Does your settlement threaten your entitlement to the new Canada Child Benefit?

September 30, 2016

As of July 2016, the Government of Canada has amended the child care benefits available, replacing the existing benefits with the new Canada Child Benefit (CCB).

If you are about to settle your personal injury claim and have children under the age of 18, or may have children in the future, how you invest your settlement dollars today may have a significant impact on your entitlement to the CCB.

Investment income generated from a personal injury settlement, unless placed in a structured settlement, is not only subject to income tax, but may also affect the amount of the CCB you are entitled to receive.

Take the example of a couple with two children under the age of 18, who have combined taxable income of $40,000.00. The table below outlines the impact of income earned from settlement dollars on their entitlement to the CCB and other federal and provincial (Ontario) benefits.

Investment income earned Loss in benefits
$10,000 $3,050
$20,000 $5,190

As you can see, a personal injury settlement that is invested conventionally, and earns income, could significantly reduce your entitlement to the CCB and other government benefits.

On the other hand, structured settlement payments are not only tax free, they are not included in income at all. They will not decrease your entitlement to these benefits.  Your settlement dollars are meant to protect your needs, not reduce your ability to care for your family.

If you have suffered a personal injury, are settling your claim, and may be entitled to the CCB, or other government benefits which are calculated based on income, please contact us so that we can ensure that your personal injury settlement does not reduce your entitlement to these benefits.

The CCB figures provided are calculated using the CRA child and family benefits calculator found here.