Indian Time - A Voice from the Eastern Door

Starting July 21, 2016, most Canadian families with children under 18 can expect to see a bigger child benefit payment, as money starts flowing in one of the most ambitious social policies to be implemented in Canada in decades.

The new Canada Child Benefit (CCB) is expected to push tens of thousands of Canadian children above the poverty line, and could help stimulate Canada’s economy.

“This is an initiative that’s going to help Canadian families in a significant measure,” Prime Minister Justin Trudeau told the CBC’s Rosemary Barton in an interview Wednesday, and noted it is a “more generous and tax free” system than its predecessor, he said later at a press conference.

The benefit is expected to cost $22.4 billion over five years. It also won’t be indexed to inflation until 2020.

Still, the vast majority of Canadian families will see a boost to their bottom line. Based on the models we have looked at and based on what the Canadian government has said, about 90 per cent of families that have kids under the age of 18 will actually have more money than they did under the old system.

The poorest of those families will see the biggest boost while the wealthiest will see their child benefit payment disappear altogether.

Under the old system, families could receive both the Canada Child Tax Benefit (CCTB) and the Universal Child Care Benefit (UCCB). The CCTB was tied to income but the UCCB was, as its name implies, universal.

The UCCB provided $160 per child per month for children under six and $60 per month for children aged six to 17. That money was paid out to families regardless of income level.

The new program combines the CCTB and UCCB into one payment that is entirely income tested. The new payment is also tax-free.

Under the new CCB, families with children under the age of six will receive as much as $6,400 per child per year. Families with kids between six and 17 will receive a maximum of $5,400 annually under the new plan.

The amount of money a family will receive depends on their net income and how many children they have. The Canada Revenue Agency will calculate a family’s adjusted net income based on information reported on income tax returns.

Families with net income below $30,000 per year will receive the maximum and families earning more than $200,000 per year will see their payments eliminated.

The extra money and the fact that it’s tax-free could have a stimulative effect on the economy, at least initially.

The Liberal government says the new program will push nearly 300,000 Canadian children out of poverty.

“The poverty rate for children in Canada will fall from about 11.2 per cent to 6.7 per cent,” says Jean-Yves Duclos, the federal minister of Families, Children and Social Development, which is responsible for the program.

“Forty per cent of all children currently living in poverty will be lifted out of poverty, which will lead to the lowest poverty rate among children ever in Canada. It will also lead to the most significant fall in child poverty ever in our country,” he says.

“So it’s a huge impact, a transformation in the lives of families of almost six million children in Canada.”

The new program completely overhauls the system that was in place under the previous Conservative government. The previous [Conservative] program believed that there should be some component of assistance for families that was universal. Whereas with this new government, the Trudeau government, it is based purely on income testing.