The Canada Child Benefit Increase and Audit Risk

Geoff Currier and Evelyn Jacks

Families receiving the Canada Child Benefit (CCB) may have noticed an increase in their recent payments. Indexing takes place each July 1. Beginning in July of 2026, the CCB will provide families up to $8,157 per child under the age of 6 and up to $6,883 per child aged 6 to 17. There is audit risk that comes with that, however.

Retroactive Eligibility. The amount of this year’s CCB increase and the total amount paid is based on the previous year’s income. The maximum benefit increase will be $160 per child under 6 and up to $135 per child aged 6 to 17.

Not Much of a Change: While the government is touting these increases, they are unlikely to make much of a difference to most families. The maximum increase, based on the $160 amount, works out to $3.33 per week for that child. That’s less than 48 cents per day.

The CCB is Tax Free. The good news for families who receive the benefit is that this is a tax-free redistribution of income from high earners to low earners. The benefit does not have to be reported on a personal income tax form. 

The Cost of the CCB: The program is an expensive one. The government’s own figures tell us that the CCB distributes some $30 billion annually. Some 3.6 million families receive the benefit, covering about 6 million Canadian children. 

Audit Risk: CRA may audit your client’s returns if there is a suspicion that someone may be making a false claim for this benefit. (CRA calls them benefit validation reviews). You can help them avoid an audit or a review by ensuring that all the information they provide is correct. A review doesn’t necessarily mean a reduction in benefits. It might even mean an increase.

CRA sends out roughly 350,000 verification notices or questionnaires to ensure that recipients have a legitimate claim to the benefit.  An individual or family might be denied or have the benefit altered based on changes to any of the following:

• Changes in marital status or address.
• Shared custody arrangements requiring verification of primary care.
• Random sampling or validation of non-resident status

Change Management Pays Off. Your clients must advise CRA if their status has changed with regards to shared custody arrangements, which are generally considered to be when two caregivers share custody equally or in  60-40 types of arrangements. The claimant must live with the child and provide daily care.

Resident of Canada or Not? CRA will check to see if someone claiming CCB is a Canadian resident for tax purposes. The agency is going after non residents who may be making false claims. Those individuals may anticipate a possible audit. Remind your clients that proof of residency and primary care are needed to keep receiving the benefit.

Documentation Matters. If your client is the subject of a review, they will receive a notice asking for documents like childcare receipts, doctors notes, school records etc. Your client will need to respond within the given deadline or potentially lose the CCB benefit.

A Tax Planning Tip: If you have clients who do not need the cash to provide for the child or children. You may want to encourage them to place the money in a RESP to help pay for their future education.

A Tax Trap for Automatic Filing.  As CRA gets ready to rollout automatic filing to millions remember that what will be audited in the future includes matters that routinely can change: income levels, primary caregiving status, marital status or residency. Tax practitioners may need to help when CRA asks for overpaid dollars back in these cases.

Make Sure Your Clients File a T1: To receive the CCB, your clients must file their income tax returns each year. They don’t have to apply for the benefit but it cannot be over-stressed just how important it is for all Canadians to file their T1 forms. You can remind them that failure to file will deprive them of the benefits and deductions which will help their families in the years to come. 

You may not have clients who are at the lower end of the income spectrum but an effort to reach out to those people will pay off in the long run as their children become educated and move up the economic ladder. They will become your valued clients in the future. 

And remember, a high income earning client may have lost or terminated a job or business, resulting in qualifying income levels. In short, high income earners need to know about income tested benefits, too.

Be sure to tune into Real Tax News with Evelyn Jacks and Friends.