Finance Canada
Budget 2000 - Budget Plan, Annex 7- 2
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The Five-Year Tax Reduction Plan – Impact on Typical Taxpayers

Table A7.10
Typical One-Earner Family of Four – Annual Impacts of 1997, 1998 and 1999 Budgets and Proposed Five-Year Tax Reduction Plan by 2004
1997-1999 budget impacts Proposed tax reduction measures by 20041
Total Income Federal tax pre-1997 budget Total relief2 Total relief as a % of federal tax3 Increase personal and spousal amounts Increase 2nd and 3rd brackets Reduce the middle rate Elimi nate surtax Enhance Canada Child Tax Benefit Other indexation Total relief Total relief as a % of federal tax4 Total relief: 1997 to 2004 budgets Total relief: 1997 to 2004 as a % of federal tax Federal tax post-Plan
$ $ $ $/% $ $ $ $ $ $ $ $/% $ $/% $
15,000 -2,946 -1,452 -1,452 -173 0 0 0 -869 -55 -1,097 -1,097 -2,549 -2,549 -5,495
20,000 -2,126 -1,475 -1,475 -274 0 0 0 -869 -55 -1,198 -1,198 -2,673 -2,673 -4,799
25,000 -897 -1,103 -1,103 -274 0 0 0 -1,268 -55 -1,597 -1,597 -2,700 -2,700 -3,597
30,000 461 -498 -498 -274 -37 0 0 -1,268 -172 -1,751 -1,751 -2,249 -2,249 -1,788
35,000 2,245 -535 -23.8 -274 -487 0 0 -594 -172 -1,526 -89.3 -2,061 -91.8 183
40,000 3,941 -573 -14.5 -274 -487 -150 0 -637 -76 -1,623 -48.2 -2,196 -55.7 1,744
50,000 7,119 -651 -9.1 -274 -487 -450 0 -723 0 -1,934 -29.9 -2,585 -36.3 4,534
60,000 10,322 -730 -7.1 -274 -512 -750 0 -809 0 -2,344 -24.4 -3,074 -29.8 7,248
75,000 15,472 -688 -4.4 -288 -852 -1,103 -2 -920 0 -3,165 -21.4 -3,853 -24.9 11,619
100,000 23,302 -906 -3.9 -288 -852 -1,103 -364 0 0 -2,607 -11.6 -3,513 -15.1 19,789
125,000 31,132 -1,123 -3.6 -288 -852 -1,103 -727 0 0 -2,970 -9.9 -4,093 -13.1 27,039
1 In calculating the amount of the tax reduction by 2004, the following assumptions were made: annual inflation factor of 1.8 per cent on average is used over the five-year period; personal amount – $8,000; spousal/equivalent-to-spouse amount – $6,800; middle tax bracket threshold – $35,000; upper tax bracket threshold – $70,000; middle tax rate – 23 per cent; five-per-cent surtax – eliminated; the Canada Child Tax Benefit base benefit increased by $70 in 2000 (including indexation) then indexed; the rate at which benefits decline with increases in income lowered to 2.07 per cent for a family with one child and 4.14 per cent for a family with two or more children; the threshold at which the base benefit starts to be reduced – $35,000; the National Child Benefit supplement increased by $200 per child by July 2001 (including indexation).
2 Negative values indicate a reduction in net tax paid to the federal government.
3 Where individuals and families receive more in federal refundable credits (Canada Child Tax Benefit, goods and services tax credit) than they pay in federal income tax, the federal income tax reductions are indicated in bold and represent the increase in the net benefits they receive from the tax and transfer system. Percentages are not meaningful so the dollar amounts are repeated.
4 Percentages are based on federal tax after the 1997, 1998 and 1999 budgets.

