8 ways in which Canada’s New Affordability Plan helps make life cheaper for you

To read more chapters, click below:

Chapter 1: 10 tax benefits that low-income Canadians should be aware of

Chapter 2: Applying for Canada Workers Benefit

Chapter 3: How to apply for GST/ HST credit in 2023?

Chapter 4: All you need to know about Canada Child Benefit

Chapter 6: All that you need to know about Canada Dental Benefit

Chapter 7: Ontario – Income Tax Brackets, Rates, & Provincial Tax Credits

Chapter 8: Quebec – income tax brackets, rates, and provincial tax credits

Chapter 9: Understanding the Tuition Tax Credit in Canada: All You Need to Know

Chapter 10: Understanding Canada Training Credit

Chapter 11: Maximizing Your Tax Return: Uncovering the Benefits of Seniors' Tax Credits in Canada

Chapter 12: Canada Taxes 2022: Federal Tax Brackets, Rates and Credits

Inflation has made it difficult for a lot of people, especially low-income group people to manage their day-to-day expenses. There are so many expenses in your daily life like paying bills, everyday cost of living etc. and each year this expense keeps on increasing. If you are also feeling the pinch of expenses lately, then Canada’s Affordability Plan might make things easier for you.

Here's all that you want to know about it and ways in which this plan can make life cheaper for you.

Important things to know –

• In 2022, the Affordability Plan allocates $12.1 billion in fresh support to enhance affordability for a large number of Canadians.
• Direct cash payments have already been sanctioned by the CRA for numerous programs, benefiting eligible Canadians who have submitted their 2021 income tax returns.
• A few of these credits are currently in the last stages of approval, so stay tuned for finalized dates and updates.

What is Canada’s Affordability Plan?

Canada's Affordability Plan is set to assist individuals with lower incomes through one-time direct payments and the injection of $12.1 billion in additional funding for established benefits.

The proposed plan encompasses eight distinct programs. While the approval process for some of these elements is still pending with the Canada Revenue Agency (CRA), a few have already been implemented.

8 ways in which Canada’s Affordability Plan makes life cheaper for you

1. Enhancing Rental Affordability for Low-Income Individuals

As the demand for affordable housing continues to grow, a tax-free payment of $500 has been introduced to alleviate the rent burden for low-income tenants by the end of 2022. To be eligible for this assistance, renters must have an adjusted net income below $35,000 for families or $20,000 for individuals and must allocate at least 30% of their adjusted net income towards rent. For instance, families with an annual income of $35,000 would need to pay $875 in monthly rent to qualify.

To claim this payment, you will be required to have filed your 2021 income tax return and provide information about your housing situation once the application period becomes available.

2. Doubling of the GST Credit for Six Months

The GST credit is a tax-free payment aimed at helping individuals with lower incomes offset the GST sales tax they incur when making purchases. Under this proposal, an additional $2.5 billion will be allocated for tax relief, potentially providing singles with an extra $234 and couples with two children with the possibility of receiving an additional $467.

For those who have already filed their 2021 tax returns and received the GST credit, the increased payment will be distributed automatically as a one-time lump-sum payment before the year's end.

3. Canada Dental Benefit

Dental care is such an important part of your overall health. But a lot of times it tends to get overlooked. You would be surprised to know that nearly 33% Canadians don’t have access to a dental insurance.

The Canada Dental Benefit is designed to offer direct financial support to families, consisting of tax-free payments totaling $1,300 per child, over the course of the next two years. This initiative is specifically aimed at assisting families in covering dental costs for their children under the age of 12. To be eligible for this benefit, families must have a total annual income of less than $90,000.

If you are a parent or legal guardian of a child, you can submit your application for this benefit starting from December 1, 2022, through the Canada Revenue Agency (CRA) website. Remember to include your dental receipts or estimates when applying to ensure you receive the appropriate support for your child's dental care expenses. This program is intended to alleviate some of the financial burden associated with children's dental health and promote better oral care for young Canadians.

