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Ottawa, June 28, 2001
2001-057

Canada Child Tax Benefit Increases by $300 a Year per Child in July 2001

Finance Minister Paul Martin today stated that, as of July 2001, the maximum Canada Child Tax Benefit (CCTB) will increase by about $300 a year per child to an annual amount of almost $2,400.

This increase was announced in the 2000 budget and expanded in the October 2000 Economic Statement and Budget Update. It is part of the Federal Government’s five-year $100-billion tax reduction plan – the largest tax cut in Canadian history. This plan is cutting federal personal income tax by an average of 21 per cent. Families with children are getting an even larger tax cut – about 27 per cent on average.

"Increasing the CCTB helps to ensure that families with children benefit the most from tax relief measures we have announced to date," said Minister Martin. "This provides a direct benefit to families with children, particularly those for whom the need is greatest."

The CCTB is an income-tested monthly benefit that has two components: The National Child Benefit (NCB) Supplement, which is available to families with incomes of $32,000 or less, and the CCTB base benefit for low- and middle-income families. As of July 2001, the maximum annual benefit for the first child will increase to $2,372 from $2,081, mainly due to an increase in the NCB Supplement.

In addition to the NCB Supplement increase, more families will become eligible for the NCB Supplement portion of the CCTB as a result of an increase in the income threshold at which the Supplement is fully phased out. Specifically, as of July 2001, this threshold will rise to $32,000, which is beyond the $30,754 level that indexation alone would have achieved. The CCTB base benefit will increase in July of every year to keep pace with inflation. The combined result of these additional changes is that more middle-income families will qualify for the CCTB, and that the benefits they receive will be larger.

The NCB Supplement portion of the CCTB benefits approximately 2.6 million children. All told, CCTB benefits for 2001 will reach 5.9 million children – more than 80 per cent of children in Canada. By 2004, the CCTB will be available to 90 per cent of Canadian children, and the maximum annual total benefit will rise to more than $2,500.

In addition to increasing the CCTB and making it available to more middle-income families, the Federal Government’s five-year tax reduction plan cut personal tax rates at all income levels. It also restored full indexation to the personal income tax system to protect taxpayers against automatic tax increases caused by inflation, and eliminated the deficit-reduction surtax.

The tax reduction plan also included measures designed to make Canada more internationally competitive. These include:

• reducing Canada's corporate tax rate to 21 per cent by 2004 from its pre-2001 level of 28 per cent;

• reducing the capital gains inclusion rate from three-quarters to one-half; and

• providing a capital gains rollover on investments in shares of certain small- and medium-sized active business corporations.

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