Don’t forget!!! You will owe tax on the expanded UCCB!

Don’t forget!!! You will owe tax on the expanded UCCB! 

UCCB tax credit: Alberta Divorce Finances

Will you owe money?

There may be some surprising tax bills as a result of the Conservative government’s expanded universal child care benefit in 2015/16. Effective July of 2015, parents received a lump-sum payment for the first six months of the year for both an increased benefit for children under 6 years of age and a new monthly benefit for children 6 and up. These funds are taxed in the hands of the lower income earner in a two parent family. For families whose children are all 6 and up, and were not previously receiving this benefit, this may result in an additional tax bill compared to past years.

Until Premier Trudeau’s Liberal government brings in the new budget and its new programs which will erase the UCCB altogether, this money will continue to be taxable. A family with one child under six and another over six is getting $220 per month from the UCCB – or $2,640 for all of 2015. If the lower income earning parent is already earning more than $11,000 (federal tax income threshold), they will owe at least about $400 on those payments – plus whatever is owed in provincial or territorial tax. And that amount will go up with the income of the parents!! For families with a non-working spouse, he/she won’t pay tax on the UCCB benefit but the spousal credit will be reduced by every dollar of the UCCB benefit so the tax bill will still increase.

We still don’t know whether the benefit that has continued into 2016 will be taxable when the Liberals new plan is brought in on July 1, 2016. Perhaps we will have cause for an added celebration on our country’s birthday.