Table A7.11
Typical Two-Earner Family of Four – Annual Impacts of 1997, 1998 and 1999 Budgets and Proposed Five-Year Tax Reduction Plan by 2004
1997-1999 budget impacts Proposed tax reduction measures by 20041
Total Income Federal tax pre-1997 budget Total relief2 Total relief as a % of federal tax3 Increase personal and spousal amounts Increase 2nd and 3rd brackets Reduce the middle rate Eliminate surtax Enhance Canada Child Tax Benefit Other indexation Total relief Total relief as a % of federal tax4 Total relief: 1997 to 2004 budgets Total relief: 1997 to 2004 as a % of fede-ral tax Federal tax post-Plan
$ $ $ $/% $ $ $ $ $ $ $ $/% $ $/% $
15,000 -3,361 -1,210 -1,210 0 0 0 0 -869 -55 -924 -924 -2,134 -2,134 -5,495
20,000 -3,042 -1,460 -1,460 -68 0 0 0 -869 -55 -992 -992 -2,453 -2,453 -5,495
25,000 -2,171 -1,480 -1,480 -287 0 0 0 -850 -55 -1,192 -1,192 -2,671 -2,671 -4,842
30,000 -1,114 -1,252 -1,252 -287 0 0 0 -1,230 -55 -1,572 -1,572 -2,824 -2,824 -3,938
35,000 6 -582 -582 -148 0 0 0 -1,291 -172 -1,611 -1,611 -2,192 -2,192 -2,186
40,000 1,326 -507 -38.2 -295 0 0 0 -777 -172 -1,244 -1,244 -1,751 -1,751 -424
50,000 3,734 -556 -14.9 -295 -37 0 0 -648 0 -980 -30.8 -1,535 -41.1 2,199
60,000 6,431 -620 -9.6 -295 -487 -30 0 -734 0 -1,546 -26.6 -2,165 -33.7 4,265
75,000 10,450 -628 -6.0 -295 -487 -300 0 -863 0 -1,945 -19.8 -2,573 -24.6 7,877
100,000 16,504 -710 -4.3 -295 -863 -750 0 0 0 -1,909 -12.1 -2,619 -15.9 13,885
125,000 23,828 -924 -3.9 -303 -1,339 -1,358 -60 0 0 -3,059 -13.4 -3,984 -16.7 19,845
1 In calculating the amount of the tax reduction by 2004, the following assumptions were made: annual inflation factor of 1.8 per cent on average is used over the five-year period; personal amount – $8,000; spousal/equivalent-to-spouse amount – $6,800; middle tax bracket threshold – $35,000; upper tax bracket threshold – $70,000; middle tax rate – 23 per cent; five-per-cent surtax – eliminated; the Canada Child Tax Benefit base benefit increased by $70 in 2000 (including indexation) then indexed; the rate at which benefits decline with increases in income lowered to 2.07 per cent for a family with one child and 4.14 per cent for a family with two or more children; the threshold at which the base benefit starts to be reduced – $35,000; the National Child Benefit supplement increased by $200 per child by July 2001 (including indexation).
2 Negative values indicate a reduction in net tax paid to the federal government.
3 Where individuals and families receive more in federal refundable credits (Canada Child Tax Benefit, goods and services tax credit) than they pay in federal income tax, the federal income tax reductions are indicated in bold and represent the increase in the net benefits they receive from the tax and transfer system. Percentages are not meaningful so the dollar amounts are repeated.
4 Percentages are based on federal tax after the 1997, 1998 and 1999 budgets.

