When you're preparing to have children, likely the last thing on your mind is, "How does this affect my taxes?"   What you may not know is that while having children increases costs in your household, it also opens the door to some additional tax benefits.  Some of these benefits include child care expenses, children's fitness amount, and the Canada Child Tax Benefit.

The Canada Child Tax Benefit (CCTB) is a monthly payment to eligible families to help with the costs of raising children.  Certain criteria need to be met before the family is eligible for the CCTB, and the amount of the benefit is based upon the adjusted family net income.  For example, in 2008, if you have one or two children, and your family income level is below $107,726, you may be entitled to the CCTB.  Typically you should apply for the CCTB as soon as possible after your child is born to take maximum advantage of this benefit.

For the children's fitness amount, each calendar year, you are entitled to claim up to $500 per child for expenses in a prescribed program of physical activity.  A prescribed program is defined as a supervised children's program, which is ongoing for more than eight weeks (with a minimum of one session per week), and involves significant physical activity.

Single parents or the lower income spouse is able to claim amounts you paid to have your children taken care of while you were carrying on a business, at work, or attending school.  Common expenses include day nursery schools, daycare centres, amounts paid to caregivers, day camps and boarding schools.

Where the child requires medical attention, or suffers from a disability, there are some additional tax benefits.  This includes the child disability benefit and the registered disability savings plan program that can assist these families.  

Preparing for a child's education is very important, and you can start early by setting up a Registered Education Savings Program (RESP) for your child.  It is a great tool for families start saving by putting a little bit away each year so that once the child is ready to further their education or training, the funds will be available.  With a RESP, you may also be eligible for government grants such as the Canada Education Savings Grant, and the Canadian Learning Bond.

Erica Chan-LaFrance

Chan Nowosad Boates