Question Period Note: CANADA CHILD BENEFIT

Canada Child Benefit Update – Inflation 

The Canada Child Benefit is tax free and provides more support for low-to middle-income families with children. Because it is based on income, it provides more support to those who need help the most.

The CCB has helped reduce the number of children living in poverty by hundreds of thousands since its introduction in 2016.

The CCB has been annually indexed since 2018 to keep up with the rising cost of living.

The Government will continue to support Canadians currently struggling with higher costs of living, to make life more affordable, and build a strong economy that benefits all Canadians.

• In July 2016, the CCB replaced three different previous benefits—the Canada Child Tax Benefit including the National Child Benefit Supplement, and the Universal Child Care Benefit—with one simplified, fair and tax-free monthly child benefit.

• The CCB is having a significant positive impact on families with children. According to the most recent survey data, the 2022 Canadian Income Survey released on April 26, 2024, the poverty rate for children was 9.9 percent in 2022. This is up from 4.7 percent in 2020 and 7.4 percent in 2021, but continues to reflect a significant decrease from the poverty rate of 16.3 percent in 2015. The decrease in children’s poverty between 2019 and 2020 is largely attributed to temporary COVID-19 emergency benefits (including additional payments made through the CCB). The increase in poverty rate for children between 2021 and 2022 reflects the end of pandemic-related income supports made available throughout 2021, as well as the significant increase in inflation experienced in 2022, which contributed directly to increased costs of living across Canada.

• Approximately 273,000 more children were living in poverty in 2022 compared to 2021. However, overall, there were 380,000 fewer children living in poverty in 2022 than in 2015. The number of children living in poverty in 2015 was estimated at 1.12 million.

• Budget 2024 proposed to extend eligibility to the CCB in respect of a child for six months after the child’s death, if the individual would have otherwise been eligible for the CCB in respect of that particular child. This proposed change would be effective for deaths that occur after 2024.

• The Department of Finance is the policy lead on the CCB, and the Canada Revenue Agency administers the benefit. ESDC contributes to ongoing policy development by working collaboratively with them and with provincial and territorial governments, to help ensure that the CCB continues to result in strengthened systems of support for all low- to middle-income families with children across Canada.

Calculating the Poverty Rate

• The Poverty Reduction Act received Royal Assent in June 2019 and legislates commitments made in the Poverty Reduction Strategy including entrenching the Market Basket Measure (MBM) as Canada’s Official Poverty Line. The MBM establishes poverty thresholds based on the cost of a basket of food, clothing, shelter, transportation, and other items for a family of four that reflects a modest, basic standard of living. A family with a disposable income below the appropriate MBM threshold for the size of the family and the region where they live is deemed to be living in poverty.

• Poverty thresholds are currently available for Canada’s 10 provinces and three territories. These poverty thresholds can be adjusted to families of different sizes. The latest available poverty thresholds for a family of four in 2023 varied between $45,250 (regions with a population between 30,000 and 99,000 inhabitants in Quebec) and $58,163 (Vancouver) in the provinces. In the territories, poverty thresholds ranged from $60,681 (rural South Yukon) to $108.933 (Iqaluit, Nunavut).

• Annual poverty rates based on Canada’s Official Poverty Line are estimated using data from Statistics Canada’s Canadian Income Survey (CIS). The primary objective of the CIS is to provide information on the income and income sources of Canadians, along with their individual and household characteristics. The data collected in the CIS is combined with tax data to generate Canada’s Official Poverty rate estimates.

Indexation and Benefit Amounts

• To ensure that the CCB continues to help Canadian families over the long term, the Government began indexing the CCB, starting in July 2018, to keep pace with the cost of living.

• In the 2024-25 benefit year, beginning July 2024, the maximum annual benefit is $7,787 per child under 6 years of age, and $6,570 per child aged 6 through 17. Families with less than $36,502 in adjusted family net income receive the maximum benefit.

• A family with one child age 5 and one child age 9 with an adjusted family net income of $65,000 will receive $12,071.92 in 2024-25. This represents $2,428.92 more than they would have received in 2023-24 ($9,643).

• The formula for CCB indexation uses prices from the previous year to increase the maximum benefit amounts as well as the income thresholds at which benefits begin to be reduced. Although CCB indexation lags inflation, it helps the benefit keep pace with the rising cost of living. For the 2024–25 benefit year, the CCB maximum was up by $350 more than the previous year. This represents an increase of 4.7% from the 2022-23 benefit year.

Special Circumstances
• A foster parent may not be considered primarily responsible for the care and upbringing of a child if the child is legally, physically, or financially maintained by a child welfare agency. In those cases, a children’s special allowance is paid to the agency and the CCB is not available to the foster parent.

• The Children’s Special Allowances (CSA) program provides payments to federal and provincial agencies and institutions (such as children’s aid societies) that care for children. The monthly amount payable for each child is equal to the maximum amount of the CCB. For eligible children, the CSA payment may also include the Child Disability Benefit. An agency can request that CSA payments be made directly to a foster parent of the child.

In addition, there is a Child Disability Benefit (CDB) which is a monthly benefit included in the Canada Child Benefit to provide financial assistance to qualified families caring for children who have a severe and prolonged impairment in physical or mental functions. For the 2024-2025 benefit year, the Child Disability Benefit provides $3,322 for each child under the age of 18 who is eligible for the Disability Tax Credit.

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