Background
On November 1, 2014, CBC News in Calgary erred in their reporting making it sound like the government was removing the Canadian Child Tax Benefit. However, they misunderstood that a CREDIT and a BENEFIT are not the same thing.
Currently, federally there is one CREDIT and three BENEFITS when it comes to children.
They are:
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Child Tax Credit (CTC) (line 367 of your Schedule 1 on the T1 tax return)
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Universal Child Care Benefit (UCCB)
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Canadian Child Tax Benefit (CCTB)
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National Child Benefit Supplement (NCBS)
Notice that only the first one uses the word "credit", this is important because this is what people, like the CBC, are misunderstanding that they are different.
Changes to the Child Tax Credit (CTC)
The Child Tax CREDIT (CTC) is the one that the government is replacing by increasing the Universal Child Care Benefit, and this will benefit EVERYONE.
Previously, the CTC was a non-refundable tax credit against income on your tax return. In 2014 households with two parents were entitled to the Basic Personal Tax Credit ($11,138 - Line 300) and the spousal amount ($11,138 - Line 303) before the Child Tax Credit ($2,255 per child - Line 367) would kick in. Single parent homes got the same amount of credits because a child was considered an "eligible dependant" ($11,138 - line 305).
In layman's terms, this means that in either case, you would have to have at least income of $22,276 in the household before the Child Tax Credit even had any benefit.
At first it sounds like $2,255 is a lot of money, but the credit system is based on the lowest tax rate. So in actual cash, $2,255 of credits is only $338.25 of tax savings. We'll come back to this number later.
Changes to the Universal Child Care Benefit (UCCB)
The changes to the Universal Child Care Benefit (UCCB) are to make up for the removal of the CTC mentioned above. Where in 2014 you only would get $100 per child under the age of 6 ($1,200 a year), in 2015 you will now get $60 more for every child under 18. So, child under 6 gets $160/month and other children get you $60 per month.
Benefits are paid in cash, and the UCCB is paid to everyone with children regardless of income, this means that for the child you might have received $338.25 in tax savings, you will now be getting $720 in cash guaranteed.
Here's the catch, but not a big one. The cash is taxable, but, like good tax policy, if you were in the scenario described above where your income was so low that the Child Tax Credits didn't work, chances are you aren't taxable with the cash either.
If you are in a higher bracket, (39% is the highest in Alberta), then the worst case scenario is that you have to pay $280.80 back in taxes on the $720 of extra cash you received. That means you are still cash-in-jeans $439.20 compared to the $338.25 under the old program.
Changes to the Canada Child Tax Benefit (CCTB) and National Child Benefit Supplement (NCBS)
NONE!
The CBC erred by thinking that the monthly, non-taxable cheque (sometimes called Family Allowance) people receive for children was being eliminated. This is NOT true. These two benefits will still exist.
If your household income is below $43,953 you will get the full tax-free CCTB.
If your household income is below $25,584 you will get the full tax-free NCBS.
Although the Universal Child Care Benefit is taxable, it is not considered household income for the purposes of calculating the CCTB and NCBS.