Table A7.12
Typical Single Individual – Annual Impacts of 1997, 1998, and 1999 Budgets and Proposed Five-Year Tax Reduction Plan by 2004
1997-1999 budget impacts Proposed tax reduction measures by 20041
Total Income Federal tax pre-1997 budget Total relief2 Total relief as a % of federal tax3 Increase personal and spousal amounts Increase 2nd and 3rd brackets Reduce the middle rate Eliminate surtax Enhance Canada Child Tax Benefit Other indexation Total relief Total relief as a % of federal tax4 Total relief: 1997to 2004 budgets Total relief: 1997 to 2004 as a % of fede-ral tax Federal tax post-Plan
$ $ $ % $ $ $ $ $ $ $ $/% $ $/% $
10,000 267 -130 -48.7 -148 0 0 0 0 -6 -154 -154 -284 -284 -17
15,000 1,053 -154 -14.6 -148 0 0 0 0 -27 -175 -19.5 -329 -31.3 724
20,000 1,873 -178 -9.5 -148 0 0 0 0 -27 -175 -10.3 -353 -18.9 1,520
25,000 2,694 -202 -7.5 -148 0 0 0 0 -27 -175 -7.0 -377 -14.0 2,317
30,000 3,756 -227 -6.0 -148 -37 0 0 0 -144 -329 -9.3 -556 -14.8 3,200
35,000 5,140 -264 -5.1 -148 -487 0 0 0 0 -635 -13.0 -899 -17.5 4,241
40,000 6,432 -302 -4.7 -148 -487 -150 0 0 0 -785 -12.8 -1,087 -16.9 5,345
50,000 9,110 -380 -4.2 -148 -487 -450 0 0 0 -1,085 -12.4 -1,465 -16.1 7,645
60,000 11,813 -459 -3.9 -148 -512 -750 0 0 0 -1,409 -12.4 -1,868 -15.8 9,945
75,000 16,459 -595 -3.6 -155 -852 -1,103 -60 0 0 -2,169 -13.7 -2,765 -16.8 13,695
100,000 24,289 -813 -3.3 -155 -852 -1,103 -422 0 0 -2,532 -10.8 -3,345 -13.8 20,945
125,000 32,119 -1,030 -3.2 -155 -852 -1,103 -785 0 0 -2,894 -9.3 -3,925 -12.2 28,195
1 In calculating the amount of the tax reduction by 2004, the following assumptions were made: annual inflation factor of 1.8 per cent on average is used over the five-year period; personal amount – $8,000; spousal/equivalent-to-spouse amount – $6,800; middle tax bracket threshold – $35,000; upper tax bracket threshold – $70,000; middle tax rate – 23 per cent; five-per-cent surtax – eliminated.
2 Negative values indicate a reduction in net tax paid to the federal government.
3 Where individuals and families receive more in federal refundable credits (goods and services tax credit) than they pay in federal income tax, the federal income tax reductions are indicated in bold and represent the increase in the net benefits they receive from the tax and transfer system. Percentages are not meaningful so the dollar amounts are repeated.
4 Percentages are based on federal tax after the 1997, 1998 and 1999 budgets.

Table A7.13
Typical Single Parent With One Child – Annual Impacts of 1997, 1998, and 1999 Budgets and Proposed Five-Year Tax Reduction Plan by 2004
1997-1999 budget impacts Proposed tax reduction measures by 20041
Total Income Federal tax pre-1997 budget Total relief2 Total relief as a % of federal tax3 Increase personal and spousal amounts Increase 2nd and 3rd brackets Reduce the middle rate Eliminate surtax Enhance Canada Child Tax Benefit Other indexation Total relief Total relief as a % of federal tax4 Total relief: 1997 to 2004 budgets Total relief:1997 to 2004 as a % of fede-ral tax Federal tax post-Plan
$ $ $ $/% $ $ $ $ $ $ $ $/% $ $/% $
10,000 -2,168 -523 -523 0 0 0 0 -444 -45 -489 -489 -1,012 -1,012 -3,180
15,000 -2,023 -668 -668 0 0 0 0 -444 -45 -489 -489 -1,157 -1,157 -3,180
20,000 -1,383 -703 -703 -274 0 0 0 -425 -45 -745 -745 -1,448 -1,448 -2,831
25,000 -660 -723 -723 -274 0 0 0 -434 -45 -753 -753 -1,476 -1,476 -2,136
30,000 658 -690 -690 -274 0 0 0 -663 -49 -986 -986 -1,677 -1,677 -1,018
35,000 1,985 -412 -20.8 -274 -127 0 0 -590 -162 -1,153 -73.4 -1,566 -78.9 419
40,000 3,650 -450 -12.3 -274 -487 -30 0 -292 -161 -1,244 -38.9 -1,694 -46.4 1,957
50,000 6,578 -528 -8.0 -274 -487 -330 0 -335 0 -1,426 -23.6 -1,954 -29.7 4,625
60,000 9,506 -606 -6.4 -274 -487 -630 0 -378 0 -1,769 -19.9 -2,375 -25.0 7,132
75,000 14,219 -653 -4.6 -288 -849 -1,050 0 -427 0 -2,613 -19.3 -3,267 -23.0 10,952
100,000 22,049 -871 -3.9 -288 -852 -1,103 -306 0 0 -2,549 -12.0 -3,420 -15.5 18,629
125,000 29,879 -1,088 -3.6 -288 -852 -1,103 -669 0 0 -2,912 -10.1 -4,000 -13.4 25,879
1 In calculating the amount of the tax reduction by 2004, the following assumptions were made: annual inflation factor of 1.8 per cent on average is used over the five-year period; personal amount – $8,000; spousal/equivalent-to-spouse amount – $6,800; middle tax bracket threshold – $35,000; upper tax bracket threshold – $70,000; middle tax rate – 23 per cent; five-per-cent surtax – eliminated; the Canada Child Tax Benefit base benefit increased by $70 in 2000 (including indexation) then indexed; the rate at which benefits decline with increases in income lowered to 2.07 per cent for a family with one child and 4.14 per cent for a family with two or more children; the threshold at which the base benefit starts to be reduced – $35,000; the National Child Benefit supplement increased by $200 per child by July 2001 (including indexation).
2 Negative values indicate a reduction in net tax paid to the federal government.
3 Where individuals and families receive more in federal refundable credits (Canada Child Tax Benefit, goods and services tax credit) than they pay in federal income tax, the federal income tax reductions are indicated in bold and represent the increase in the net benefits they receive from the tax and transfer system. Percentages are not meaningful so the dollar amounts are repeated.
4 Percentages are based on federal tax after the 1997, 1998 and 1999 budgets.

