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Aboriginal Communities and the New Canada Child Benefit

25/07/2016


Capitalize on New Opportunities by Filing Your Tax Return

As of July 20, 2016 many Canadian families with children under 18 can expect to see a bigger child benefit payment, as the federal government begins to carry out an incredibly ambitious social policy. The hope, is that the new Canada Child Benefit (CCB) will push thousands of Canadian children above the poverty line with the vast majority of Canadian families will see a boost to their bottom line.

With that being said, Aboriginal families living on reserve could miss out of the CCB due to the fact that the basis for calculating how much a family receives is based on their tax return. Currently, the federal government estimates tax filing rates on reserve at approximately 50 percent. That means half of the country's Aboriginal families living on reserves could miss out on monies set aside specifically to fund the federal government's new child benefit.

Understandably, as an individual with no taxable income, there may be an inclination to not file a personal income tax return (i.e. the T1). However, you may be giving up some of the benefits you are entitled to from the government.

We’ll demonstrate the benefits of filing a return with the following example: Jane lives on First Nation land in B.C. In 2016, she made $10,000 of income working on reserve. Jane has two children — ages 4 and age 7. Jane’s income is exempt of tax because her income was generated on reserve. If she files her 2016 personal tax return, she would receive:

  • $11,800 of Canada Child Benefit for the two children ($6,400 per year for each eligible child under 6 and $5,400 per year for each eligible child aged 6 to 17).
  • $276 GST credit for herself
  • $566 GST credit for her children (this includes $276 GST credit as a single parent, $145 GST credit per child).

The total benefits are $12,642 over the course of the year. Please note that other provinces may have further different benefits (e.g. BC has a Low Income Climate Action Credit available, and Alberta has an Alberta Child Benefit), and the benefit rates may be different from year to year. By not filing a personal tax return, Jane could be foregoing $12,642 a year of benefits.

Depending on your unique situation, there could literally be thousands of dollars, which could be allocated to empowering your family and helping you build towards a stronger financial future. For lower income families with children, you might want to consider filing your 2016 return.  

For more information on how to get on top of your tax returns so you can get the most out of the Canada Child Benefit, contact Angela Chang, CPA, CGA at 778.374.2121 or [email protected].