We’re coming off a significant election in October and we’ll likely see a number of changes in regards to Tax Laws, Child Care Benefits and Tax Free Savings Account Limits. At the time I write this, there are still some things that we don’t know but what we do know, is that changes are coming. Some will be positively affected by the new policies and others, not so much. I’m hoping that by the end of the year, we’ll have some more clarity on a number of things.
One thing that changed earlier in the year was the amount of the Universal Child Care Benefit. Child Care Benefits will go through more tweaks in the New Year and they are worth having a conversation about. While the former UCCB was a taxable benefit of $160/month for children under 6 (and $60/month for those under 18), the new Child Care Benefit will be based on Income. This means that some families will receive amounts above what I referenced above and some may not receive any benefit at all. While the new CCB will not be subject to Taxation, it doesn’t sound like it will exist for families earning more than $200,000 per year.
This information is important as I have a lot of clients who use this money to fund Registered Education Savings Plans (RESPs). Others use it for “In Trust For” accounts for their children or grandchildren and many use this money to fund Tax Efficient Life Insurance Policies which can house investments for their kids. Based on the proposed changes, many families will have more to put into their children’s savings. It may be worth looking at your contributions and determining whether an adjustment should be made.
With Christmas coming, this is a good chance to remind Grandparents that kids nowadays have a lot (maybe too many…) toys! Take it from Natalie and me, we’d rather have you help out with the kids’ RESPs than buy them more stuff!! Individual RESPs can be set up by Grandparents or Aunts & Uncles in order to make sure that gifts you’re giving make a real, lifelong impact.
We’ll be busy here in Calgary right up until December 22nd. Please let us know if there’s anything we can do for you before the Holidays!
Bryce A. Borden