4. Increasing the Canada Workers Benefit

The Canada Workers Benefit (CWB) is a federal government program in Canada aimed at providing financial assistance to low-income individuals and families who are part of the workforce. It was formerly known as the Working Income Tax Benefit (WITB) before being renamed as the Canada Workers Benefit in 2019.

The CWB is designed to supplement the income of low-wage workers and encourage them to join or remain in the workforce. It provides a refundable tax credit, which means that eligible individuals and families can receive the benefit as a tax refund, even if they have little or no income tax payable.

The amount of benefits you receive will fluctuate depending on your income and your province of residence, but all eligible individuals can anticipate a refundable tax credit of up to $1,200 (or up to $2,400 for eligible working couples).

5. Affordable early learning and child care

Parents understand the challenges of finding affordable and reliable daycare options for their children. To address this issue, Canada has introduced a new universal child care benefit with the aim of reducing daycare costs by 50% in 2022. The long-term objective is to establish a nationwide standard where the average daily daycare fee for all regulated child care facilities in Canada is set at $10 by the year 2026.

This initiative translates to substantial savings for families, ranging from $2,610 for families in Manitoba to as much as $6,000 for those residing in British Columbia and Ontario. In the case of Québec, which already boasts an affordable child care system, the focus will shift towards creating an additional 37,000 new child care spaces, further expanding access to quality child care services for families in the province. The goal is to alleviate the financial burden on Canadian parents and ensure that high-quality child care is more accessible and affordable across the country.

6. Climate Action Incentives Payment (CAIP)

Climate Action Incentive Payment (CAIP) is a program in Canada designed to encourage individuals and families in provinces where the federal carbon pricing backstop applied to take action against climate change. The CAIP was part of the federal government's approach to addressing carbon emissions and combating climate change.

Under the CAIP program, eligible individuals and families received direct payments as an incentive to reduce their carbon footprint and make environmentally friendly choices. These payments were intended to help offset the increased costs associated with the carbon pricing system, such as higher fuel and energy costs.

The CAIP program varied in terms of payment amounts and eligibility criteria based on the province or territory in which the individual or family resided. The provinces covered by the federal carbon pricing backstop at the time included Ontario, New Brunswick, Manitoba, and Saskatchewan. The CAIP is a tax-free payment distributed every four months to individuals and families to help mitigate the expenses associated with federal pollution pricing. For instance, in the 2022-23 period, a family of four could expect payments ranging from $745 in Ontario to $1,101 in Saskatchewan.

You don't have to submit a separate application to receive CAIP payments. Your eligibility is assessed by the CRA when you file your income tax return, and if you meet the criteria, the CRA will send you the payments accordingly.

7. 10% increase to Old Age Security

The Old Age Security (OAS) program in Canada is a key component of the country's retirement income system. It provides financial support to eligible Canadian seniors aged 65 and older to help them maintain a basic standard of living in retirement. The OAS program is funded by general tax revenues and is one of the pillars of Canada's retirement income system, along with the Canada Pension Plan (CPP) and personal savings.

As of July 2022, the Canada Revenue Agency (CRA) implemented a 10% increase in the Old Age Security (OAS) pension for seniors aged 75 and above. This adjustment translates to an additional $73 per month or a total of $880 over the course of a year for seniors currently receiving the maximum monthly benefit of $733.

Canadians aged 65 or older are eligible for the OAS pension if their annual income is below $129,757 and they have resided in Canada for a minimum of 10 years. Furthermore, individuals can access their OAS benefits even if they have never been employed or are still actively working.

8. Other benefits

Some of the other benefits that Canadians can avail to make life slightly cheaper are –

1. Canada Child Benefit

The Canada Child Benefit (CCB) is a tax-free financial support program provided by the Government of Canada to assist eligible families with the cost of raising children. The CCB is designed to help low- and middle-income families provide for the well-being of their children by providing them with a monthly financial benefit.