Table A7.14
Typical Single Elderly – Annual Impacts of 1997, 1998, and 1999 Budgets and Proposed Five Year Tax Reduction Plan by 2004
1997-1999 budget impacts Proposed tax reduction measures by 20041
Total Income Federal tax pre-1997 budget Total relief2 Total relief as a % of federal tax3 Increase personal and spousal amounts Increase 2nd and 3rd brackets Reduce the middle rate Eliminate surtax Enhance Canada Child Tax Benefit Other indexation Total relief Total relief as a % of federal tax3 Total relief: 1997 to 2004 budgets Total relief: 1997 to 2004 as a % of federal tax Federal tax post-Plan
$ $ $ % $ $ $ $ $ $ $ $/% $ % $
15,000 407 -135 -33.3 -148 0 0 0 0 -81 -228 -84.0 -364 -89.4 43
20,000 1,283 -161 -12.5 -148 0 0 0 0 -81 -228 -20.4 -389 -30.4 893
25,000 2,158 -186 -8.6 -148 0 0 0 0 -81 -228 -11.6 -415 -19.2 1,743
30,000 3,383 -216 -6.4 -148 -37 0 0 0 -257 -442 -13.9 -658 -19.4 2,725
35,000 4,953 -259 -5.2 -148 -487 0 0 0 -113 -747 -15.9 -1,007 -20.3 3,947
40,000 6,424 -302 -4.7 -148 -487 -150 0 0 -113 -897 -14.7 -1,199 -18.7 5,224
50,000 9,341 -387 -4.1 -148 -487 -450 0 0 -91 -1,175 -13.1 -1,562 -16.7 7,779
60,000 12,765 -457 -3.6 -148 -487 -719 0 0 -554 -1,908 -15.5 -2,365 -18.5 10,400
75,000 18,947 -573 -3.0 -155 -852 -1,103 -24 0 -510 -2,644 -14.4 -3,217 -17.0 15,730
100,000 28,265 -772 -2.7 -155 -852 -1,103 -355 0 0 -2,464 -9.0 -3,236 -11.5 25,029
125,000 36,095 -990 -2.7 -155 -852 -1,103 -717 0 0 -2,827 -8.1 -3,816 -10.6 32,279
1 In calculating the amount of the tax reduction by 2004, the following assumptions were made: annual inflation factor of 1.8 per cent on average is used over the five-year period; personal amount – $8,000; spousal/equivalent-to-spouse amount – $6,800; middle tax bracket threshold – $35,000; upper tax bracket threshold – $70,000; middle tax rate – 23 per cent; five-per-cent surtax – eliminated.
2 Negative values indicate a reduction in net tax paid to the federal government.
3 Percentages are based on federal tax after the 1997, 1998 and 1999 budgets.

