Tuesday, February 14, 2017

Canada's Child Care Benefit

Taking a walk with baby girl despite being winter.
One of the perks of parenthood in Canada is what every parent affectionately calls the 'baby bonus'.

This is the money the Government of Canada gives you because you have a baby. Actually, the money continues until your baby is 17.

It's had many names over the years and in different forms.

In its current form, the 'baby bonus' is monthly tax free money based on previous year's income. The more you make, the less you get. If you make over a certain amount, you don't get 'baby bonus'.

So how do you apply for it?

That's easy. When your baby is born, you need to register his or her birth. At the same time, you can apply for the baby's SIN and baby bonus. That's what we did the moment baby and wifey were discharged from the hospital.

The process to apply was 5 minutes. Just clicking and typing the information required. The amount of time process our application was 6 weeks... 6 weeks! In any case, we didn't need the money, so it was no difference to us. If anything this money would be a bonus as it would be money on top of what we're bringing in.

Finally, in December, the Government issued the first cheque. It was for the months of November and December, however, it looks like we qualified for $270 or so a month. Not bad. Of course, since we received a cheque, I logged onto the CRA website and set up direct deposit into wifey's account.

While $270 a month doesn't sound like a lot, that's $3,240 a year! Well, we won't be getting that amount for a year. We'll only get this amount until June. In July, they will calculate a new amount based on income from 2016. I estimate it to be a lower amount in July since wifey changed to a higher paying job in March 2016. I estimate we'll get something around $2,160.

So what are we going to do with the extra $2,160?

We're not sure. So far, we've deposited the full amount into baby girl's RESP. By full amount, I mean $2,500 at the end of 2016 and $2,500 at the beginning of 2017.

So if you count the $2,160, that helped fund 40% of baby girl's RESP. Not bad.

Aside from that, the usual suspects are baby clothes, toys, gear, etc. However, we don't need to use that money for these things as we're pretty much set.

I've been thinking of just saving the money and giving it to baby girl when she turns 18. Assuming $2,000 a year for 17 years, that's $34,000... Wow!

No matter how you slice it, free money is free money. It's good that we're given the choice on how best to use this money.