Child Benefits
The Canada Child Benefit is a federal non-taxable payment to parents of
children under 18 and varies according to the number of children in the
family and family income. For families with net income below $30 500,
larger fraction of their income in taxes than is paid by lower-
income households—that is, the NIT is progressive.
Supporters of the NIT believe that it would be an effective tool
for reducing poverty. The NIT provides a minimum level of
income as a matter of right, not of charity, and it does so
without removing the work incentives for people who are
eligible for payments; every dollar earned adds to the after-tax
income of the family. Poverty traps are avoided.
A step toward the NIT was taken in 2007 with the introduction
of the Working Income Tax Benefit (WITB). The WITB is aimed at
low-income working Canadians and is designed to reduce the
marginal income-tax rate and thereby provide greater
incentives for low-income people to increase their labour-force
participation. The WITB works by offering a refundable tax
credit for every dollar earned within a specific range. A
refundable tax credit means that even if the individual pays no
income tax, the credit would result in money being paid to
(refunded to) the individual. The WITB is an important step
toward the reduction of poverty traps in Canada.