Changes to the tax treatment of the $100-a-month Universal Child Care Benefit to help single-parent families "will create new inequities," says the Caledon Institute of Social Policy, an Ottawa-based think-tank known for its work on social security.
Critics of the benefit have long complained that it is subject to income tax, penalizing single-parent families in particular. Last week's budget acknowledged that, until now, single-parents could end up paying more tax on their $100 per child benefit than a two-parent family with the same income.
The budget set out to address the problem by allowing single-parent families to claim the payments as income for their dependents. The new measure means most single-parent families will likely avoid paying any tax on their $100 because the money will be claimed as their children's income.
But the change means two-parent families will end up paying more taxes on their benefit than single-parent families of the same income.
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