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.
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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 of 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 $1,795 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 $4,884 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’s 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?
Actually, let’s do a table. This is for a family with a household working income of $41,000, which results in a net income of $32,689 for 2018 taxes (the old programmes) and $32,748 for 2019 taxes (the new programme). I chose $41,000 because it’s the cutoff amount for the new programme.
I used the federal Estimated Benefits calculator to determine how much each family would get based on the working and net incomes above. Remember, “Old” includes the child benefit and the tax credit.
|4 or more children||$3962.00||$3454.68||-$507.32|
So the more children you have, the less you get under the new programme.
Now, to be fair, under the old programmes, families would get nothing after their household income passes $42,287. Under the new programme, however, they would. At least until they hit $61,000.
That being said, the government expects to spend about $230 million on the new programme in the 2020–2021 budget year. During the 2018–2019 budget year, the NDP spent $328 million on their combined programme.
That’s a $98 million difference.
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.
Note: an earlier version of this story had miscalculated the amounts in both columns in the example table. I’ve since updated it to more accurately reflect the benefits for each programme.