The ABCs of the UCCB

Imagine the possibilities with having an extra $1,200 a year. Well, that’s exactly what Canada’s Universal Child Care Benefit (UCCB) provides families who have young children with. The UCCB works like this: the federal government pays a primary caregiver (usually the mother) $100 a month per child under the age of six. She gets the money regardless of how much income she takes home.

It doesn’t matter whether she spends the UCCB on educational savings plans, babysitting or general expenses that come with raising a child.

To qualify for the UCCB, the primary caregiver must be a Canadian citizen and live with the child. Here’s what else you need to know about the UCCB.

How do I get the Universal Child Care Benefit?

You apply for the UCCB by filling out the Canada Child Benefits Application. In some cases, hospitals send new parents home with this form in tow. But you can also download the application here.

Filling out this application will also determine your eligibility to receive the Canada Child Tax Benefit (CCTB), a monthly, non-taxable payment which is dependent on your family’s net income.

Send your completed form to your nearest Tax Centre. Look up yours by clicking here.

If you’re already receiving the CCTB, there’s no need to apply separately for the UCCB. You’ll automatically start receiving it, says Toronto-based Doug Carroll, vice-president of tax and estate planning at Invesco Trimark Investments.

 When should I apply for the UCCB?

Apply soon after your child is born. That way, you’ll start to receive the monthly payments within a few months. Haven’t gotten around to it due to new priorities like round-the-clock feedings? That’s OK, but you should apply within the child’s first 11 months to ensure you’ll get retroactive payments.

Wait longer than that and you’ll lose some past monthly payments. “If three years go by before you apply for the UCCB, the government won’t [give] all the way back to when the child was born,” notes Toronto-based Frank DiPietro, director of tax and estate planning at Mackenzie Financial. “They’ll only go as far back as 11 months.”

Besides losing free money, delaying your application by a year makes the whole process more onerous. You’ll have to provide photocopies of your birth certificate — not to mention your child’s — and proof that you are the primary caregiver, among other things. Compare that to what you need to do when you fill out the application right away: simply write down your names, mailing address, you and your spouse’s Social Insurance Numbers and your child’s place of birth and birth date. That’s it.

 I’m divorced. Who gets the UCCB?

Divorced parents who have joint custody of the child can now apply to have the UCCB split between both parties. Attach a note to your application that explains your circumstances.

Is the UCCB taxable?

In a word, yes. The $1,200 must be reported as income for the year. Each February, the Canada Revenue Agency will issue a UCCB statement, which will explain where the amount belongs on your income tax return.

In a two-parent household, the spouse who makes the lower income pays the tax. But recent changes to the UCCB have made taxes more equitable for single parents. Single parents can now have their child pay the tax instead of paying the tax themselves. Since children under the age of six don’t pay income tax, “technically that means it will be a tax-free benefit for the single parent,” says DiPietro.