Child­care cheques

Par­ents won­der on in­creases to the Uni­ver­sal Child Care Ben­e­fit.

The Guardian (Charlottetown) - - FRONT PAGE - BY TERESA WRIGHT twright@the­guardian.pe.ca Twit­ter.com/GuardianTeresa

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.”

BRIAN MCINNIS/ THE GUARDIAN

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.

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