Great news! New data from Statistics Canada’s Canadian Income Survey, released on February 26, shows that poverty levels are on the decline thanks (at least, in part) to federal benefit programs like the Canada Child Benefit (CCB) and the Guaranteed Income Supplement (GIS). Unfortunately, there is a fly in the ointment, but tax and financial professionals can help.
Federal benefits and the challenges for families. The latest Canadian Income Survey reports that higher wages and salaries among non-senior families, and an increase in Canada Child Benefits starting in 2017 (the first full year it was distributed) increased the median after- tax income for all family structures. It rose 3.3% to $59,800 in 2017, following two years without growth.
The numbers for specific family structures mirror this trend. Lone parent families specifically received an extra $1,300 in 2017 (compared to 2016). Meanwhile, couple families saw their median child benefits increase by $1,200.
But there’s a hitch. As we reported in November, the take-up rate for some of the available benefits is low. Annual benefit reviews conducted since 2015 reveal that the CRA specifically owes $1.837 billion to taxpayers. This means there is still a big gap in the distribution of money that could contribute to family finances and help Canadian families get their incomes above the poverty line.
One significant barrier causing this gap: it’s challenging for families to comply with the complex tax filing and audit requirements. This is where tax and financial come in by:
Federal benefits and the challenges for seniors. Income levels for seniors aged 65 and older have been rising steadily since 2012. The median after-tax income of senior families totaled $61,200 in 2017, up $2,500 from 2016. Statistics Canada attributes this positive change to increases in income from wages and salaries and private retirement income.
Unfortunately, it’s not all good news for low income seniors who have not saved enough. Many lack access to an important source of income offered through the recently enhanced GIS. As previously reported, over one in ten seniors who are eligible for the Guaranteed Income Supplement (GIS) failed to receive it in 2016-17.
There’s a role for tax and financial advisors interested in helping close the gap for seniors, too:
Thinking ahead, it may be time to question whether the tax filing system is the right distribution vehicle for these income-tested programs, especially for those with little or no income or access to tax filing opportunities. With an election coming up this year, it’s a question professionals and taxpayers alike may wish to discuss with their local candidates.
Additional educational resources:
For beginners: help low income people in your community: learn to prepare personal tax returns and manage the audit-relationship with CRA as a certified professional. Start with Income Tax Filing Fundamentals certificate course.
For tax and bookkeeping practitioners: become a designated specialist by completing the DFA-Tax Services Specialist™ program.
For financial advisors: tackling complex societal issues requires a multi-faceted approach, where financial and legal professionals come out of their silos to collaborate with their honed expertise. Become the professional that brings them together, and truly make a difference as a Real Wealth Manager™. The Elements of Real Wealth Management certificate course is this week’s KBR special offer. Check your newsletter for the exclusive code and save $200 on tuition.
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