Author’s note: If you followed a link directly to this post, don’t forget to check out the follow-up blog post on income splitting!
Due to popular demand (thanks to the 3.5 people who asked for a follow-up!)….I give you a Tax Plan Showdown: Harper’s UCCB increase vs. Trudeau’s reinvention of the way we receive child benefits.
I’ve actually gotten a lot of feedback from readers on my last post, the common theme being a demand for a more “real world” scenario as opposed to hypothetical situations and numbers. While the real world is all well and good, it’s not easy to lay out the tax accounting for all families in all of Canada at the same time while keeping people from drooling on their laptop keyboards due to excessive sleepiness (a typical symptom of reading about taxes). So, I decided to make a pretty table (check out that font!):
** The above table includes the following federal government payments:
Harper plan: The newly increased UCCB (taxable payments) and the Canada Child Tax Benefit (CCTB) (non-taxable payments)
Trudeau plan: The proposed, enhanced CCTB (all non-taxable payments)
And another, even MORE fantastic table for those of you with kids between 6 and 17 years old:
First, find your family income on the left side of the table. Then, check how many kids you have. Easiest way of doing this is by doing a head count or asking for a show of hands during breakfast. The table contains 3 sections (for 1 kid, 2 kids or 3 kids). If you have more than 3 kids, I’m not quite sure how you have time to read this blog post but thanks! (and good for you for making time to read my ramblings!)
The dollar values in the table show the approximate AFTER-TAX dollars (money in your pocket) from both the Trudeau tax plan and the Harper tax plan. Keep in mind, the info above is still based on a simple scenario that doesn’t take into account a lot of things that are likely to have an impact on your taxes (RRSPs, daycare costs, medical expenses, etc.) but it does reflect the reality of the 2 tax plans and the net effect on your wallet.
Now, the last thing I want is to go all partisan on you. This blog was never meant to be used for political means or to report anything but fact (while simultaneously separating out the fiction). However, I happen to have seen an advertisement this evening for the “increase in the UCCB” for which many of you will be getting cash beginning on July 20th. It says nothing about the fact that these payments are taxable nor does it mention the elimination of the “child tax credit” that I mentioned in my previous blog post. Yes, you will end up with more cash in your pocket with the increase in the UCCB. If you receive more money from the government in the form of increased child benefits, there are no scenarios in which you will end up poorer (even with the cancellation of the child credit). That being said, after a deep, cleansing breath and with every objective and unbiased bone in my body, I say this:
When a CEO who earns $5,000,000 per year and a family struggling along with $40,000 of income per year both collect the same $160/month per child (under 6) from the federal government in UCCB payments, we have a system that requires some adjustments. Especially when those reallocated dollars could be put to far better use in the hands of a family with very limited child care options. It was, after all the original purpose of the UCCB: to offer “choice in child care”, allowing Canadians to “choose the child care option that best suits their family”.
I’m not sure the above hypothetical family earning $40,000 per year is able to choose quite that freely under the current system. Just saying.
The Funny Accountant
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.