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How to Put Your Child Tax Benefit To Good Use

Many parents were full of anticipation waiting for their first cheque for their Canada Child benefit.   In general these were made by direct deposits and the information pertaining to what families would receive was based on their 2015 tax return.  If they did apply via their tax return then the payment should be received automatically, however if they didn’t then they will have to apply for this.   This new benefit is tax-free and it is replacing the Canada Child Tax Benefit as well as the Universal Child Care benefit. Included in the payment may be the child’s disability benefit for those that qualify. Now that many families have received this money they are planning on the best way to put this money to good use

Unfortunately many families have to rely on it to top off the money they have for their daily living. For those that that want to invest the money wisely they can utilize it to put into an RESP being as it is tax-free this will make it an extra bonus. There are some good advantages to you utilizing the RESP. Another option is to put the money into an RDSP. Then there’s also the RRSP or the TFSA that could be considered, and all three of these options are ways or planning for the future and building security.

Many of those that were anticipating the money that they would receive from this were unsure as to exactly what they may benefit. An example would be that for a family who has an income of $25,000 and has one child under 6 and two between the age of 6 and 17 then they would probably receive around $1,433 a month. This is a substantial amount of money that could certainly help those families that are living at this dire low income level.

If this were increased where the family income for 2015 was $35,000 with the same children the amount would be decreased to $1,354.   If this happened to be a family where both were working with this number of children and were averaging a total family income of $55,000 then the amount would be reduced to $1,037 a month. No matter what calculations are applicable they are no doubt going to bring in some much-needed money for many that are in a bad financial situation. It can mean critical elements such as being able to buy better food or providing better accommodations. It can mean that the kids are able to join in more activities that otherwise were unaffordable. It can even mean putting better clothing on their backs.

There is little doubt that any family would have difficulty finding some great ways to use the money that they are going to be receiving from the Canada Child benefit. The fact that it is based on the family income is a positive aspect as those in need will get more than those that are not.

 

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Sam Seidman, CPA, CA, LPA
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