Currently, under Ontario Works an individual may be eligible to deduct a maximum of $390 per month per child from their declared income which is only allowable over a three month period. This does not mean that individuals are paid out $390 per month. What this means is that the total amount of social assistance you are entitled to will not be reduced if you can prove how much money you spent on child care. Let’s consider an extremely simplistic example, if you receive $1000 a month from social assistance and you earn $500 a month at work, the amount you made at work would be deducted from your social assistance cheque, making it $500. However, if you can prove that you paid $390 in childcare, your cheque would increase back up to $990.
There are further restrictions on this income earnings deductible through Workfare. If considering a two parent family where only one parent is working, this deduction will not apply because the government assumes the other parent is providing care for the child. In a single parent family the caretaker must be working or training in order to qualify. Therefore, this policy does not take into account job searching as well as family and health responsibilities in which childcare is required. Also, a recipient cannot receive this deduction if the child is being cared for by a family member. These same restrictions apply under the federal Child Care Expense Deduction.
All Canadians can attempt to claim childcare expenses through the CCED (with the very maximum being 7000/year). For Ontario Works recipients, they are only allowed to claim that which was not added to their total earnings. For example, if childcare costs totaled 500 per month, and were claimed with Ontario Works, 390 dollars would not have been taken off their regular social assistance cheque. Therefore, a recipient can only claim 110 from CCED. In addition, CCED requires that individuals pay for the full amount of child care expense upfront. An individual can then attempt to claim these expenses at tax time. Therefore, CCED is advantageous for parents whose incomes are high enough to cover their child care expenses throughout the year, these families are also more able to afford formal daycare. Another issue is that many low income and Ontario Works parents cannot claim CCED because they are required to provide receipts and many of the less expensive independent caregivers refuse to provide receipts to avoid paying income tax.
The federal government also established the federal Child Tax Benefit program. This is a tax free, income tested monthly payment for children under 18. In 1999 the benefit totaled 1,020 per child per year, low income families can receive additional funds of 605 per year. However, CTB, like CCED and the following National Child Benefit (NCB) do nothing to provide more affordable and greater numbers of child care services. Federal, provincial and territorial governments have also agreed to implement the National Child Benefit (NCB) which included childhood intervention programs, child care, cash benefits etc. This was a good step forward, however spending on these programs has not totaled much. The Canadian Health and Social Transfer (CHST) which replaced the Canadian Assistance Plan is a block transfer grant to the provinces to provide heath care, social assistance, postsecondary and education funding. The decisions as to which program money is filtered into is left to the discretion of the provinces, with childcare usually be left on the back burner.
Based on the review of childcare compensation under Ontario Works as well as the federal compensation programs applicable to all Canadians (in theory), I would recommend the following:
Short Term Recommendations:
Target Population: families receiving social assistance
Objective: Transition people out of poverty
• Provide all those receiving social assistance with a monthly childcare allowance regardless of working status, family member status or provision of receipts.
• Provide this assistance as an upfront payment of 390/month/child and do not include it in the calculation of earnings.
• Provide this assistance during a 1 year period, with the possibility for extension under extenuating circumstances.
Long Term Recommendations:
Target Population: All Canadian families, especially those of low income
Objective: Preventative poverty measure
• Development of a more universal child care system.
o Increase federal funding with the implementation of goals and timelines.
o Increase number of childcare services available ensuring affordability.
o Ensure quality standards are met within these services.