Alberta

The Child Benefit You Got was Not an Error

Cory G. Litzenberger, CPA, CMA, CFP, C.Mgr

Published

5 years ago

4 minute read

The Child Benefit You Got was Not an Error

So a lot of people are wondering why money showed up for the Canada Child Benefit (CCB) yesterday (May 20) when they normally don’t qualify.

The CCB “one-time payment” for COVID-19 relief is actually formula driven but it is created by adding $3,600 for each additional child (not $300)… you’ll see in a minute why this is.

Step 1 – Add up the number of children that were under 6 years old in 2018 and multiply by $6,639.00

Step 2 – Add up the number of children that were between 6 and 17 years of age in 2018 and multiply by $5,602.00

This is your normal ANNUAL Canada Child Benefit entitlement before reductions.

However, for your May 2020 payment only, the formula adds $3,600 per child to bring the numbers to $10,239 and $9,202 per child based on age respectively.

If you have less than $31,120 of adjusted household income, you will get the full $300 extra, congrats, no more math for you.

For the rest of you it gets interesting or complicated, depending how you view math.

Any amount of adjusted household income between $31,120 and $67,426 causes your ANNUAL entitled CCB to be reduced by the following:

7% of the amount of household income if you have 1 child
13.5% of the amount of household income if you have 2 children
19% of the amount of household income if you have 3 children
23% of the amount of household income if you have 4 children or more

This is called the “first reduction”. The maximum amount of household income subject to the first reduction formula is $36,306 more than the base $31,120 (meaning an income of $65,976)

Those of you over this number, you are not done yet.

Any amount of adjusted household income over $67,426 causes your ANNUAL entitled CCB to be reduced by the following:

3.2% of the amount of household income if you have 1 child
5.7% of the amount of household income if you have 2 children
8% of the amount of household income if you have 3 children
9.5% of the amount of household income if you have 4 children or more

This is called the “second reduction”. There is no maximum amount of household income subject to the second reduction formula. You keep calculating until you hit zero.

For example. If you have one school-aged child in 2018, and your adjusted household income is $100,000 the formula would be this:

NORMAL MONTHLY BENEFIT:

First reduction: 67,426-31,120 = $36,306 x 7% = $2,541.42
Second reduction: 100,000-67,426 = $32,574 x 3.2% = $1,042.37
1 child: $5,602
$5,602.00 minus $2,541.42 = $3,060.58 minus $1,042.37 = $2,018.21
$2,978.21 divided by 12 = $168.18/month CCB as a Normal Benefit

COVID19 MAY 2020 BENEFIT:

The first two reduction steps are the same but that 1 child is $3,600 more
1 child: $9,202
$9,202.00 minus $2,541.42 = $6,660.58 minus $1,042.37 = $5,618.21
$5,618.21 divided by 12 = $468.18/month CCB as a one-time Benefit (an extra $300 like promised)

So yes… an extra $300 per child for those already getting the benefit already… but for those that were not getting it before, but filed in 2018… and had an eligible child… the formula is recalculated with the $3,600 ($300 per month) change, and so many more households in Canada will be seeing some sort of amount.

For example, the lowest amount possible to collect would be with one school-aged child ($9,202 formula).

Households that make up to $163,069 will receive the full $300 for this child.
Households between $163,069 and $275,569 will receive less than $300 on a sliding scale from the Second reduction.
Households over $275,569 in this scenario would receive zero.

So almost every household with eligible children in Canada will see something coming their way for the May benefit to help with the extra costs with no schools or dayhomes open.

Sincerely,
Your Friendly Neighbourhood Tax Nerds

CGL Strategic Business & Tax Advisors

CV of Cory G. Litzenberger, CPA, CMA, CFP, C.Mgr can be found here.

Cory G. Litzenberger, CPA, CMA, CFP, C.Mgr

CEO | Director CGL Tax Professional Corporation With the Income Tax Act always by his side on his smart-phone, Cory has taken tax-nerd to a whole other level. His background in strategic planning, tax-efficient corporate reorganizations, business management, and financial planning bring a well-rounded approach to assist private corporations and their owners increase their wealth through the strategies that work best for them. An entrepreneur himself, Cory started CGL with the idea that he wanted to help clients adapt to the ever-changing tax and economic environment and increase their wealth through optimizing the use of tax legislation coupled with strategic business planning and financial analysis. His relaxed blue-collar approach in a traditionally white-collar industry can raise a few eyebrows, but in his own words: “People don’t pay me for my looks. My modeling career ended at birth.” More info: https://CGLtax.ca/Litzenberger-Cory.html

