Canadian parents are about to get a little bit richer.
The Canada Child Tax Benefit was introduced by the Liberal government during 2016’s federalbudget.
The benefit, which replaced similar income-based programs for Canadian parents, will result in most folks ending up with more cash in their pockets each month. Maximum benefits will be $6,400 per child under the age of six and $5,400 per child up to the age of 17. Families with less than $30,000 in household income will receive the maximum benefit.
Even wealthier families will see a boost in income from the program. A family making $80,000 per year with two kids aged between six and 17 can expect $5,220 in annual Child Tax Benefit payments. A family making $100,000 will get just over $4,000. Benefits are gradually cut back until families making more than $170,000 per year end up with nothing.
This free money from the government is an opportunity for parents to painlessly save for their kids’ education. If the cash is put into RESPs (Registered Education Savings Plans), the government will then make an additional top-up payment of 20% of the amount contributed up to a limit of $500 per year and $7,200 for a the lifetime of the plan.
That’s free money on top of free money. It doesn’t get much better than that.
RESPs are a terrific way for Canadian parents to save for post-secondary education, something that’s becoming more and more of a necessity in today’s world. Using free money from the government to put towards education is just icing on the cake. It’s a real no-brainer for parents.
