Parents wonder on increases to the Universal Child Care Benefit.
Jennifer Ford of Charlottetown says she is happy to have a little more money to help care for her four-year-old son, Liam.
She doesn’t use daycare, but she says the recent increase to the Universal Child Care Benefit will help with the many other costs involved in raising a child.
“People don’t realize how much money both food and clothing for a child costs,” Ford said.
“He is also into sports. (The) money received will also go towards that.”
But she admits the changes that rolled out this week to the childcare benefit are confusing.
Many Island parents have been posting on social media sites, wondering whether increases to the Universal Child Care Benefit (UCCB) will make them better off in the long run.
As it turns out, it depends on the parent’s income level.
Those with the lowest incomes will benefit most, while those with middle-to-higher incomes will see little or virtually no overall financial benefits, says UPEI economist Jim Sentance.
It all has to do with how these boosted childcare cheques have replaced the former child tax credit.
Starting on Monday, families with children under 18 started receiving an additional $60 a month per child for childcare, which amounts to a total of $720 per child annually. This benefit is retroactive to Jan. 1, which means parents are getting lump sum cheques this week to bring them up to date.
But the increase to the UCCB replaces a non-refundable child tax credit of $2,255 formerly available for parents.
“What that did was – if you had taxes owing, you could deduct up to up to $338 a year. So that’s gone now,” Sentance explained.
This eliminates almost half of the increases to the UCCB.
“For people who were at an income level that was high enough that they could take full advantage of (the child tax credit) for their kids, they’re losing that – so not quite half of the money that they’re gaining, they’re losing,”
Also, the UCCB is taxable income, which means parents will pay provincial and federal taxes on this money.
On the other hand, for those who pay little to no taxes, replacing the child tax credit with an increased UCCB helps them most, since the child tax credit, as a non-refundable credit, did not offer them much help.
This makes the UCCB change “a progressive move,” Sentance said.
“It’s a bigger benefit for lower income people than higher income people.”
Robyn McCormack, a mother of three in P.E.I., says she understands this change will likely mean a smaller income tax rebate.
But she believes it’s worth it to get some financial help for childcare expenses.
“I pay $12,000 in daycare annually. This works for me,” McCormack said.
“It gives me that monthly help to pay for daycare, which is exactly what it’s for.”
But not everyone likes the changes.
Ilonka Gardsmith of Summerside also has three children, but because of the high cost of childcare, it cancels out her income so her children stay home.
She believes her family received more benefit from the former child tax credit than from these increased UCCB payments.
“What this is doing is worse for us,” Gardsmith said.
“I would have chosen what the NDP platform is offering – to have daycare more affordable. So that for people like me, who have a degree and want to contribute to society, we don’t have the option if we choose to have more than one or two kids.”
Jennifer Ford and her four-year-old son Liam Ford Coffin enjoy a snack outside their home in Charlottetown Tuesday. Ford says she is happy with the increases to the federal childcare benefit.