Table A7.15
Typical Elderly Couple – Annual Impacts of 1997, 1998, and 1999 Budgets and Proposed Five-Year Tax Reduction Plan by 2004
1997-1999 budget impacts Proposed tax reduction measures by 20041
Total Income Federal tax pre-1997 budget Total relief2 Total relief as a % of federal tax3 Increase personal and spousal amounts Increase 2nd and 3rd brackets Reduce the middle rate Eliminate surtax Enhance Canada Child Tax Benefit Other indexation Total relief Total relief as a % of federal tax4 Total relief: 1997 to 2004 budgets Total relief: 1997 to 2004 as a % of federal tax Federal tax post-Plan
$ $ $ $/% $ $ $ $ $ $ $ $/% $ $/% $
15,000 -398 0 0 0 0 0 0 0 -36 -36 -36 -36 -36 -434
20,000 -373 -25 -25 0 0 0 0 0 -36 -36 -36 -61 -61 -434
25,000 524 -235 -44.8 -287 0 0 0 0 -164 -451 -451 -686 -686 -161
30,000 1,498 -290 -19.4 -287 0 0 0 0 -259 -546 -45.2 -837 -55.9 661
35,000 2,663 -319 -12.0 -287 0 0 0 0 -263 -550 -23.5 -868 -32.6 1,795
40,000 4,131 -361 -8.7 -287 -448 0 0 0 -166 -901 -23.9 -1,262 -30.6 2,869
50,000 7,072 -447 -6.3 -287 -487 -287 0 0 -166 -1,227 -18.5 -1,674 -23.7 5,398
60,000 10,018 -527 -5.3 -287 -487 -581 0 0 -209 -1,564 -16.5 -2,091 -20.9 7,927
75,000 15,957 -646 -4.0 -301 -728 -963 0 0 -607 -2,599 -17.0 -3,245 -20.3 12,712
100,000 25,835 -837 -3.2 -301 -852 -1,103 -229 0 -53 -2,538 -10.2 -3,375 -13.1 22,460
125,000 33,665 -1,055 -3.2 -301 -852 -1,103 -591 0 -53 -2,901 -8.9 -3,955 -11.7 29,710
1 In calculating the amount of the tax reduction by 2004, the following assumptions were made: annual inflation factor of 1.8 per cent on average is used over the five-year period; personal amount – $8,000; spousal/equivalent-to-spouse amount – $6,800; middle tax bracket threshold – $35,000; upper tax bracket threshold – $70,000; middle tax rate – 23 per cent; five-per-cent surtax – eliminated.
2 Negative values indicate a reduction in net tax paid to the federal government.
3 Where individuals receive more in federal refundable credits (goods and services tax credit) than they pay in federal income tax, the federal income tax reductions are indicated in bold and represent the increase in the net benefits they receive from the tax and transfer system. Percentages are not meaningful so the dollar amounts are repeated.
4 Percentages are based on federal tax after the 1997, 1998 and 1999 budgets.

Personal Income Tax

Reinstating Full Indexation

The personal income tax system has been only partially indexed to changes in the consumer price index (CPI) since 1986. Under the current rules, a number of parameters of the personal income tax system are adjusted each year for the percentage change in the CPI exceeding 3 per cent for the 12-month period ending on September 30 of the preceding year. As inflation has been below 3 per cent in recent years, the personal income tax system has effectively not been indexed.

The budget proposes to reinstate full indexation effective January 1, 2000, for all amounts that are presently partially indexed.

The indexation factor for a given taxation year beginning January 1 is the percentage change in the average CPI for the 12-month period ending on September 30 of the previous year relative to the average CPI for the 12-month period ending on September 30 of the year earlier. As an example, the indexation factor effective for January 2000, 1.4 per cent, is the percentage change in the average level of the CPI from October 1, 1998 to September 30, 1999 relative to the average level of the CPI from October 1, 1997 to September 30, 1998.

