Universal Child Care Benefit (UCCB)

What is the Universal Child Care Benefit Program?

The Conservative government implemented the Universal Child Care Benefit (UCCB) program, formerly known as Choice in Child Care Allowance, in 2006. The amount of UCCB is $1,200 per year for children under the age of six years, with monthly payment of $100 made on the 20th of each month, started from July, 2006.

In the meantime, low- and middle-income families which qualify for the universal child care benefit program will no longer receive the young child supplement paid under the Canada Child Tax Benefit Program.

UCCB is taxable in the hands of the lower-income parent.

How to Apply for the Universal Child Care Benefit?

• Families that are already receiving the Canada Child Tax Benefit will automatically receive the UCCB.
• Families that do not receive the Canada Child Tax Benefit can apply for the UCCB by submitting a completed Canada Child Tax Benefit application form to the Canada Revenue Agency.
  
  You can download the Canada Child Tax Benefit (CCTB) application form; by call the Canada Revenue Agency at 1-800-9595-2221for a form to be mailed to you.

Invest UCCB in a Registered Education Savings Plan

Basically, you can spend the Universal Child Care Benefit money whatever way you want. We all know that most the parents will put the money in good use, but I really sympathize with that politician who suspected that some of the parents might use the UCCB money to buy cigarettes and therefore put him on the hot spot for a while.

If you don't have an immediate use for the money then you might want to save it for your child's post-secondary education by investing the money in a Registered Education Savings Plan (RESP). Here are some of the benefits of investing the Universal Child Care Benefit in an RESP account:

1. Income generated in an RESP plan is tax-free.
2. You will receive the Canada Education Savings Grant (CESG) in the amount of 20%, 30% or 40% of your annual contribution (to a lifetime maximum of $7,200).

According to an Heritage Education Funds' illustration, if your monthly RESP contribution is $100, with a 6.0% rate of return, and you invest for six years, your total value of investment in 12 or 18 years would be, after fees are deducted:

• In 18 years: $55,307, based on 6 years of contributing the UCCB into an Heritage RESP plan, from birth to age 6;
• In 12 years: $29,444, based on 6 years of contributing $100 each month starting at age six.

For more information regarding how to invest the Universal Child Care Benefit into an RESP account, please contact the RESP representatives.