Cameron Wigmore: Green Party Member

February 25, 2007

Harper government taxing childcare benefits

The Harper government is taxing your childcare benefits.

I sent the following letter as an op/ed to all of my local papers. So far I have not encountered one single person who was aware that their benefits are being clawed back. Feel free to copy and send to your local papers.

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I wonder how many people are aware that their childcare benefit payments count as income and are being taxed back by the Harper government.

Recently my wife and I, along with all other parents with a child under six years old, received a letter from the Canada Revenue Agency which included a universal child care benefit statement (RC62). Our new government is now taxing back a large portion of that benefit. Instead of $1200 per year per child under six, you will only get to keep $460 of this if your combined family income is between $30,000 & $40,000 per year. The rest is taxed back.

So not only was the $100 per month too little to pay for early childhood development services (and not nearly enough for one parent to stay at home) now it may even put my family income over a certain tax bracket, and it could cause me to lose a significant portion of my tax return.

Tricky.

REFERENCES
The following links spell out the situation very well.
http://www.childcareadvocacy.ca (Harper Plan PDF)
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Harper Plan tax info
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3 comments:

Anonymous said...: Most benefits are taxable, including benefits for seniors. CPP benefits and OAS (old age security) benefits are considered taxable as well.

In the grand scheme of things, young people are able to manage their finances more easily than seniors. So, if I were to be selective about what I don't want taxed (besides provincial health premiums), seniors benefits would be much higher on my list than this child credit.; 1:26 p.m.
camsax@gmail.com said...: You have a point, and I don't disagree. My objective in writing the letter above is to inform people receiving this new benefit that it is counting as income as is being taxed.

Most people I speak with still have no idea that this is the case.; 2:51 p.m.
Anonymous said...: Thanks for the information- re it is taxable I hadn't really thought about it. We just put the $100 into an RESP so I think the Government will give us a top up for amount being put in, so we won't loose as much if you add all the pros and cons. Personally I think the UCCB is crap. I live in a place with no daycare (arctic). When I return to work if I can find a baby-sitter who will actually show up (not to mention other issues) I will be paying $250 a week for childcare so really $100 a month makes no difference. We (Canadians) need money and support to set up more quality daycare.; 11:35 a.m.