Canadian parents might have to tighten their purse strings even further in the face of inflation and interest rates. This comes as the Canada Revenue Agency (CRA) recently started up clawbacks from the Canada Child Benefit (CCB) program this year.
Debt collections and overpayments started up in April of 2023, with some parents seeing their funds reduced to zero. So, what’s going on? And what can Canadian parents do to make ends meet?
The details
The CRA announced they would be notifying parents of overpayments and debt collections in CCB payments. This could result in keeping “all or part of future CCB payments, income tax refunds, or goods and services tax/harmonized sales tax (GST/HST) credits until the amount you owe is repaid,” according to their website.
This was the norm before the pandemic, when the CRA temporarily stopped this collection method to provide financial relief. However, this was resumed recently, with parents in some cases seeing their benefits reduced to nil.
Parents can usually find out if a clawback is coming, along with future CCB payments, by either calling the CRA directly or visiting MyAccount by CRA. There you can view future payments as well as any mail from the CRA regarding payments due.
What can families do?
If you’re a family that has been desperate for these payments, it can be really difficult when you suddenly see them reduced to nothing. However, these payments will return eventually as soon as your debts are repaid. If you’re in dire straights and need an explanation, I would recommend calling the CRA directly.
However, if you’re wanting an influx of passive income and having some cash sitting in your Tax-Free Savings Account (TFSA), then I would recommend investing instead.
There are numerous strong stocks to consider for income, including safe stocks that will continue rising. In fact, for even more safety, it might be a good idea to consider an exchange-traded fund (ETF). This is like having a team of managers looking after your portfolio.
A strong option
Vanguard Growth ETF Portfolio (TSX: VGRO) is a solid choice for parents wanting to make ends meeting in a short period of time. The exchange-traded fund (ETF) offers a dividend yield currently at 2.12% as of writing, with shares up 2% in the last year and 4% year-to-date. Sure, it’s not a huge amount, but it’s a positive during this trying time.
What’s more, it’s a far safer investment than picking up a random growth stock. Not only is it an ETF focused on creating growth through equity and fixed-income assets, but it invests in other Vanguard funds. So, you’re buying one fund but really getting access seven other Vanguard funds as well.
Now, investing in this isn’t necessarily going to make up what you’re losing from the CCB fund. Combined with dividends, perhaps from a large investment. But for now, it should at least help investors bridge the gap, while the CRA looks to get back its funds.
But again, call the CRA. They can help you figure out the best method moving forward, without putting you in dire straits.
