Question Period Note: CANADA CHILD BENEFIT

Canada Child Benefit Update – Inflation

The Canada Child Benefit provides more support for low-to middle-income families with children. It is tax-free and based on income, providing 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.

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

We recognize the current rate of inflation is creating additional challenges for all Canadians. We will continue to prioritize the needs of children and families.

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 2021 Canadian Income Survey released on May 2, 2023, the poverty rate for children was 6.4 percent in 2021. This is up from 4.7 percent in 2020, 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 2020 and 2021 reflects the phaseout of key temporary COVID-19 income supports, however, the overall poverty rate for children has been decreasing since 2015.

In 2021, approximately 462,000 children were living in poverty, approximately 129,000 more children than in 2020. However, overall, there were 653,000 fewer children living in poverty in 2021 than in 2015. The number of children living in poverty in 2015 was estimated at 1.12 million.

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, Yukon and the Northwest Territories. These poverty thresholds can be adjusted to families of different sizes. The latest of available poverty thresholds in the provinces correspond to the 2021 calendar year and varied between $39,982 (urban region of less than 30,000 inhabitants in Quebec) and $51,884 (Vancouver) for a family of four (2 adults, 2 children).

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 2023-24 benefit year, beginning July 2023, the maximum annual benefit is $7,437 per child under 6 years of age, and $6,275 per child aged 6 through 17. Families with less than $34,863 in adjusted family net income receive the maximum benefit. This represents a 6.3% increase since the last benefit year (2022-23). Both the maximum benefits and the income thresholds are indexed annually based on the Consumer Price Index (CPI).

A family with one child age 5 and one child age 9 with an adjusted family net income of $65,000 will receive $9,643 in 2023-24. This represents $1,090 more than they would have received in 2022-24 ($8,553).

The formula for CCB indexation, which uses prices from the previous year, generally works well except in periods of rapidly rising inflation. Benefit increases are currently not keeping up with the rise in the cost of living, but are mitigating them to some extent.

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 2022-2023 benefit year, the Child Disability Benefit provides $2,985 for each child under the age of 18 who is eligible for the Disability Tax Credit.

The Government of Canada recognizes that young families in particular experienced unpredictable expenses due to the COVID-19 pandemic. The Government provided a one-time enhancement of up to $300 per child as part of the May 2020 CCB payment. The overall increase for families receiving the CCB was approximately $550 on average. In addition, families entitled to the CCB received up to $1,200 per child under the age of six in 2021 through the temporary CCB young child supplement.

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