New Child Tax Credit

1. What is the New Child Tax Credit?
2. Who will be eligible for the New Child Tax Credit?
3. How will the New Child Tax Credit be calculated?
4. What will taxpayers need to do to apply for the New Child Tax Credit?
5. Where can I get more information about the New Child Tax Credit?
6. Can taxpayers entitled to the Child Tax Credit have their income tax withholdings reduced directly from their paycheque?

Q.1 What is the New Child Tax Credit?

A.1 For 2007 and subsequent years, the 2007 Budget proposes to introduce a non-refundable Child Tax Credit for parents.

Q.2 Who will be eligible for the New Child Tax Credit?

A.2 The 2007 Budget proposes that, where the child resides with both parents throughout the year, either parent would be entitled to claim the Child Tax Credit.

Any unused portion could be transferred to that parent's spouse or common-law partner.

If the child does not reside with both parents throughout the year, the parent who is entitled to claim the amount for an eligible dependant will be able to claim the Child Tax Credit.

Q.3 How will the New Child Tax Credit be calculated?

A.3 The CTC will be calculated by multiplying the lowest personal income tax rate for the year (15.5% in 2007) by $2,000 for each child (indexed after 2007).

Q.4 What will taxpayers need to do to apply for the New Child Tax Credit?

A.4 Taxpayers will claim the New Child Tax Credit when they file their 2007 return.

Q.5 Where can I get more information about the New Child Tax Credit?

A.5 The CRA is committed to providing taxpayers with up-to-date information. Taxpayers are encouraged to check our Web site often - all new forms, policies and guidelines will be posted here as they become available.

In the meantime, please consult the Department of Finance's Budget 2007 documents for details.

Q.6 Can taxpayers entitled to the Child Tax Credit have their income tax withholdings reduced directly from their paycheque?

A.6 Yes. Taxpayers may arrange for a reduction in tax withholdings starting in July. For more information, see How Payroll Works - Filing Form TD1, Personal Tax Credits Return. Taxpayers are encouraged to check our Web site often - all new forms, policies and guidelines will be posted here as they become available.