There are two reasons for the use of this mechanism: first, the indexation formula needs to be one which provides stability in the indexation factor to be used over time; and, second, this indexation factor should be as recent as possible. The first reason leads to the use of averages for the past two years; the second reason leads to the use of this information as of September 30 of last year.

Indexation as of January 1, 2000, means that amounts used for the purpose of calculating tax to be withheld for the 2000 taxation year by employers would be adjusted beginning July 2000. In most cases, this would mean that the annual increase in these amounts would be doubled for the purpose of calculating withholdings for the latter half of the year. Similarly, for the goods and services tax credit and the Canada Child Tax Benefit, the increase in payments for July to December 2000 would be doubled to capture the increase planned for January to June 2000.

These higher levels of benefits from July to December 2000 will be maintained until future indexation raises these benefits further.

Table A7.16 lists the main parameters of the tax system that are currently partially indexed and that are proposed to be fully indexed. As an example, the thresholds for the three tax rates (17 per cent, 26 per cent and 29 per cent) would rise by 1.4 per cent for the taxation year 2000 to $7,231, $30,004 and $60,009 respectively. The table shows both the values as they would have been on January 1, 2000 in the absence of indexation and the increased values resulting from full indexing. Table A7.17 lists other provisions that will be affected by the change to full indexation.

Table A7.16
Parameters to Be Fully Indexed for 2000 Beginning January 1, 2000
Before
2000 budget		 After 2000 budget,
as of Jan. 1, 2000
(dollars)
Basic personal amount 7,131 7,231
Spousal/equivalent-to-spouse amount 6,055 6,140
Net income threshold 606 614
Taxable income threshold at which the 26-per-cent rate begins to apply 29,590 30,004
Taxable income threshold at which the29-per-cent rate begins to apply 59,180 60,009
Infirm dependant amount 2,353 2,386
Net income threshold 4,778 4,845
Caregiver amount 2,353 2,386
Net income threshold 11,500 11,661
Age amount 3,482 3,531
Net income threshold 25,921 26,284
Disability amount 4,233 4,293
Medical expense tax credit (METC) 3 per cent of net income ceiling 1,614 1,637
Refundable METC supplement 500 507
Minimum earnings threshold 2,500 2,535
Family net income threshold 17,419 17,664
Old Age Security repayment threshold 53,215 53,960
Goods and services tax credit
Adult maximum 199 202
Child maximum 105 106
Single supplement 105 106
Phase-in threshold for the single supplement 6,456 6,546
Family net income threshold 25,921 26,284
Canada Child Tax Benefit See Tables A7.18 and A7.19
See Table A7.17 for a list of provisions that are indirectly indexed as they are based on the amounts listed above.

Table A7.17
Other Provisions That Will be Affected by Indexation
  • Definition of "eligible child" for the purpose of the child care expense deduction.
  • Definition of "preferred beneficiary" for the purpose of the preferred beneficiary election.
  • The income threshold of a dependant for determining medical expense tax credit claims in respect of a dependant other than a spouse.
  • The formula for determining the transfer to a spouse of unused personal amounts (e.g., age, pension and disability amounts).
  • Establishing financial dependency for the purpose of determining the taxation of amounts in a registered retirement savings plan on the death of an annuitant.
  • The calculation of the goods and services tax credit in the case of bankruptcy.
  • The criteria for deeming resident a dependent child of a deemed resident.

Reducing the Tax Burden for Middle-Income Canadians

Reducing the Middle Tax Rate

The budget proposes to reduce the middle tax rate from 26 per cent to 24 per cent effective July 1, 2000. Tax forms for the year 2000 would show a rate of 25 per cent.

The middle tax rate will drop further to 23 per cent within the next five years.

5-per-cent Surtax

Under the current rules, a 5-per-cent surtax applies to basic federal tax in excess of $12,500 (at an income level of about $65,000). The budget proposes to raise this amount to $18,500 (at an income level of about $85,000) effective July 1, 2000. Raising the surtax threshold to $18,500 of basic federal tax as of July 1, 2000, means that, for the 2000 taxation year, the 5-per-cent surtax would apply on basic federal tax in excess of $15,500.