Key features of the Canada Child Benefit (CCB) include –

• Eligibility: To be eligible for the CCB, you must be the primary caregiver of a child who is under the age of 18 and residing with you. You and your child must also be residents of Canada for tax purposes.
• Income-Based: The amount of CCB you receive is determined by your family's net income. The benefit is gradually reduced as your family's income increases. Families with lower incomes receive higher CCB payments.
• Indexation: The CCB is indexed to inflation, meaning that benefit amounts are adjusted annually to keep pace with the rising cost of living.
• Tax-Free: The CCB is a tax-free benefit, which means you do not need to pay income tax on the money you receive through this program.
• Monthly Payments: The CCB is typically paid on a monthly basis, and payments are usually made on the 20th of each month. However, payment dates may vary.
• Additional Benefits: Families with children who have disabilities may be eligible for the Child Disability Benefit (CDB), which provides additional financial support.
• Application: To receive the CCB, you must file your income tax return every year, even if you have no income to report. The Canada Revenue Agency (CRA) uses the information from your tax return to determine your eligibility and calculate the benefit amount.

The Canada Child Benefit is a significant source of financial assistance for Canadian families, helping to cover the costs associated with raising children. The program aims to reduce child poverty, provide financial stability to families, and ensure that children have access to essential resources and opportunities.

2. Canada Pension Plan

The Canada Pension Plan (CPP) is a government-run, earnings-related social insurance program in Canada. It is designed to provide financial assistance to Canadian workers and their families in retirement, in the event of disability, or in case of a contributor's death. The CPP is a key component of Canada's retirement income system and provides a source of income to eligible individuals and their dependents. Here are some key features of the Canada Pension Plan (CPP) –

• Contributions: Most Canadian employees and their employers are required to contribute a portion of their earnings to the CPP. These contributions are made throughout a person's working life and are based on a percentage of their earnings, up to a specified maximum.
• Retirement Pension: The CPP offers a retirement pension to individuals who have contributed to the plan and meet the eligibility criteria. The amount of the pension is based on the contributor's earnings history and the number of years of contributions.
• Disability Benefits: CPP provides disability benefits to individuals who are unable to work due to a severe and prolonged disability. To qualify, contributors must meet specific disability criteria.
• Survivor Benefits: In the event of a contributor's death, the CPP offers survivor benefits to their eligible spouse or common-law partner and dependent children. The amount of the survivor's pension depends on various factors, including the contributor's contributions.
• Death Benefit: A one-time death benefit is paid to the estate or survivor of a deceased CPP contributor to help cover funeral expenses.
• Post-Retirement Benefits: CPP contributors can continue to make contributions even after they start receiving their retirement pension. These post-retirement contributions can enhance their future retirement benefits.
• Combination with Other Benefits: The CPP can be combined with other retirement income sources, such as the Old Age Security (OAS) pension and personal savings, to provide a more comprehensive retirement income.

The CPP is a mandatory program for most Canadian workers, and contributions are automatically deducted from their paychecks. The goal of the program is to help Canadians maintain a certain level of financial security during retirement, in case of disability, or in the event of a contributor's death

3. Guaranteed Income Supplement

The Guaranteed Income Supplement (GIS) is a federal government program in Canada designed to provide additional financial assistance to low-income seniors who are receiving the Old Age Security (OAS) pension. The GIS is intended to help seniors who have limited income and are at risk of living in poverty during their retirement years.

Key features of the Guaranteed Income Supplement (GIS) in Canada include –

• Income-Based: The GIS is income-tested, meaning that the amount of benefit a senior receives depends on their annual income. Seniors with lower incomes receive higher GIS payments.
• OAS Recipient Requirement: To be eligible for GIS, individuals must already be receiving the Old Age Security (OAS) pension. This means that GIS is typically available to seniors aged 65 and older.
• Marital Status Consideration: GIS payments are based on individual income, but the marital status of the recipient can affect the calculation. For example, a senior living with a spouse or common-law partner may receive a different GIS amount than a single senior with the same income.
• Quarterly Payments: GIS payments are made on a quarterly basis (every three months) to eligible recipients. These payments are typically added to the OAS pension payments.
• Application: Seniors who believe they may be eligible for GIS should apply for the benefit. The application process involves providing income and marital status information to the government.