Deadline to cash in on the kids

National Post

2007-06-30


Today is the last day to apply for the Universal Child Care Benefit (UCCB) if
you want to collect the maximum retroactive entitlement for children who were
under six as of July 1, 2006. Those who delay applying will permanently forfeit
the payment of $100 per child for each month they wait. That's because under the
rules, UCCB benefits can only be paid retroactively for a period of up to 11
months.

"I want to ensure that Canadians receive all the benefits available to them,"
Carol Skelton, Minister of National Revenue, stated this week. "I urge parents
not to delay in applying for their UCCB benefits."

The UCCB was introduced by the government in the 2006 budget and came into
effect on July 1 last year. According to Ottawa, the benefit was "designed to
assist Canadian families, as they seek to balance work and family life, by
supporting their child-care choices through direct financial support."

The payments, equal to $100 per month for each child under the age of six,
began in July, 2006. According to the Canada Revenue Agency, most Canadian
families with young children are already receiving the benefit, with
$2.4-billion paid out so far to 1.5 million Canadian families.

If you've been receiving the Canada Child Tax Benefit, then you should
automatically be receiving the UCCB as well. Higher-income Canadian families,
who are not eligible to receive the Child Tax Benefit, must apply for the UCCB.
The application form can be downloaded from the CRA's Web site.

Remember, the UCCB is considered to be taxable income and must be reported by
the lower-income spouse or partner, regardless of which spouse or partner
actually receives the payments. The UCCB is excluded from income when
calculating your entitlement to the Child Tax Benefit and the GST/HST credit.

Have kids over age six? You are still entitled to some tax relief this year.
The 2007 Budget, passed into law last week, introduced the new Child Tax Credit.
This non-refundable credit is equal to $2,000 per child under the age of
18,multiplied by 15.5% (the federal tax credit rate for 2007). This translates
into a tax credit of $310 per child under the age of 18, which can be claimed
when you file your 2007 tax return next spring.

Neither the UCCB nor the new Child Tax Credit are in-come-tested and can add
up to some significant dollars. Noam Goodman, a corporate lawyer and partner at
Heenan Blaikie in Toronto, has four kids under the age of six. For 2007, his
total benefits and credits will add up to slightly more than $6,000.

"My wife and I did not plan on having four children in order to take
advantage of the tax credit, but we are very grateful that the Conservatives
have begun to address the inequality perpetuated under the Liberals," he says.
Under the old regime, the government allocated its child-care dollars to
providing daycare spaces. Mr. Goodman argues that system discriminated against
women who chose to stay at home, as they did not receive the benefits of
government child-care dollars. Goodman is pleased the government is directing
the funds toward families themselves, who can then decide how to spend it.

Jamie Golombek, CA, CPA, CFP, CLU, TEP, is vice-president, taxation and
estate planning, at AIM Trimark Investments in Toronto.

Jamie.Golombek@aimtrimark.com