The budget also proposes to reduce the surtax rate from 5 per cent to 4 per cent effective January 1, 2001.

The 5-per-cent surtax will be eliminated within the next five years.

Canada Child Tax Benefit

The Canada Child Tax Benefit (CCTB) is a key element of federal assistance to families. It is an income-tested benefit that has two components: the CCTB base benefit for low- and middle-income families and the National Child Benefit (NCB) supplement for low-income families.

The budget proposes a five-year plan to increase CCTB benefits by $2.5 billion annually by 2004, divided almost equally between low- and middle-income families. Together with increases announced in previous budgets, annual CCTB benefits will exceed $9 billion in 2004, of which low-income families will receive about $6 billion and middle-income families about $3 billion.

The Government’s goal is to increase the maximum CCTB benefit for the first child to $2,400 by 2004 from $1,975, the currently scheduled amount for July 2000. The five-year plan will achieve this objective through a number of actions. First, the CCTB will be fully indexed. Second, both the base benefit and the NCB supplement will be increased beyond indexation. Third, the income thresholds at which the base benefit begins to be reduced and the NCB supplement is fully phased out will be increased. Fourth, the reduction rate for the base benefit will be lowered. Finally, the Children’s Special Allowance, which provides benefits parallel to the CCTB to provincial agencies for children in care, will be increased.

The following changes, summarized in Tables A7.18 and A7.19, will be legislated for 2000 and 2001.

Chart A7.1 shows CCTB benefits, income thresholds at which benefits are reduced, and benefit reduction rates for a two-child family in July 2001.

Chart A7.1 - CCTB Benefits for Two-Child Family in July 2001 (One child under the age of seven) - bpan7-1e.gif (6120 bytes)

These changes will bring the maximum CCTB benefit for the first child to $2,056 in July 2000 and $2,265 in July 2001, well on the way to the five-year goal of $2,400. For the second child, the goal is to raise the maximum CCTB benefit to $2,200 in 2004. There are also additional benefits for children under the age of seven for whom no child care expense is claimed and for larger families. Maximum benefits for a two-child family with one child under the age of seven will reach $4,550 in July 2001 and $4,832 in July 2004.

Benefits for a typical two-child family with an income of $60,000 will increase from their pre-budget 2000 level of $733 to $967 in July 2001 and $1,541 in July 2004.

Table A7.18
Changes to the Components of the Canada Child Tax Benefit
Maximum benefit
(as of July 1999)		 Indexed amount 20001
(starting January 1)		 Maximum benefit 20002
(starting July 1)		 Maximum benefit 20015
(starting July 1)
(dollars)
Base Benefit
Basic amount 1,020 1,034 1,0903 1,110
Additional benefit for third child 75 76 76 77
Additional benefit for children under 7 years 213 216 216 220
NCB Supplement
First child 785 796 9664 1,1556
Second child 585 593 7634 9556
Third child 510 517 6874 8806
Total Benefit
First child 1,805 1,830 2,056 2,265
Second child 1,605 1,627 1,853 2,065
Third child 1,605 1,627 1,853 2,067
1 1.4 per cent increase based on July 1999 benefit level.
2 Excludes indexation benefits for the January to June period, to be paid in the second half of the year. These benefits are the differences between the first and second columns of the table.
3 Increase of $70 per child, including indexation.
4 Includes the $170 per child provided in the 1999 budget. The benefit reduction rates for family income above the threshold will be 11.1 per cent for one-child families, 19.9 per cent for two-child families, and 27.8 per cent for families with three or more children.
5 For 2001, it assumes an indexation factor of 1.8 per cent.
6 Increase of $200 per child, including indexation.

Table A7.19
Changes to the Income Thresholds of the Canada Child Tax Benefit
As of July 1999 Starting July 1, 2000 Starting July 1, 2001
(dollars)
Income Thresholds
Base benefit 25,921 30,004 30,544
NCB Supplement
Start phase-out 20,921 21,214 21,596
End phase-out 27,750 30,004 30,544

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