Gloomy clouds of uncertainty were everywhere in March 2020, as lockdown measures began to curb the pandemic’s spread. With most couples being stuck at home, there was even anticipation of a baby boom in nine months.
Contrary to expectations, statistics showed that birthrates declined in British Columbia and Quebec nine months on. Several reasons could have led to lower birth rates, and financial uncertainty is undoubtedly one of the most significant reasons.
The Canada Revenue Agency (CRA) has been proactive with providing Canadian parents support through the Child Care Benefit (CCB). With the financial uncertainty growing amid the lockdown, the government agency enacted several changes to the CCB to offer Canadian parents additional support.
Additional CCB for 2021
The CRA offered several benefits to parents in Canada, including a higher Goods and Service Tax (GST) refund, deductions for childcare expenses, and the CCB. The GST tax refund and childcare expense tax credits are the same as before the pandemic, but the CRA offers additional payments for Canadian parents of children under six through the CCB.
If you have already been receiving the CCB, the CRA will transfer an additional $300 each quarter for 2021 or until your child’s sixth birthday. The additional CCB is tax exempt, like the original CCB payments you receive.
Parents of children who are under six years old can qualify for this additional benefit. You need to be earning less than $120,000 and filing your taxes regularly to be eligible for this benefit. If you are earning more than $120,000, the CRA will still provide you with $150 in CCB per quarter.
Increased amount for regular CCB
The CCB will pay more than the additional $1,200 CCB. The CRA has increased the regular CCB amount after adjusting the payment for inflation and income. The CRA created CCB to support mid- to low-income Canadian parents in raising their children. Between July 2021 and June 2022, your child under six years old can get you up to $6,833 in CCB if your average family net income falls below $32,028.
Creating more benefits to supplement CCB
With all the additional CCB and tax credits available to Canadian parents, childcare expenses might still be a lot. When you have the baby and start taking care of the expenses, it will not take you long to realize that you should save more funds. Creating a personal benefits pool in your Tax-Free Savings Account (TFSA) could be an excellent way to go.
You can invest using your TFSA contribution room and enjoy tax-free returns and withdrawals. Using the TFSA to hold a portfolio of reliable income-generating assets like BCE (TSX:BCE)(NYSE:BCE) stock could help you maximize your long-term returns.
BCE is the most significant telecom operator in the country. It boasts a substantial adjusted EBITDA of 42% through its existing 4G network. The company is poised to grow its 5G infrastructure aggressively to capitalize on the 5G boom.
5G is the next big thing in the telecom industry. 5G will be more massive than 4G ever managed to become, connecting all manner of devices. BCE might see some weakness in the coming months due to higher capital spending on 5G infrastructure, but it could provide you with massive long-term returns.
With the updates to the CCB announced by the CRA for 2021, you can get a significant amount from the government to take care of your expenses. Planning your personal benefits pool to supplement the CCB could be crucial, because the child benefit might not be enough as expenses pile up.
Creating a TFSA portfolio that offers substantial long-term returns is a viable way to supplement the CCB with a personal benefits pool. BCE is an ideal stock to consider for your TFSA to fulfill this purpose.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Adam Othman has no position in any of the stocks mentioned.