Author’s note: this blog post talks about the UCCB increase only. For a closer look at more “real world” scenarios on how the Trudeau and Harper tax plans will affect your bottom line, please check out the follow-up post!
Full disclosure: sometimes I use catchy blog titles or gimmicky phrases to attract readers to my blog. In my defense, it works (sometimes)! In this case, however, there ain’t no gimmick. Simply put, if you have kids under the age of 18, there will be cash unexpectedly deposited into your bank account on or around July 19th. This is due to an increase in the UCCB (the federal Universal Child Care Benefit) and it’s easy (and fun!) to figure out how much:
- For each child under the age of 6: you’ll be getting $520 (and $160/month from August onwards, an increase from $100/month)
- For each child between 6 and 17 years old: you’ll be getting $420 (and $60/month from August onwards, an increase from $0/month)
If I was a Smart Funny Accountant, at this point in the blog post I would just cut and run, but I’m a masochist at heart and I love delivering bad news to my loyal readership, so here goes…
First of all, the money you’ll be receiving is taxable. So while it’ll be nice to have some cash on-hand, just remember that, depending on your tax bracket, a good chunk of that change will be headed right back the other way come April 2016. (Moral of the story, don’t spend it all right away!)
Secondly, a federal tax credit was eliminated at the same time that the UCCB was increased. This credit was informally called the “child amount” and basically reduced your tax bill by around $338 per kid. It was also a non-refundable credit, meaning you had to be earning enough (AKA paying enough tax) to make use of it…but 95% of my clients who have children were making use of it. And now it’s gone. And I am sad…(Please visualize a single tear rolling down my cheek.)
Thirdly (and only for us Quebecers with kids in $7.30/day daycare), don’t forget about that tax “surprise” coming in April 2016 if your family income is over $50,000 (which gets even more “surprising” the more you earn). Add the increased UCCB to your income and now you’re earning even more, making the big tax bill you didn’t expect even more bigger (as my 3-year-old would say)!
All that being said, what does all this mean?? It is an election year, so it’s not surprising that a few goodies will be tossed out for a big group of voters. I’m not going to lie, I have 2 kids under the age of 4 so I’ll be getting $1,040 ($520 x 2) deposited next month. That’s more than a few Olaf dolls and would go a long way to paying for a few days of vacation in summerrrr. But let’s be real…if you’re earning around $100k between you and your better half (and depending on a lot of other factors affecting your personal taxes), this is what that money really looks like:
So is your current government trying to buy your vote? Probably…but can you blame them for trying?
The Funny Accountant
Again, don’t forget to check out the follow-up blog post!
In case you missed it, here’s the audio from my appearance on CJAD, chatting with Dan Delmar about the UCCB increase and other family related tax stuff!
If you like what you read, please like my Facebook page and/or follow me on Twitter! And, as always, if you have tax questions, need advice on your personal taxes, corporate taxes or anything else accounting or business related, please contact me (Mitch Kujavsky), AKA The Funny Accountant, either by phone at (514) 833-1158 or by e-mail at firstname.lastname@example.org.
Also, for a witty and insightful read, check out the wifey’s blog. It’s funny and good.