As-Salamu ‘Alaykum wr wb,
My family had a question pertaining children benefits that low income parents get from the government.
The main question is to who does the money belong to?
One may be inclined to say that the one to whom the money is transferred to is the owner of it, in most cases the mother. However, is it possible that the mother merely receives it on behalf of the entire family (husband wife and children)? One aspect that seems to indicate that is the fact that it is based on family income.
Please refer below for more detail.
In Canada there is a CCTB benefit given to all families with children. The CCTB is a non-taxable amount paid monthly to help eligible families with the cost of raising children under 18 years of age. Our questions are as follows:-
Who does this money belong to? Does this money belong to the father, the mother or the child?
Does it matter which parent is earning in the family?
Is there any added responsibility for the owner on how the money must be spent? If so is there a responsibility for the owner who does not receive any benefit or receives very little due to their high income?
This CCTB benefit was introduced in 1945 and this was implemented due to the fact that parents have higher expenses compared to childless couples. The amount of CCTB given to families is calculated by looking at the income of parents. If your adjusted family net income is more than the base amount, your CCTB will be reduced. In other words, the higher your income, the less CCTB funds you will receive and the lower your income the more CCTB funds you will receive.
Primarily responsible
Primarily responsible for the care and upbringing of a child means that you are responsible for such things as supervising the child’s daily activities and needs, making sure the child’s medical needs are met, and arranging for child care when necessary. If there is a female parent who lives with the child, we usually consider her to be this person. However, it could be the father, a grandparent, or a guardian.
Who should apply?
The person who is primarily responsible for the care and upbringing of the child should apply for the CCTB. For CCTB purposes, it is presumed that when both a male and a female parent live in the same home as the child, the female parent is considered to be primarily responsible for the child and should apply. However, if the male parent is primarily responsible, he can apply if he attaches a signed note from the female parent to Form RC66, Canada Child Benefits Application, which states that the male parent is primarily responsible for all of the children in the household.
Are you eligible?
To receive the CCTB, all the following conditions must be met:
You must live with the child, and the child must be under 18 years of age.
You must be the person primarily responsible for the care and upbringing of the child. This means that you are responsible for such things as supervising the child’s daily activities and needs, making sure the child’s medical needs are met, and arranging for child care when necessary. If there is a female parent who lives with the child, we usually consider her to be this person. However, it could be the father, a grandparent, or a guardian. (NOTE: If a child does not reside with you all the time, see Shared Eligibility)
You must be a resident of Canada for tax purposes.
We consider you to be a resident of Canada when you establish sufficient residential ties in Canada. For more information, see Interpretation Bulletin IT-221, Determination of an Individual’s Residence Status.
Note: We pay Children’s Special Allowances for children under 18 years of age who are under the care of a government department, agency, or institution. You cannot receive the CCTB for a child for any month in which Children’s Special Allowances are payable for that child.
Shared eligibility
There are situations where a child may reside with two different individuals on a more or less equal basis, and both of these individuals share equally in the child’s care and upbringing.
If this situation applies to you, attach a note to your application that clearly states your parenting arrangement.
1. What is shared eligibility?
Shared eligibility exists where a child lives more or less equally with two separate individuals (whether 4 days with one, and 3 days with the other, on a one week on, one week off basis or some other similar rotation), and each individual is primarily responsible for the child’s care and upbringing when the child resides with them. The Canada Child Tax Benefit (CCTB) legislation only allows eligibility to one “eligible individual” in a month. To address this problem, the Canada Revenue Agency (CRA) developed a shared eligibility policy that would recognize that there could be two eligible individuals for the same child. It was therefore decided to allow eligibility for the child (or children) to each individual on a 6-month on, 6-month off rotation, both for the CCTB and for the child component of the goods and services/harmonized sales tax (GST/HST) credit.
2. Why is eligibility rotated on a six-month basis? My children live with me for one week, and with another individual for one week.
Legislation prevents the CRA from having two eligible individuals for the same child in the same month. At this time, for administrative reasons, the CRA is not able to rotate the eligibility month by month; therefore a six-month cycle has been established.
3. I am in a shared eligibility situation, and have made an arrangement with the other individual that I will receive the CCTB and the child component of the GST/HST credit. We have told the CRA about this arrangement in the past. What will happen now?
Although alternative arrangements were accepted in the past, the CRA decided that these options would no longer be allowed. There are no plans to look for all the individuals in your situation; however, if CRA officials do come across a situation such as yours in the course of conducting their normal activities, or if you happen to self-identify, the individuals involved will be put into a six-month rotation of benefit eligibility.
4. I have recently separated from my ex-spouse and because my family income is much lower, I would receive a greater amount of benefits if I were the sole recipient. Why is this option no longer available?
By letting individuals pick and choose who between them will be the eligible individual, the CRA is not being fair to all of its other benefit recipients. If a child lived with one individual only, that individual would be the eligible individual (assuming all of the other eligibility criteria have been met) without regard to that person’s family income. If a child resides with two individuals, and they are both responsible for that child’s care and upbringing, it is most fair and equitable if both share benefit eligibility for that child, regardless of the amount of the benefit, if any, that each will receive. It is entirely possible in a situation of shared eligibility, that one individual will receive no benefits at all during their six-month rotation, due to their high family income.
