By completing your income tax return for 2015, you will be able to understand what the modulation of childcare costs and the increase in the PUGE actually entail.
Several tax experts and columnists had already sounded the alarm: the adjustment of childcare costs according to income, the improvement of the universal childcare benefit (PUGE) combined with the abolition of the credit for federal child tax were going to cause a lot of headaches (and wallets) to Quebec families.
A Fake Gift
In October 2014, the federal government announced some changes and, among these, we remember that the Universal Child Care Benefit (UCCB) had been increased by $60 for children under preschool age, and extended for minor children. At the same time, the federal tax credit for children under 18 was eliminated.
The catch is that the UCCB is taxable. If the taxpayers come out a little winners, they are not so much: this little room for maneuver will not really manage to lessen the shock of the modulated childcare costs, at leastprovincial.
Since April 2015, Quebec has required an additional contribution from certain parents. Basically, the daycare rate set at $7.30 per day remains the same for families with a total income of less than $50,000. This income is indexed each year, according to inflation, starting in 2016.
But from an income of $50,001, the rate increases to $8.00 per day, while for incomes above $75,000, the daily rate gradually increases to $20 per day if you have an income of about $155,000. In short, the higher the income, the more parents should expect to pay a hefty bill…
It's when they file their income declaration that the we althiest families have to pay the bulk of the bill, since the basic rate, set at 7, $30 is always payable directly to the subsidized daycare service. The adjustment based on family income is therefore paid directly from the income tax return and source deductions from wages. In short, Quebecers now have two bills to pay: the first to the CPE, the second to the provincial government, after calculating the taxes to be paid, i.e. before April 30, 2016.
At the time of passing its law, the Ministry of Finance gave the following example: “a couple with equal work income totaling $100,000 will have a daycare rate of $11.41 per day. A daily amount of $7.30 will be paid to the daycare, while the additional contribution of $4.$11 will be paid when filing the tax return. »
Josée Jeffrey, tax expert, explained to Daniel Germain, columnist at lesaffaires.com, that for a family with a net income of $110,000, childcare costs additional would be $1,082.90. For a net income of $150,000, the bill goes up to $2,174.90. It should also be remembered that these fees only cover part of the year since the modulated childcare fees have only been active since April. In short, for the 2016 tax year, it will be necessary to add approximately 30% to this already rather large note.
Small consolation: these fees are federally deductible. It will still hurt, but a little less…
It is also important to add that this calculation will change a little in 2016, since since January 2016, the basic contribution has increased to $7.55 per day, per child. It is from an income of $50,545 that the rate will increase, to $8.25 per day. Thus, the daily rate will gradually increase to $20.70 per day, for an income of about $158,820.
The Ministry of Revenue has just made an update of all these calculation tools (for the 2015 and 2016 tax year), which you can consult on line. This will give you an idea of the bill you can expect to receive.
The calculator makes it possible to estimate the aid to which parentsmay be en titled based on certain assumptions. It thus reflects the most common situations. The calculator, which is easy to use, also helps parents compare the financial advantages between a subsidized childcare space and a private childcare space.
You might be very surprised at the results and even want to transfer your children to private daycare because the savings are significant in certain situations! Of course, in private, your weekly bill will be higher on the spot, but you recover significant sums. So do the test with the calculator to get a more precise idea.