Turn This CRA Benefit Into $4,050.76 in 2024

Tax season is upon us. And that means parents are likely keeping an eye on what this might mean for their Child Care Benefit (CCB) payments. This benefit has been a huge win, with the amount actually increasing significantly over the last few years.

Today, let’s look at what Canadians might expect to bring in from CCB. But even better, let’s consider how they can use that cash to create even more income for their families.

The CCB explained

The CCB is a tax-free monthly payment for families that is meant to help with the cost of raising children under 18. After being introduced back in 2016, each here it has increased to help these families. What’s more, there have been more increases during these times of economic uncertainty.

The biggest advantage of course is that these are tax-free payments. The calculations are based on your family’s household income. From there, you will then receive a monthly payment around the 20th of the month.

Overall, however, the maximum Canadians can receive is $619.75 per month for children under six. It then rises to $522.91 per month for children between six and 17. And if you have several children, that can certainly add up.

Get even more

Now, if you have that cash available, you can then use it to put directly into another account. Let’s say you have two children, one under six and one over. Then, we’ll also assume that you can max out that amount. You would then have total cash of $13,712 available to you.

But don’t start investing in random stocks in your Tax-Free Savings Account (TFSA) just yet! To create even more cash for both investment and your child, put the money into a Registered Education Savings Plan (RESP). If you’re able, put in $2,500 towards each child. That would add on the maximum received from the Canada Education Savings Grant (CESG), putting another $500 into that account — without even investing!

You would have a total of $14,712 for your kids in government money. And now is the chance to do something with it.

Create passive income

Now, if this cash if all for your children, whether it’s a Tax-Free Savings Account or a Registered Education Savings Plan, you can start investing. And given that you have some time potentially before they go to university, then it would be best to consider long-term holds in investments that offer dividends.

A great option is an exchange-traded fund (ETF) — one that provides a dividend and gives you access to a strong, global portfolio. That way, you can set it and forget it, adding to it on a monthly basis if you can.

One to consider is Horizons Active Global Dividend ETF (TSX:HAZ). This ETF provides exposure to dividend income and long-term capital growth. This occurs from investing in global dividend-paying equities. What’s more, it has an active management strategy to select high-quality companies from around the world.

Bottom line

So, if you were to take that $14,712 and put it into HAZ, here is what you could achieve in just one year.

As you can see, you could create returns of $3,837.72, with dividends of $213.04. That’s total passive income of $4,050.76 in 2024 alone! So, do it for the kids.