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The Child Benefit You Got was Not an Error

COVID-19 / 5 years ago

Keep It Simple S…ubsidy

Alberta

Integrated Border Enforcement Team makes 189 kg cocaine bust at Coutts port of entry

Published on December 30, 2024

Todayville

News release from Alberta RCMP

Canada Border Services Agency (CBSA) officers, working with the Integrated Border Enforcement Team (IBET) in Alberta, a joint force operation between the RCMP Federal Policing Northwest Region, CBSA and Calgary Police Service, seized 189 kg of cocaine following a secondary examination of a commercial truck seeking entry at the Coutts port of entry on Nov. 13, 2024. The drugs have an approximate wholesale value of $2 million.

“The safety and security of Canadians is the RCMP Federal Policing Northwest Region’s top priority. With the support of various law enforcement agencies, we’ve successfully prevented harmful drugs from entering Canada and harming our communities.

Supt. Sean Boser, Officer in Charge of Federal Serious Organized Crime and Border Integrity – Alberta, RCMP Federal Policing Northwest Region

“I want to commend our CBSA officers who prevent illegal narcotics from breaching our borders and disrupt crime networks. In cooperation with our law enforcement partners, the RCMP and the Calgary Police Service, this significant seizure serves as another example of how Canada’s borders are being secured and drugs are kept off our streets.”

Ben Tame, Director, Southern Alberta and Southern Saskatchewan District, Canada Border Services Agency

“Our efforts to combat drug trafficking rely heavily on working closely with our partner law enforcement agencies, including the CBSA and RCMP. This is a significant seizure that undoubtedly had the potential to cause serious damage to our community.”

Supt. Jeff Bell, Criminal Operations & Intelligence Division, Calgary Police Service

IBET’s mandate is to enhance border integrity and security along the shared border, between designated ports of entry, by identifying, investigating and interdicting persons, organizations and goods that are involved in criminal activities.

All partners are engaged in the ongoing criminal investigation.

Alberta

Alberta government must do more to avoid red ink

Published on December 27, 2024

Todayville

From the Fraser Institute

By Tegan Hill

As Albertans look toward a new year, it’s worth reviewing the state of provincial finances. When delivering news last month of a projected $4.6 billion budget surplus for fiscal year 2024/25, the Smith government simultaneously warned Albertans that a budget deficit could be looming. Confused? A $4.6 billion budget surplus sounds like good news—but not when its on the back of historically high (and incredibly volatile) resource revenue.

In just the last 10 years, resource revenue, which includes oil and gas royalties, has ranged from a low of $3.4 billion in 2015/16 (inflation-adjusted) to a high of $26.1 billion in 2022/23. Inflation-adjusted resource revenue is projected to be relatively high in historical terms this fiscal year at $19.8 billion.

Resource revenue volatility is not in and of itself a problem. The problem is that provincial governments tend to increase spending when resource revenue is high, but do not similarly reduce spending when resource revenue declines.

Overall, in Alberta, a $1 increase in inflation-adjusted per-person resource revenue is associated with an estimated 56-cent increase in program spending the following fiscal year, but a decline in resource revenue is not similarly associated with a reduction in program spending. Over time, this pattern has contributed to historically high levels of government spending that exceed ongoing stable levels of government revenue.

And while the Smith government has shown some restraint, spending levels remain significantly higher than reliable ongoing levels of government revenue. Put simply, unpredictable resource revenue continues to help fund Alberta’s spending—and when resource revenues inevitably fall, Alberta is at high risk of plummeting into a deficit.

Indeed, Finance Minister Nate Horner continues to emphasize that we are “living in extremely volatile times” and warning that if oil prices fall below $70.00 per barrel a budget deficit is “very likely.” According to recent forecasts, the price of oil may hit $66.00 per barrel in 2025.

To avoid this fate, the Alberta government must do more to rein in spending. Fortunately, there’s plenty of options.

For example, the government spends billions in subsidies (a.k.a. corporate welfare) to select industries and businesses every year. A significant body of research shows these subsidies fail to generate widespread economic benefits. Eliminating this corporate welfare, which would generate significant savings in the budget, is a good place to start.

If the Smith government fails to rein in spending, and Alberta incurs a budget deficit, it will only mean more government debt on the backs of Albertans. And with Albertans already paying approximately $650 each in provincial government debt interest each year, that’s something Albertans simply can’t afford.

With a new year set to begin, the Smith government continues to warn of a budget deficit. But rather than simply prepare Albertans for more debt accumulation—financed by their tax dollars—the government should do more to avoid red ink. That means cutting wasteful government spending.