maximize child canada benefit

After filing my income tax return in mid-April (yes, I tend to procrastinate), I noticed on the bottom of the screen the amount that we will receive for the Canada Child Benefit. 

While we’ve been receiving this benefit since the Trudeau administration has been in power (2016), what really got me thinking is that we’ll be receiving more this year than last.  This got the wheels churning on looking into this program a little more, and how to maximize this program.

What is the Canada Child Benefit (CCB)

Before we get started, what is the Canada Child Benefit?  As the title suggests, it’s a program that helps subsidize the cost of raising kids.  As you can see from our annual budget updates, between daycare and activities, raising kids can get pricey!

The CCB can be lucrative compared to previous child benefit programs, however, the twist with this program is that the benefit decreases as your income increases – similar to old age security in that way!  They look at a number of factors in the benefit calculation including:

  • the number of children that live with you;
  • the ages of your children;
  • your adjusted family net income;
  • your child’s eligibility for the child disability benefit (will dive into this in a future post).

How Much do Parents get?

How much can parents get from the CCB? If you qualify, you can receive up to:

  • $6,639/child/year under age 6, and
  • $5,602/child/year aged 6 to 17.

To put the cherry on the cake, the benefit is not taxable! 

If your family net income is under $30,450, you would qualify for the maximum. Above that and your family will start to receive reduced benefits.  According to the official website, the rules are as follows:

We start to reduce the amount of CCB you get when your adjusted family net income (AFNI) is over $30,450. The reduction is calculated as follows:

  • families with one eligible child: the reduction is 7% of the amount of AFNI between $30,450 and $65,976, plus 3.2% of the amount of AFNI over $65,976
  • families with two eligible children: the reduction is 13.5% of the amount of AFNI between $30,450 and $65,976, plus 5.7% of the amount of AFNI over $65,976
  • families with three eligible children: the reduction is 19% of the amount of AFNI between $30,450 and $65,976, plus 8% of the amount of AFNI over $65,976
  • families with four or more eligible children: the reduction is 23% of the amount of AFNI between $30,450 and $65,976, plus 9.5% of the amount of AFNI over $65,976

Those rules can be a bit complicated, the easiest way to calculate your family CCB benefit is to use the official calculator located here.  I did some of my own calculations and came up with some examples with approximate numbers

Examples with 1 child:

  • 1 child under 6, family income of $70k: $4,023.41 CCB/year;
  • 1 child under 6, family income of $120k: $2,423.41 CCB/year;
  • 1 child under 6, family income $160k: $1,143.41 CCB/year;
  • 1 child aged 6 to 17, family income 70k: $2,986.41 CCB/year;
  • 1 child aged 6 to 17, family income 120k: $1,386.41 CCB/year;
  • 1 child aged 6 to 17, family income 160k: $106.41 CCB/year.

Examples with 2 children:

  • 2 children under 6, family income of $70k: $8,252.52 CCB/year;
  • 2 children under 6, family income $120k: $5,402.62 CCB/year;
  • 2 children under 6, family income $160k: $3,112.62 CCB/year;
  • 2 children aged 6 to 17, family income 70k: $6,178.62 CCB/year;
  • 2 children aged 6 to 17, family income 120k: $3,328.62 CCB/year;
  • 2 children aged 6 to 17, family income 160k: $1,048.62 CCB/year.

Examples with 3 children: 

  • 3 children under 6, family income of $70k: $12,845.14 CCB/year;
  • 3 children under 6, family income of $120k: $8,845.14 CCB/year;
  • 3 children under 6, family income $160k: $5,645.14 CCB/year;
  • 3 children aged 6 to 17, family income 70k: $6,178.62 CCB/year;
  • 3 children aged 6 to 17, family income 120k: $5,734.14 CCB/year;
  • 3 children aged 6 to 17, family income 160k: $2,532.14 CCB/year.

Ways to Maximize Canada Child Benefit

Having explained the rules and shown some examples, it’s evident that it’s a fairly generous program for a middle-class family. 

