easily put $2,500 towards each child and still have some left over. I would recommend investors think long term in most cases, but especially for long-term education. A great option would be essential services or financial institutions offering dividend income.
For example, if you were to invest in Toronto-Dominion Bank (TSX:TD), you could see that $2,500 rise at a compound annual growth rate (CAGR) of 6.2% based on the last decade. Plus, you’ll receive additional income from dividends. That currently sits at $3.84 per share annually. This, too, can be used to reinvest back into your child’s investments.
So, make sure to check your bank accounts and mail this August 18! There could be a massive cheque waiting for you and 10 more coming your way.
The post Parents: CCB Benefits Have Increased to $7,437 Per Child Max, Due Aug 18! appeared first on The Motley Fool Canada.
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