Greg Bonnell

Reporter

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Canadian families with school-age children are now receiving a new child benefit, a stimulus measure that will influence household balance sheets and the country’s economic growth.

When it comes to family finances, Canadians needs to be aware of some important changes. The new Canada Child Benefit ushered in by the Liberals is tax-free, but income tested.

Families with less than $30,000 in net annual income will receive the maximum benefit:

• Up to $6,400 per year ($533 a month) for each child under the age of six
• Up to $5,400 ($450 a month) for each child aged six to 17
• And an additional $2,730 annually if a child qualifies for the disability amount

Those are maximum amounts. As net family income rises, the benefit decreases – ultimately down to zero benefit once a certain level is breached.

If you’re wondering how much your family will receive, the Canada Revenue Agency provides an online calculator. The page registered 1.6 million visitors between April 1 and June 30, and you can find it at the CRA's website. 

With labour strife brewing at Canada Post, the CRA says only nine per cent of families will receive their July 20 payments by cheque. The remaining 91 per cent have signed up for direct deposit.

Since the full impact of the benefit is aimed at lower income Canadians, it’s expected that most of that money will find its way into the economy.
That should support economic growth.

The Bank of Canada anticipates a healthy rebound in the third quarter after a pullback in the second (largely because of the Alberta wildfires). A substantial part of that growth spurt is being attributed to the new child benefit.

Economists at CIBC say the benefit, taken together with the middle class tax cut, should provide a 10 to 20 basis point bump up for GDP this year – with a more meaningful effect on the third quarter.

BMO Chief Economist Doug Porter suspects that the “vast majority of the new money will be spent, and spent relatively quickly.”

Still, he cautions the benefit will be a “one-time lift that won’t be repeated next year -- it does nothing for long-run growth rates.”

Paul Ashworth at Capital Economics agrees that putting the money in the hands of lower-income Canadians means it will likely be spent. Yet the bump it provides for the overall economy is “not a game changer.”