A busy, 3 child family all under age 6, with a family net income of $70k/year would receive a benefit of a little over $1,000/month.  At that income level, an extra $1k/month after-tax can make a significant difference.  

Besides having more children, there are legitimate ways to maximize the CCB, which mostly focuses around keeping the family net income as low as possible.  How is that possible?  By maximizing tax deductions!  Remember that tax deductions lower your net income.

Some common larger tax deductions:

RRSP contributions

Every dollar that you contribute to an RRSP will result in more CCB (providing that you aren’t super high income).  However, if you are a high-income family that doesn’t qualify for CBB, a large contribution may bring your income low enough to qualify.  How much you get would depend on the number and age of your kids – best to use the calculator mentioned above to get exact numbers. 

As previously mentioned, the 3 child family mentioned above would receive about $12.8k/year in CCB.  With the mindset of maximizing tax deductions, what if that family managed to max out their RRSP contribution of $12,600 ($70k * 18%)?  Assuming no other deductions, that would result in a net family income $57,400, and CCB of $13,853/year, which is a $1k/year increase just for the RRSP contribution.  

In this specific case, it’s like getting another 8% cash back from your RRSP contribution.

Related:  I use Great Canadian Rebates to get cash back while shopping online (like at Amazon).

Childcare costs 

If you have kids in daycare, you can claim $8,000/child/year under the age of 7, and $5,000/child/year aged 7 to 16.  If you have a couple of kids in full-time daycare, that would result in reducing the family net income by $16,000 (assuming the lower income spouse makes at least $16k income/year). 

Say a 2 child family both under age 6 with a net family income of $120k/year.  Without any deductions, CCB would be $5,402.62/year.  Claiming the $16k in childcare costs would result in a CCB of $6,314, which is an extra $900/year.  Combine this with a $21,600 RRSP contribution and now CBB is up to $7,545

Combining the two large deductions would result in an extra $2k/year, or similar to 5.3% cash back.

Leveraged Investment Accounts

If you borrow to invest, like in a business, the stock market, or rental real estate, your interest paid could be tax deductible.  Also, if you have a personal business or rental real estate, and report a loss, this would act as a tax deduction as well.  For us, we leverage our home equity to invest in dividend-paying stocks.  You can read more about this strategy here.

Final Thoughts

The Canada Child Benefit is a program that helps subsidize the cost of raising kids and offers a generous non-taxable benefit that is maximized if you have a middle-class net family income.  

The CCB can be lucrative compared to previous child benefit programs, however, the twist with this program is that the benefit decreases as your net income increases.  The key to maximizing this program is to keep your family net income as low as possible through tax deductions.  This can be through deductions such as: contributing to your RRSP; claiming childcare costs; and, claiming interest on loans used towards business/investing/rental real estate expenses.

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One would have to run the numbers with # of kids, income, etc but maybe there is a benefit in only claiming RRSP deductions every other year?

While my income is pretty constant, my wife’s is variable when she is on maternity leave for example. If I was to have a big RRSP claim the year she is on maternity leave, the following year we would have some VERY generous CCB payments.

Can’t wait to see what our CCB is this year since my income was low from last year due to mat leave.

And people say kids are expensive… they actually make you money! :p

All joking aside, I like the that CCB is now tax free. Our oldest will turn 6 later this year so looks like our CCB amount will be reduced. Not looking forward to that.

Good one!
We have 8 children from 3 to 23 but it was the younger ones that allowed our family to “cash in” with all the changes to the CCB.

Flow through shares are another way to reduce income. In Quebec, the child care tax credit is also income tested, so you get more $ back for your child care expenses the lower your AFNI is.

Favorite part about this article is that the lowest test quote included in this article is 70k household earnings.

While this won’t maximize your CCB, I have consistently put every dime of that payment into my children’s RESPs and enjoyed the 20% top up on that. I’m nearly 8 years into that process and I’m really starting to see the compound growth!

We have three kids and get about $1000 CCB every month. I have been a stay at home mom for the past 9 years, but just started working part-time. Do you know if I will have to pay back some of the CCB payment next year? I tried to find info on the CRA website but didn’t have any luck. Thanks!