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Canada Child Benefit (formerly Universal Child Care Benefits)

October 26, 2020

The Office of the Superintendent of Bankruptcy received several requests for clarification regarding the treatment of the Canada Child Benefit (CCB) in an insolvency proceeding following its message to LITs on March 30, 2020.

The CCB was introduced in 2016 to replace the Universal Child Care Benefit. In July 2020, the maximum annual Canada Child Benefit increased.

Under subsection 122.61(4) of the Income Tax Act the CCB:

  • shall not be subject to the operation of any law relating to bankruptcy or insolvency;
  • cannot be assigned, charged, attached or given as security;
  • does not qualify as a refund of tax for the purposes of the Tax Rebate Discounting Act;
  • cannot be retained by way of deduction or set-off under the Financial Administration Act; and
  • is not garnishable moneys for the purposes of the Family Orders and Agreements Enforcement Assistance Act.

As the CCB is not “subject to the operation of any law relating to bankruptcy or insolvency”, it is not subject to the operation of the Bankruptcy and Insolvency Act (BIA), including paragraph 67(1)(c), section 68 and section 71. Therefore, CCB payments are not to be included as “property of a bankrupt divisible among his creditors” or “total income” pursuant to the BIA. As a result, the CCB amount should not be included as income on Form 65 for the debtor or the other family unit member. However, trustees should refer to this amount by way of a footnote on Form 65 in the interest of transparency.

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