Congratulations! If you are a new parent, or about to be one, there are some things that can benefit you tax wise when having children. Children can be expensive to raise and the government recognizes this and gives parents different tax credits and benefits to somewhat offset those costs.
If you are a single parent, then you can claim the child as equivalent to spouse, which gives you an additional $11K non-refundable tax credit.
Apply for child benefits
With the Automated Benefits Application (ABA), you can automatically apply for child benefits when registering the birth of your new baby. If you live in a province that has ABA and give your permission, you will automatically be applying or registering for:
- the Canada child benefit (CCB)– A tax-free monthly payment made to eligible families to help them with the cost of raising a child under 18
- the goods and services tax/harmonized sales tax (GST/HST) credit - A tax-free quarterly payment that helps families and individuals with low and modest incomes offset all or part of the GST or HST that they pay
- any related provincial programs – Most provinces and territories also have child and family benefits and credits, which families can receive in addition to the CCB and the GST/HST credit. We won’t get into these in this post as there are just too many of them.
If you live in a territory that does not have ABA, you can apply for child and family benefits using the “Apply for child benefits” service through My Account or by completing and mailing Form RC66, Canada Child Benefits Application to your tax centre.
Canada Child Benefit (CCB)
The Canada child benefit (CCB) is a tax-free monthly payment made to eligible families to help them with the cost of raising children under 18 years of age. The CCB might include the child disability benefit and any related provincial and territorial programs.
The Canada Revenue Agency (CRA) uses information from your income tax and benefit return to calculate how much your CCB payments will be. To get the CCB, you have to file your return every year, even if you did not have income in the year. If you have a spouse or common-law partner, they also have to file a return every year.
Benefits are paid over a 12-month period from July of one year to June of the next year. Your benefit payments will be recalculated every July based on information from your income tax and benefit return from the previous year.
If you want to know if you qualify for the CCB check out CRA’s website here.
The GST/HST credit is a tax-free quarterly payment that helps individuals and families with low and modest incomes offset all or part of the GST or HST that they pay. You no longer have to apply for the GST/HST credit. The Canada Revenue Agency will automatically determine your eligibility when you file your next income tax and benefit return for the 2014 and later tax years.
There are various provincial programs related to the GST/HST credit, which you can check on CRA’s website here. For British Columbia, there is the BC Family Bonus and the BC Low Income Climate Action Tax Credit.
If you have a spouse or common-law partner, only one of you can receive the credit. The credit will be paid to the person whose return is assessed first. The amount will be the same, regardless of who (in the couple) receives it.
Working Income Tax Benefit
Your baby is considered an eligible dependent, which means you may now claim the working income tax benefit (WITB), or the amount you claimed before might increase. The WITB is a refundable tax credit that provides tax help for working low-income families and individuals. Eligible individuals and families may be able to apply for WITB advance payments, which are paid quarterly. This credit is especially helpful if you are a single parent.
Save For Your Child's Education
It's never too early to start saving for your child's future education by contributing to a registered education savings plan (RESP). Programs such as the Canada education savings grant (CESG) and the Canada learning bond (CLB) are other reasons for creating an RESP for your child. These programs may provide incentives for using an RESP to save for a child's education after high school (post-secondary education).
With the above credits, there is a disability portion if your child is diagnosed with any kind of disability. All the above credits get an increase for a disable child under 18 years of age. Note that the disability must be severe and prolonged impairment in physical or mental functions.
If you are having a baby, then these credits can help with the cost of raising them, and you may as well take advantage of them.