The Opposite of Robin Hood: Child Care Tax Credit Elimination (Bird’s Eye View Blog)

THE OPPOSITE OF ROBIN HOOD – The Conservatives Elimination of the Chid Tax Credit is the opposite of Robin Hood and instead takes from the poor and gives to the rich

So what is happening with this announcement that the child tax credit is being cut? Your child allowance is NOT being cut, which is a relief, but it does mean less at tax time.

CBC did this article in 2012 that best explains the three terms in question here: http://www.cbc.ca/news/business/taxes/7-important-tax-credits-for-families-1.1139389

Here is what is happening with this change:

(a) Child tax credit: Parents cannot claim their children/dependents when they file their taxes. This would result in about $320.00/child that could be gained back at tax time. This will no longer exist.

(b) Child tax benefit: Monthly benefit based on total income and will continue to be provided (child allowance). This is non-taxable and does not affect your total income.

(c) Universal child care benefit: Monthly benefit that is going up – $100 for kids 5 and under; $60.00 for kids from 6-18. This is taxable and will affect your total income at the end of the year.

Still doesn’t make sense? I’ll break it down some more.

This will only affect you when you are filing your year-end taxes (i.e.: at H&R Block for example). When you go to claim your total income it will be higher because the universal child care benefit is added in (since it is taxable). On top of that, you cannot claim your kids as dependents, which would help lessen your income. These two things combined could put you into a higher tax bracket.

How does that look?

Tax brackets for 2014 (from CRA website)

(1) 15% on the first $43,953 of taxable income,

(2) + 22% on the next $43,954 of taxable income (on the portion of taxable income over $43,953 up to $87,907)

(3) Saskatchewan Provincial Tax: 11%; 13% after $43,292

Here is my personal example.

I made $63,000/last year. I have a daughter that is almost 2. I am currently taxed at a rate of 26% on my first $43,292 earned. I am then taxed at 35% on the next $20,000. In total, 30% ($18,153) of my total income goes to Provincial and Federal taxes.

Previously I could claim my child and get back about $2100 at tax time. This would be added to my return. Now, I cannot claim my daughter and the UCCB adds $1920.00 to my income. My return will be much lower since I am hit twice: (a) cannot claim daughter to save money and (b) I have added income from the UCCB. Tax time is going to suck and I shouldn’t expect to get a return anymore.

So who benefits from the child tax credit elimination? The working class? No. The poor? No. Those with children looking for relief for high daycare costs? No. Where do the savings from this go to?

The savings are being used in the new ‘income splitting’ program the Conservatives introduced that only helps those making a lot of money already.

In conclusion, the child tax credit elimination seeks to take from the poor to give to the rich.

– Jay Bird, Bird’s Eye View Blog