It is not widely known that the Canada Child Tax Benefit (CCTB) is based on a family’s net income i.e. income from all sources less deductions such as RRSP contributions, childcare expenses etc. If you are working on your 2007 taxes, enter the numbers from Line 236 of T1 General of your return and your spouse in this calculator to see if you are eligible for the CCTB. Don’t just assume that you won’t be eligible – you may be surprised to learn that only a small fraction of families won’t be eligible for this tax-free benefit. The following note is from reader D:
I thought I would pass on something interesting that I encountered while working on my 2007 tax return. I was playing with the RRSP contribution calculator in Ufile as well as the CTB calculator on the CRA website to determine CTB payments for next year for our two children. I found that if I max out my RRSP contributions for 2007 at $4,500, thereby decreasing my taxable net income by that amount, it will increase the CTB received by $15 per month, or $180 for the year. By my rough calculations, this is a 4% immediate return on investment on top of the other benefits of contributing to a RRSP. Just thought that I would pass this on as another positive associated with contributing to a RRSP and perhaps your readers might be interested in.
Thanks for your note D. If you have a financial tip you would like to share with our readers, please don’t hesitate to contact me. And if you haven’t done so already, don’t forget to enter your name in The RRSP Book giveaway.
