A cash gift for families with kids

After almost a year of singing the economic blues, Canadian families are about to get a little financial relief. Starting this month, parents will get as much as $400 in additional benefits each year-tax-free-thanks to recent changes in the National Child Benefit system.

The changes mean parents can earn an extra $1,894 before the National Child Benefit supplement for low-income families is cut off, or the base benefit under the Canada Child Tax Benefit begins to get phased out. The effect of the change is significant: 2.4 million low- and middle-income Canadian families will be eligible for increased child tax benefits, and low-income families with two children will receive additional funds of up to $436 a year. Parents who have registered their children for the programs will automatically get the increase if they're eligible.

According to Mark Stabile, director of the University of Toronto's School of Public Policy and Governance, those few extra hundred dollars could make a big difference to kids. A recent study that he conducted with Kevin Milligan, associate professor of economics at the University of British Columbia, found that even small increases in child benefits mean better test scores for children and a marked improvement in the mental health of both mothers and kids.

Stabile says that implementing the increase by raising the income cut-off is a plus, because it provides incentive for parents to work more on their own. The resulting higher incomes will elevate the well-being of both parents and kids, he says, and "even small changes in well-being can make a difference in the probability that a kid finishes high school." That, in turn, could conceivably have a more lasting positive effect. "Finishing high school is correlated with getting a better job, going on to further school, getting a higher income in later life, and better health."

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