UCP guts Alberta Child Benefit by $100 million a year
Last October, the Alberta government announced that it’d be introducing the Alberta Child and Family Benefit, directed at lower-income Albertans.
The programme replaces the Alberta Child Benefit and the Alberta Family Employment Tax Credit and takes effect this month.
What was the Alberta Child Benefit?
Introduced by the NDP government in 2016, the Alberta Child Benefit provided direct financial assistance to lower-income families. All lower-income families, including those receiving AISH or income support, were eligible to receive this benefit.
Eligible families would receive up to $1,128 per year for one child, and up to $2,820 for four or more children.
The income cutoff for this benefit was $42,255 a year.
What was the Alberta Family Employment Tax Credit?
Introduced by the PC government, the Alberta Family Employment Tax Credit provided a tax break to low- and middle-income working families with children when they filed their taxes. To qualify for this tax credit, families had to be making at least $2,760 a year.
Eligible families would receive up to $783 per year for one child, and up to $2,064 for four or more children as a tax deduction when they filed their taxes.
The income cutoff for this benefit was $42,287 a year; anything above that would reduce how much of a tax credit the taxpayer would receive when they filed their taxes.
What’s the Alberta Child and Family Benefit?
As mentioned, the Alberta Child and Family Benefit replaces those two programmes. It provides direct financial assistance every 3 months (starting in August) to lower and middle-income families with children under 18.
The new programme has two components: the base component and the working component.
The base component is available to lower-income families with children, regardless off whether they earn employment income. The working component is available to families who make over $2,760 a year.
Under the base component, families could receive up to $1,330 per year if they have 1 child and $3,325 per year if they have 4 or more children. The working component would add as much as $681 per year for 1 child and $1,1794 for 4 or more children.
Families could qualify for both components, which would work out to a maximum combined total of $2,011 for a family with 1 child and $5,120 for 4 or more children.
Prior to this month, a family could receive as much as $1,911 a year if they had 1 child and $4,4884 a year if they had 4 children, when you combined the benefits from the two previous programmes. Seems like that’d be more under the new programme.
However, there’a catch.
While you can potentially receive both the base component and the working component of the new benefit if you’re working as a parent, as soon as your household starts making over $24,467 a year, the base component starts to drop, and it’s completely gone if your household income exceeds $41,000.
And speaking of $41,000, that also happens to be the point when the working component starts to be reduced. So, once your household income passes $41,000, you’re no longer receiving any of the $1,300-$3,325 per year for the base component, and the $681–1,795 working component starts to be whittled down.
By the time your household income hits $61,000 (say, if each parent makes $30,500 a year), the working component will be completely diminished: you’ll no longer qualify for any component of the Alberta Child and Family Benefit.
So, while the $2,011-$5,120 sounds pretty awesome, it’s available only to families who make between $2,760 a year and $24,467 a year. And that’s household income, so that’d be both parents’ income combined.
How do the old and new programmes compare?
Under the old programmes, a family making $41,000 would qualify for between $1,911 and $4,884 a year, when you combined the benefit and the tax credit.
Under the new programme, a family making $41,000 would qualify for between $681 and $1,795 per year.
For reference, the median employment income (the halfway point between the lowest income and the highest income) in Alberta in 2018 was $41,400.
Actually, let’s do a table. This is for a family with a household income of $41,000, the cutoff amount for the new programme, and roughly Alberta’s median income.
Yes, you read that right. Alberta families could end up losing as much as $3,000 a year under the new programme.
And that’s just for families still under the cutoff income. Anyone making above the cutoff will have even more taken away.
That’s $98 million less.
If the UCP government’s spending nearly $100 million less on the child benefit (and that’s not counting population or inflation growth), then it shouldn’t be that surprising that working families are going to get less than they were under the NDP.
Originally published at kimsiever.ca on 6 July 2020.