CRA Relief: Got a Child Under 18? You Can Get Almost $7,000 in 2021

The Canada Child Benefit (CCB) is one of the government programs that received a special mention during the Fall Economic Statement 2020 delivered by Canadian Deputy Minister and Finance Minister Chrystia Freeland. The latest federal economic package had more good news for Canadians with a young family.

Regarding the CCB base benefit, the amount beginning in July 2021 is $6,833 per child under six. For children ages six to 17, the CCB base benefit amount per child is $5,765. Remember that increases for this particular benefit take effect every July, which is the beginning of the program year for payments. Since CCB is an income-tested benefits program, the actual benefit amount varies.

Income thresholds

The Canada Revenue Agency (CRA) computes the CCB benefit amount based on the adjusted family net income (AFNI). In 2021, the AFNI phase-out begins at $32,028 from $31,711 last year. Note that as your AFNI exceeds an income bracket, the CCB benefit reduces.

If the AFNI doesn’t exceed the income threshold of $32,028, families receive the maximum benefit. However, if your AFNI is greater than $32,028 up to $69,395, the annual CCB benefit reduces by 7% in the second phase-out. The reduction percentage increases depending on the AFNI and the number of eligible children.

The CRA assigns a base amount per eligible children plus a certain percentage after the second phase-out. Regarding the child disability benefit, the maximum amount in 2021 is $2,915, while the AFNI for phase-out is $69,935. For eligible CCB recipients, the government will also extend a temporary benefit of $1,200 for each child under six this year.

Boost household income

Canadian families can further boost household income through dividend investing. Among the profitable choices is a renewable energy company. Algonquin Power & Utilities (TSX: AQN)(NYSE: AQN) is a $12.5 billion utility company that operates mainly in America.

This utility stock is also among the TSX’s steady performers in 2020. Algonquin rewarded investors with a total return of 19% on top of a decent 3.8% dividend. Because its renewable energy assets are regulated, the company generates stable cash flows and consistently reports earnings growth over the years.

Furthermore, Algonquin’s business is recession-resistant, if not low-risk, given that utilities are essential services every day. I wrote after the U.S. presidential elections in November 2020 that Algonquin will play a critical role when the Biden administration kickstarts the fight against climate change.

The U.S. will rejoin the Paris Climate Agreement on the first official day of Joe Biden as the country’s 46^th duly elected President. When his clean energy revolution begins, Algonquin is more than ready to meet the challenge. The company has earmarked $9.2 billion for its five-year capital program.

Algonquin will invest more in its regulated services group while allocating a spending budget for its renewable energy group. This utility should be the next buy-and-hold stock of income investors.

Why claim the CCB

The CCB has four salient features:

1. The program is simple because there’s a single payment monthly.
2. The CCB is tax-free, so recipients don’t pay taxes on payments received.
3. The group that needs the CCB the most, low and middle-income families, get higher benefits.
4. Families receive, on average, about $6,800 in CCB payments annually.

Thus, don’t miss out on this benefit if you have children under 18.