Thank you, Mr. Chair.
My name is Jason Heath. I am a certified financial planner and the managing director of Objective Financial Partners in Markham, Ontario. I am a fee-only financial planner, meaning that I provide financial advice to clients, but unlike the typical financial planner, I do not sell investments or insurance. I am also a personal finance columnist for the Financial Post, which is the business section of the National Post, as well as MoneySense, which is Canada’s personal finance magazine.
Most importantly though, I am daddy, or dada, or much to my dismay these days, dad—which makes me feel very old—to five-year-old Joel, six-year-old Jayden, and six-year-old Mila.
The Criminal Code of Canada dictates that leaving a child under the age of 10 alone is considered abandonment, suggesting that older children are able to take care of themselves. The Canadian Red Cross babysitting course is for children age 11 and up. It therefore seems odd that a parent would be allowed up to a $5,000 annual tax deduction and a $2,500 annual tax refund for child care for a 16-year-old. A portion of private school fees for a child in grade 11 may qualify for this deduction, for example. The proposed limits for the child care expense deduction fall well short of the actual cost of child care in many Canadian cities, particularly for younger children. It would not be unreasonable to pay over $20,000 annually for infant child care in Toronto, for example.
Accordingly, I would be inclined to consider a modification to the child care expense deduction to allow up to $12,000 for children under the age of six and $6,000 for children age six to twelve. A child care expense deduction for teenage children is unnecessary in my opinion, except in the case of a disabled child. On that note, I think that $11,000 is not nearly enough of an eligible deduction for a child that qualifies for the disability tax credit. I suggest a $24,000 deduction limit for disabled children as it would not be uncommon for a family to spend this much, or more, on a live-in nanny, for example. It is also twice my suggested limit for the child care expense deduction for children under the age of six.
The cancellation of the Canada child tax benefit is a double-edged sword. It seems better to limit the administration of tax benefits for children to one single benefit instead of paying two benefits, with the resulting administrative government costs to manage both programs. On the other hand, it seems unfortunate, in my opinion, to cancel a means-tested benefit like the Canada child tax benefit in favour of a non-means-tested benefit like the universal child care benefit.
The result of the changes to these benefits may be a reallocation of tax dollars out of the hands of people who truly need and count on the money and into the hands of those who may not. The cancellation of the Canada child tax benefit also has a negative impact on single parents that is not offset in this bill by the family tax cut credit. I would be inclined to instead consider an increase in the Canada child tax benefit to provide more benefits for low-income and middle-class Canadians while reducing or negating benefits for those whose income exceeds a certain threshold. This could be done by instead cancelling the universal child care benefit and using the resulting savings to enhance proportionately the Canada child tax benefits for those whose income is below a certain threshold.
The Income Tax Act distinguishes between families that have more than one child in the claiming of tax credits like the amount for children, the children’s arts amount, the children’s fitness amount, and deductions like the aforementioned child care expense deduction. It seems odd that the family tax cut credit would not do the same. I would prefer to see it be based on the number of children under the age of 18 and suggest a limit of $25,000 of split income per eligible child.
In addition, I would prefer to see this credit even further benefit a young family contemplating having a stay-at-home parent for some period of time. This could allow a two-income family to temporarily become a one-income family and have a parent as a caregiver for a young child instead of both parents having to go to work and hiring a third party. This could be done by allowing the splitting of income for parents with children under the age of six without subjecting them to the $2,000 tax credit limit. I propose, instead, a $10,000 tax credit limit.
Finally, single parents do not benefit from the family tax cut credit. I would like to see single parents be able to claim the family tax cut credit by notionally splitting income with their youngest child under the age of 18.
Thank you, Mr. Chair.