5. I am in a shared eligibility situation, but I have a court order that states that I am to receive the CCTB. How can the CRA overrule a decision made by the court?
The CRA is not obligated to respect these court decisions, as the only legal authority for determining benefit eligibility is the Income Tax Act, specifically the definition of “eligible individual.” The existence of a court order or agreement may be one of the factors used in determining with which parent a child or children may reside, but its provisions do not determine who is eligible for the CCTB and the child component of the GST/HST credit. Part of the communication strategy for this policy change is to ensure that the legal community is made aware that benefit eligibility is determined according to the Income Tax Act, and not by the courts.
Note: The NCB and CDB are all inclusive in the CCTB. In other words, one cheque is mailed out with all the benefits.
National Child Benefit (NCB)
The NCB is a joint initiative of the federal, provincial and territorial governments. This initiative is designed to:
■ help prevent and reduce the depth of child poverty;
■ ensure that families will always be better off as a result of parents working; and
■ reduce overlap and duplication of government programs and services.
The National Child Benefit Supplement (NCBS) is included in the CCTB and paid monthly to low-income families with children under 18 years of age. It is the Government of Canada’s contribution to the National Child Benefit (NCB). As part of the NCB, certain provinces and territories also provide complementary benefits and services for children in low-income families, such as child benefits, earned income supplements, and supplementary health benefits, as well as child care, children-at-risk, and early childhood services.
Child Disability Benefit (CDB)
The CDB is a monthly benefit included in the CCTB to provide financial assistance to qualified families caring for children who have severe and prolonged impairment in physical or mental functions. Families with children under 18 years of age who qualify for the disability amount are eligible to receive a CDB. A child qualifies for the disability amount when we have approved Form T2201, Disability Tax Credit Certificate, for that child.
Basic Benefit Calculation Method Used by the Government:
We calculate the basic benefit as described below:
■ $111.66 per month for each child under 18 years of age (if you live in Alberta, see the note below); and
■ an additional $7.75 per month for your third and each additional child.
We reduce the basic benefit if your adjusted family net income is more than $40,726. For a family with one child, the reduction is 2% of the amount of adjusted family net income that is more than $40,726. For families with two
or more children, the reduction is 4% of the amount of adjusted family net income that is more than $40,726.
What is meant by “family net income”?
Family net income is one of the factors used in the calculation of your CCTB entitlement. Family net income is your net income at Line 236 of the tax return. If you have a spouse or common-law partner, their net income from their tax return is added to your net income to determine your family net income.
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
We have studied the contents of your email regarding CCTB benefits. Hereunder are our observations:
There are two issues:
1. CCTB funds excluding the National Child Benefit (NCB) and Child Disability Benefit (CDB)
2. NCB and CDB funds
1. The CCTB funds excluding the NCB and CDB belong to the responsible parent/s of the child as these funds are given by the government to assist the responsible parent/s. This is deduced from the fact that the amount of funding is based on the amount of income that the responsible parent/s earns. The government gives this money as a form of assistance (Ta’awun) to the responsible parent/s. The existence of dependant’s (children) is merely a Sharth (condition) for the eligibility of this assistance.
The above can be deduced from the following clauses:
1.1) “The amount of CCTB given to families is calculated by looking at the income of parents. If your adjusted family net income is more than the base amount, your CCTB will be reduced. In other words, the higher your income, the less CCTB funds you will receive and the lower your income the more CCTB funds you will receive.”
2. 1)“We reduce the basic benefit if your adjusted family net income is more than $40,726. For a family with one child, the reduction is 2% of the amount of adjusted family net income that is more than $40,726. For families with two or more children, the reduction is 4% of the amount of adjusted family net income that is more than $40,726.”
3.1) “Family net income is one of the factors used in the calculation of your CCTB entitlement.”
2. The NCB/CDB/NCBS funds/monies belong to the child and not the parent’s of the child. The parent’s serve as Wakeel (agent) on behalf of the government; who serve as principle (Mu’akkil). The parent merely holds the money in his/her possession (Qabdh) as Amanat (trust) on behalf of the child.
We understand that one CCTB cheque is given out with all the benefits including NCB/CDB/NCBS, therefore one should work out the different amounts/benefits when calculating which amounts will belong to the responsible parent/guardian and the child.
The above can be deduced from the following clauses:
1. “The National Child Benefit Supplement (NCBS) is included in the CCTB and paid monthly to low-income families with children under 18 years of age. It is the Government of Canada’s contribution to the National Child Benefit (NCB).”
2. “The CDB is a monthly benefit included in the CCTB to provide financial assistance to qualified families caring for children who have severe and prolonged impairment in physical or mental functions. Families with children under 18 years of age who qualify for the disability amount are eligible to receive a CDB.”
And Allah Ta’āla Knows Best
Ismail Desai,
Student Darul Iftaa
Durban, South Africa
Checked and Approved by,
Mufti Ebrahim Desai.