The Universal Child Care Benefit, or UCCB, is a $100 taxable monthly payment to help with the cost of raising children under 6 years old. To be eligible for the Universal Child Care Benefit, you must be the primary care giver of a child under the age of 6 and a resident of Canada. If you already receive the Canada Child Tax Benefit (CCTB) then you will automatically receive the UCCB.
The income is taxed to the lower-income spouse. This can be a slight advantage if the spouse is staying home to care for their children since not only would they not need to spend the money on child care, but would not be taxed if it’s their only source of income. It will however reduce the spousal amount, increasing the taxes of the working spouse. Of course, while it’s not a huge payment, it might be nice to cover the occasional babysitter when the parents want a night out.
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Great post! The UCCB is not, though, tied in any way to formal child care. I think it would be more accurate to say it is to help with the cost of child *raising,* not child care (only because people tend to think of “child care” as formal care provided by someone other than the child’s parents).
Also – while the payment is taxable in the hands of the lower income-earning parent, by default it is *paid* to the mother. The slip needs to be entered on the return of the lower-income-earning parent at tax time, no matter who actually received it.
Finally, while a parent earning no income will pay no income tax on the UCCB amount, it *will* reduce the spousal credit available to the supporting spouse – so there will be a tax impact in that case.
Alexandra, thanks for the clarification. Good point about the spousal credit, I’ll edit the post to include it.
What’s your opinion on the UCCB? While it’s not a large amount, I prefer that it’s not a ‘daycare or nothing’ plan so that parents are encouraged to stay home and raise their children.
Hi Tom – I’m pretty neutral on the UCCB. I would prefer a less-complicated tax system overall — i.e., lower overall tax rates — than a system which allocates credits and payments to people based on their demographic characteristics. I particularly dislike the Children’s Fitness Tax Credit (but I have two kids and make use of the credit!). My concern with any tax credit or deduction is that people understand it and plan for it appropriately.
If the tax of the earning spouse is increased then would it really help the family to go for this child tax benefit? if overall the net benefit is zero then why would parents like to take this tax cut?