The “Universal Child Care Benefit” (UCCB) is a federal government initiative that was implemented July 1, 2006 and is included in ChildView^® version 2006.2.0 and higher.  Amounts are paid on behalf of children under the age of six in installments of $100 per month per child.  The maximum per child for 2006 is $600, as the program began July 1, and the maximum for 2007 onward will be $1,200 per child (pending future legislative changes).  

The eligibility criteria to receive the UCCB are the same as that of the Canada Child Tax Benefit (CCTB); however, that is the only commonality between the two programs.  Unlike the CCTB, the UCCB is not really a “benefit” as it is to be taxed in the hands of the household’s lower income spouse and is included in “the sources of income that comprise line 150 of a T1 General tax return.”  This means that absent an amendment to the Child Support Guidelines (CSG) it is also captured by the definition of income in the CSG, which the CCTB is not.   Further, there is no income limitation in the determination of the amount to be received under the UCCB program, so those who otherwise qualify, but do not receive the CCTB because of their level of income, will still receive the UCCB.  However, the federal government has also implemented legislation that excludes the UCCB income from the income limitations in other federal government programs, such as the CCTB and the GST credit, so it will not lower the amount received from those programs.  At the provincial or territorial level, all of the governments have gone along with the federal request to exclude it from income limitations in provincial / territorial programs. In addition, some have created offsetting non-refundable tax credits to counter the tax effect on low and low-middle income families.

Due to the fact that the tax treatment of the UCCB has created a potentially unfair and inconsistent result with respect to child support, Ottawa has just announced amendments to the CSG effective April 1, 2007.  Details have been published in the April 4, 2007 issue of Part II of the Canada Gazette.  Through Schedule III, these amendments remove the UCCB from Guideline income for purposes of the Section 3 table amount and adjust the income used to determine the pro-rata sharing in Section 7 so that only UCCB for a child for whom section 7 expenses are being claimed is included in income.  The amendments also address the possible problems raised by the fact that the UCCB must be reported for income tax purposes by the household’s lower income spouse.  Where the UCCB has been received for a specific child but not included in income for tax purposes and special expenses are claimed for that child, the UCCB received is to be included in income for purposes of the pro-rata sharing.  With respect to the standards of living test in Schedule II of the CSG, no change was necessary as the UCCB was already appropriately included in household income.

The amendments also clarify the effect of the UCCB in the determination of a “net” special expense and state that it is not to be taken into account.  This is completely consistent with the reality of the UCCB.  In particular, with regard to child care expenses under section 7 of the CSG, there is no connection between the receipt of the UCCB and the incurring of child care expenses.  The only connection to child care expenses is in the politically motivated choice of the program’s name.  There is no requirement that the money be spent on child care, nor that child care expenses be incurred in order to receive the money.  The effect on special expenses under section 7 is only through the effect on taxable income and the calculation of the pro-rata sharing percentage.  To further include it in the determination of the net amount would result in double counting.

These amendments are included in ChildView^® version 2007.1.1 and higher.

For further information, click this link to the relevant section of the Canada Gazette by following this link: http://canadagazette.gc.ca/partII/2007/20070404/html/sor59-e.html.  Also refer to Justice Canada's website: Q & A - Amendments to the Child Support Guidelines related to the UCCB.