The Program

The Alberta Family Employment Tax Credit (AFETC) is a program funded by the Alberta government to help working families provide for their children.  It's part of the provincial government's reinvestment program, based on priorities identified through consultation with Albertans.

The program has two objectives:

• to support children in low and middle income families, and
• to provide incentive for the parents of these children to continue to work.

The AFETC supports families both financially and by encouraging self-reliance and stability.  In 2006, the Alberta Family Employment Tax Credit will provide about $80 million in tax relief to 146,000 Albertan families.

In July of each year, the maximum credit amounts and the phase out threshold are indexed to inflation.  This ensures that the value of the credit is not eroded over time.

Who is Eligible?

If you meet the following criteria, you qualify for the AFETC:

• Resident of Alberta for at least one month,
• Parent of one or more children under 18,
• More than $2,760 annual family working income, and
• A family net income of less than $39,475 for families with one child, $52,225 for families with two children, $59,875 for families with three children, and $62, 425 for families with four or more children.

How to Apply

You do not need to apply for the AFETC.  Your eligibility will be determined from the information the federal government uses for the Canada Child Tax Benefit (CCTB).

The amount you receive for the AFETC is based on the information you and your spouse (if you have one) provided on last year's income tax return.  If you qualify, a notice will be sent to you each year near the end of July, along with your first payment.  The notice will show how your payment was calculated as well as how much you will receive the following January.  Your return(s) must have been assessed by the Canada Revenue Agency to qualify.

If you have a child in the future, your application to the Canada Revenue Agency for the CCTB will automatically be used to determine your AFETC.

How the Tax Credit Works

You could receive up to $560 per child, with a maximum of $1,478 for your family for the twelve month period beginning July 2006. The maximum amounts (as of July 1, 2006) are as follows:

• first child - $560;
• second child - $510;
• third child - $306;
• fourth child - $102.

The tax credit is calculated at a rate of eight per cent of family working income above $2,760 up to the maximum amount.  It is reduced by four per cent of family net income over $25,475.  To qualify, your family net income for the previous calendar year would have to be less than $39,475 for families with one child, $52,225 for families with two children, $59,875 for families with three children, and $62, 425 for families with four or more children.

Your family's working income is the combined earned income of you and your spouse (if you have one), including income from self employment.  It does not include income from sources such as alimony and child maintenance.

Your family's net income is your family's total income minus your registered pension plan and RRSP contributions, annual union dues, child care expenses, moving and other expenses (as found on line 236 of your federal income tax form).

Only one parent per family may receive the tax credit.  It will be paid to the same parent who receives the CCTB.

Payments

Payments will be mailed near the end of January and July.  These will be advance payments - the January payment will cover the first six months of the year, the July payment the second six months.  If your credits under the program amount to less than $20 a year, you will receive only one payment for the full year.

If your family leaves Alberta during a six-month period for which you have already received payment, you will have to return the money you received for those months you were not living in the province.

If you currently use the direct deposit service from Canada Revenue Agency for your CCTB, we will deposit your AFETC into the same account.  If you receive your CCTB by cheque, we will send a cheque for your AFETC.

Online Calculator

For information on how much you may be entitled to receive for the Alberta Family Employment Tax Credit and the Canada Child Tax Benefit (CCTB), please see the online calculator on the Canada Revenue Agency website.  Please note:  you will need your personal income tax return and supporting documents to enter specific amounts.

Questions?

If you need more information, please call:

1-800-959-2809 (toll free)