As CRA restarts child benefit clawbacks, parents scramble to make ends meet

Canada’s Canada Revenue Agency (CRA) has resumed clawing back child benefit payments, and it’s sending many parents into a financial frenzy. The pandemic-induced income loss has made the Child Benefit program a critical lifeline for many Canadian families. However, some families now find their child benefit payments cut off or reduced, as they have started to make more income than the CRA determined when initially processing their benefits. Clawbacks are a common policy for any income-tested benefit program. But it’s causing significant financial hardship for many families who depend on the benefit.

According to CRA estimates, August 2021 saw 89,000 families lose an average of $229 in benefit payments. However, the CRA provides two months’ warning before clawing back any benefits, affording parents some time to adjust their finances. Furthermore, the agency announced a one-time payment to low-income families to offset part of the anticipated loss. However, for many middle-income families who have become more prosperous than when they applied for benefits, the clawback is unexpected and a substantial financial blow.

Incidentally, the clawback of Child Benefits isn’t the only financial distress experienced by Canadian families during the pandemic. Canada’s affordability crisis continues to make headlines with skyrocketing real estate prices making homeownership out of reach for many Canadians, foster care policies that are hurting children, and policies that limit parental benefits while encouraging a two-income household. The current status quo underlines the urgency for the government to address the economic anxiety affecting Canadians across the country.

In conclusion, the reinstatement of the clawback policy goes a long way to highlight the urgent need for Canada to address its current affordability crisis. With the pandemic-induced economic insecurity forcing many families to depend heavily on benefits, the government must do more to ensure such policies don’t hurt the very people they’re designed to assist. While clawbacks may be necessary, they must be conducted in a way that doesn’t pull a rug from under families struggling to make ends meet.