The cost of raising a child is high. From soccer programs to school tuition for college or university, parents are faced with countless expenses when it comes to their children.
Luckily, the Canadian government recognizes the financial stress faced by parents when it comes to raising kids and offers many family tax benefits, and credits and deductions parents can apply for to help offset these costs of raising children.
Key Points You Should Know About Family Tax Benefits
- Many tax benefits are available to parents, both on provincial and federal levels.
- Notable Federal examples include the Canada Child Benefit and the Child Disability Benefit.
- You could be eligible to claim hundreds or even thousands of dollars worth of tax credits each year.
Federal Family Tax Benefits For Parents
A few family tax benefits are available from the federal government for parents, including the following.
The Canada Child Benefit
The Canada Child Benefit is a tax-free monthly payment for eligible families to help cover the cost of raising children under the age of 18. The benefit is paid upon registering a child’s birth and stops automatically upon the child’s 18th birthday.
The amount you receive under this benefit depends on your income level, the age of your child and the number of children you have. You can calculate how much money you can receive through the Canada Revenue Agency’s (CRA) claims calculator.
Are You Eligible For This Family Tax Benefit?
To claim the Canada Child Tax Benefit, eligible parents must file income tax returns together to receive this benefit each year.
You and your child must also meet the following qualifications:
- You live with your child
- Your child is under 18 years of age
- You must be the person primarily responsible for caring for and bringing up the child
- You must be a Canadian resident
- You or your spouse or partner must be either a(n):
- Canadian citizen
- permanent resident
- temporary resident
- protected resident
- Have status under the Indian Act
| Note For Separated Parents If you are a single parent, the custody-bearing parent is the only parent who receives the benefit. In situations of shared custody, the benefit is usually split in half, or in another way depending on the custody agreement. |
The Child Disability Benefit
The Child Disability Benefit is a non-taxable monthly benefit to parents who have children with severe and prolonged physical or mental impairments. In addition to receiving the Canada Child Benefit, parents with children who have disabilities are also eligible for the Child Disability Benefit.
Are You Eligible For This Family Tax Benefit?
Eligibility requirements include those listed above for the Canada Child Benefit and the Disability Tax Credit, as well as the following:
The child must be either
- Blind
- Restricted in a minimum of one basic activity of daily living
- Significantly restricted in two or more basic activities of living
- Need life-sustaining therapy
The child’s impairment must also meet all of the following requirements:
- Have lasted or expected to last for a minimum period of 12 months
- Be present all or most of the time (minimum 90% of the time)
If you already receive the Canada Child Benefit for your child who is also eligible for the Disability Tax Credit, you will receive the Child Disability Credit automatically.
Eligibility for the Disability Tax Credit requires certification from a medical practitioner via Form T2201, Disability Tax Credit Certificate and approval from the CRA.
How Much Can You Get Through The Child Disability Benefit?
Depending on the severity of the child’s impairment, the amount of money a parent can receive varies. From July 2023 to June 2024, you can receive up to $3,173 ($264.41 per month) for each child who is eligible for the disability tax credit.
Is There A Family Tax Benefit To Reduce Child Care Expenses?
In Canada, you can deduct the child care expenses from your income. The child care expenses deduction is taken away from gross income if you use daycare or babysitters during your time at work or school.
Depending on the child’s age, eligible deduction amounts vary per year. Furthermore, if your child has a disability, those expenses can be deducted as well, provided they meet the Canada Revenue Agency’s criteria.
Type Of Child Care Expenses You Can Deduct
Here are a few examples of expenses that you can deduct related to caring for your child:
- Services from nannies and babysitters
- Daycare centres and nursery school
- Childcare services from educational institutions
- Sports programs during the day and other day camps with a primary childcare function
- Any type of boarding school or overnight camps
- Advertising costs to locate a childcare specialist
Check out these tax tips for low-income earners.
Is There A Family Tax Benefit To Reduce Your Child’s Medical Expenses?
Medical expenses for your children can also be claimed as a deduction on your taxes. Additionally, you can claim birth-related expenses that were not covered, perhaps by your provincial health plan or health insurance. When claiming medical expenses, keep in mind that:
- The amount of money you can claim as medical expenses is capped at either $2,635 or 3% of your dependent’s net income (whichever is lower); and
- You can only claim medical expenses that you paid for, not your health insurance company.
Family Tax Benefits For Children’s Activities
There are tax benefits parents are eligible to apply for regarding children’s activities:
- Quebec Tax Credit for Children’s Activities – Parents can claim a refundable tax credit for costs incurred for fitness, cultural, or artistic activities for each of their children.
- Yukon Children Fitness Tax Credit – Parents can claim up to $1,000 on money paid for fitness programs for their children.
- Manitoba Fitness Tax Credit – Parents can claim up to $500 for money paid for fitness programs for their children.
Other Provincial Family Tax Benefits
Each province offers tax benefits for parents caring for children, in addition to the Canada Child Benefit and Child Disability Benefit. The chart below outlines the benefit amounts for each provincial program. Make sure to check each link to learn more about eligibility.
Use An RESP To Save For Your Child’s Education
Perhaps the best way to save for your child’s education is to open a Registered Education Savings Plan (RESP) account. This plan allows your investment in your children’s education to grow without having to pay taxes on it.
The Canadian government will match 20% on the first $2,500 contributed each year to an RESP, up to a maximum of $500 per year. The lifetime maximum is $7,200, up to the age of 18. Financial experts recommend parents start an RESP early on, as post-secondary education costs continue to rise in the tens of thousands of dollars.
What If You Can’t Afford Your Child’s Expenses?
If the benefits above are not enough to cover your child’s expenses due to other debts, you can consider the following options:
Get A Personal Loan
If you’re having trouble keeping up with your monthly costs, a personal loan can help. A personal loan can help you spread your costs over a few months to a few years.
Moreover, you can use a personal loan to help you consolidate other debt, particularly high-interest debt. This will allow you to reduce the interest you pay and consolidate your debts into a single manageable payment.
To get the most out of your personal loan, be sure to check your credit score. Your credit often plays an important factor in the interest rates you qualify for. The lower your interest rate, the more affordable your monthly payments will be.
Speak To A Credit Counsellor
If you’re losing control of your debts, it’s best to speak to a credit counsellor. They can help you assess your financial solution and provide you with a debt relief solution that’s best for you. Solutions can vary in intensity from a friendly budget to bankruptcy.
Final Thoughts
Raising children is no easy feat, and the financial implications can be quite burdensome. Make sure you conduct ample research to learn every tax benefit and deduction you are eligible to apply for when it comes to your children.
