Earlier today the government tabled the 2016 federal budget. While the mainstream media is talking about deficits, the debt-to-GDP ratio, and special interest groups, I want to take a look at how this budget may impact you.
Families with children
Many of the tax measures announced in today’s budget impact families with children. The most significant change is the new Canada Child Benefit (CCB). The CCB is a monthly benefit that will replace the UCCB1 and the CCTB2 starting in July 2016; you’ll continue to receive the UCCB and/or CCTB until then.
The CCB is a non-taxable payment that’s based on your adjusted family income3 and the number of children you have. The CCB phases out as your family income increases. You can use our handy calculator to estimate your family’s monthly CCB payment.4
As expected, the budget also eliminates income splitting for families (the family tax cut) in 2016. If you need a refresher on the family tax cut, here’s the blog post we wrote when it was introduced.
The budget also plans to phase out and eliminate the child fitness and arts amounts. In 2016 the limits for the credits will be $500 (from $1,000) and $250 (from $500), respectively.5 They will both be eliminated completely in 2017.
The budget included several measures relating to Canada Student Loans and Canada Student Grants. These changes are explained in greater detail here.
To fund these changes, the education amount and the textbook amount will be eliminated in 2017.6 The tuition amount (which is based on the actual amount of tuition you pay) won’t be changed. This change will not impact any amounts carried forward from prior year returns.
More changes for 2016
As promised during the election, the government will introduce a teacher and early childhood educator school supply tax credit.
The amounts used to calculate the Northern Residents Deduction will be increased.
This is just a smattering of what was announced today. Other announcements relate to the OAS, GIS, EI, CPP, and more. You can read all about those changes on the Department of Finance’s Budget 2016 page.
1 The Universal Canada Child Benefit (UCCB) is the the taxable amount of $160 per child under six and $60 per child 6 to 17 that’s paid on the 20th of each month to all families, regardless of income.
2 The Canada Child Tax Benefit (CCTB) is also paid out on the 20th of the month, however this credit is based on your family income. This credit is sometimes referred to as the “child tax credit” or the “family allowance”.
3 Adjusted family income is your family’s net income minus any UCCB and registered disability savings plan (RDSP) income received plus any UCCB and RDSP amounts repaid.
4 This calculator does not yet include the additional amount you’ll receive if your child qualifies for the disability tax credit. This additional amount is up to $2,730 per child eligible for the disability tax credit and the phase-out of this additional amount will be made to generally align with the CCB.
5 If your child is eligible for the disability tax credit, the $500 additional amount for both the fitness and arts amounts will remain in place for 2016.
6 The education and textbook amounts are both set amounts based on number of months you attended a full-time or part-time post-secondary program.