ADJUSTED PARENTAL CONTRIBUTION Information for childcare
Transcription
ADJUSTED PARENTAL CONTRIBUTION Information for childcare
ADJUSTED PARENTAL CONTRIBUTION Information for childcare practitioners On April 20, the Couillard government invoked closure to adopt the controversial Bill no 28 introducing the adjustment of the parental contribution for childcare services based on family income. The FIPEQ strongly opposed the government’s bill. Now that the new rates have taken effect, we wish to provide you with an overview of the changes and answer the questions most frequently asked by parents and educators. Highlights of the adjusted parental contribution New rates in effect since April 22, 2015 As of April 22, 2015, the daily rate required for subsidized childcare services consists of a basic contribution of $7.30 per day per child and an additional contribution that varies according to net family income. The total rate per day and per child – basic contribution + additional contribution – is now: $7.30 for a net family income of $50,000 or less; $8 for a net family income of more than $50,000 and up to $75,000; Between $8 and $20 for a net family income of more than $75,000 and up to $155,000. The rate rises incrementally from $8 to $20 based on income. For example, the rate is $11.41 for a net family income of $100,000; $20 for a net family income of more than $155,000. Net family income The new rate is based on net family income. Net income means that certain deductions are subtracted from the total income, the largest being contributions to a registered retirement savings plan (RRSP) or a registered pension plan. More specifically, net family income is the amount of income entered on line 275 of the income tax return for each spouse. Commentaire [CP1]: NB ce lien (line 275) ne fonctionne pas. ET ce serait différent pour l’anglais. The daily rate for a given year is based on the net family income of the previous year. For example, the daily rate for the year 2015 is determined according to the net family income of 2014. Parents can therefore refer to their notices of assessment for 2014 to determine their net family income. A two-part payment Parents will continue to pay the basic contribution directly to their childcare service provider (CPE, HCP or subsidized private daycare). Parents will pay the additional contribution when they file their income tax return. Table I Adjusted parental contribution Net family income $50,000 or less More than $50,000 and up to $75,000 More than $75 000 and up to $155,000 More than $155,000 Basic contribution Additional contribution (A) (B) $7.30 $0 $7.30 $0.70 $7.30 between $0.70 and $12.70 $7.30 $12.70 Payable to childcare service provider Payable upon filing income tax return Total daily rate (A + B) $7.30 $8 between $8 and $20 $20 2 Frequently asked questions Do the basic contribution and the additional contribution entitle you to tax credits? The basic contribution and the additional contribution entitle parents to the childcare expense deduction from the federal government,1 but not to the Québec government tax credit. The federal government also provides other tax assistance measures for families, notably the Universal Child Care Benefit (UCCB). When all these assistance measures are combined, the net rate paid by parents is a little lower than the gross rate indicated in Table I. For example, the gross rate of $11.41 for family with a net income of $100,000 becomes a net rate of $9.09 after tax assistance measures are taken into account. Will parents have to pay the additional contribution for days of absence? How will the number of days be calculated for which parents must pay the additional contribution adjusted to income? Currently, the Ministère de la Famille and Revenu Québec appear to be unable to provide clear answers to these questions. Does this mean we must take into account the days children are actually present, the days agreed upon in the service agreement (days of occupancy) or the days for which the $7.30 contribution is paid (including days the service is closed)? Despite the FIPEQ's many efforts and research in recent weeks to find answers to these questions, unfortunately, we have realized that there are more contradictions in the answers we obtained and in the documents we consulted than there are clear, unanimous answers to our questions. The FIPEQ will continue to call on government bodies to obtain definitive answers and will inform you of any response as soon as possible. Which forms must be completed? RL-30 slip — Determine the total additional contribution payable upon filing the income tax return Before February 29, 2016, CPEs or, in the case of HCPs, coordinating offices, will have to give parents a new slip, since the RL-30 slip determines the additional contribution. However, Revenu Québec has not yet made the RL-30 slip available. 1 Technically, a "deduction" is not the same as a tax credit, but the general result is the same: to lower income tax. 3 RL-24 slip — Childcare Expenses As was done in the past, HCPs will have to complete and submit an RL-24 slip to parents with whom they have service agreements. The adjusted contribution does not change anything in this respect. What can parents do to avoid a large payment when they file their next income tax return? The first step is to estimate the additional contribution they will have to pay. The Ministère de la Famille has put a calculator online to estimate the amount to be set aside for every pay period. Parents then have three options: Set aside the estimated amounts; Ask their employer to modify the tax deducted at source (the amount withheld on a paycheque for income tax). In this case, parents must complete and submit one of the following two forms to their employer: Source Deductions Return (TP-1015.3) or Request to Have Additional Income Tax Withheld at Source (TP-1017); Commentaire [CP2]: Liens équivalents en anglais: ? (lien en français ne fonctionne pas). Increase instalment payments2 if the parent is a self-employed worker. Does a subsidized space cost more than a private space that entitles a parent to the Québec tax credit and to the advance payment of reimbursement? Depending on the type of family (couple or single parent) and the parents' income level, there are, in fact, situations in which the net daily rate3 for a space in a subsidized childcare is higher than the net daily rate for a space in unsubsidized daycare. This was also the case before the introduction of adjustments to childcare rates. By refusing to review the parameters of the tax credit for childcare expenses when the adjustments were introduced, the Couillard government has increased the number of situations in which a space in unsubsidized daycare is more financially advantageous than a subsidized space. The FIPEQ has strongly condemned this situation at every possible opportunity. However, it is not true that this financial disadvantage exists in all family situations or for all income levels. The financial advantage of an unsubsidized space depends on its gross cost ($25, $30, $35, $40 or more per day). 2 3 Instalment payments are payments that a taxpayer makes to revenue agencies over the course of a year to anticipate income tax payable upon the filing of income tax returns. After tax assistance (tax credits and deduction) 4 Commentaire [CP3]: Lien en anglais: http://www.budget.finances.gouv.qc.ca/B udget/outils/Garde-2015-EN.htm The Québec Ministère des Finances provides a calculator for comparing net daily rates. Unsubsidized spaces costing $25 or $30 are often less expensive. On the other hand, spaces costing $40 or $45 are more expensive than subsidized spaces. It should also be recalled that when parents choose childcare, finances are not the only criterion. Regulatory oversight, quality of service and an educational mission are also decisive factors for parents who entrust their children to a childcare service provider for many hours each week. Since subsidized childcare services are subject to the quality, health and safety standards strictly administered by the Ministère de la Famille, coordinating offices and childcare centres, they meet parents’ criteria in this regard. Is this a steep rate increase for parents? The amount of the rate increase depends on family income. The amount of the increase for various income levels (based on the net daily rate) is provided below: 5 Table II Percentage of increase in the parental contribution (net daily rate) Type of family and Former net rate New net rate Difference in $ Percentage of increase $6.09 $6.02 — $0.07 — 1% $5.88 $9.09 $3.21 + 55% $6.02 $11.62 $5.60 + 93% $5.66 $5.60 — $0.06 — 1% $5.88 $6.37 $0.49 + 8% $5.63 $8.84 $3.21 + 57% net family income Couple - $50,000 Couple - $100,000 Couple - $120,000 Single parent - $50,000 Single parent - $75,000 Single parent - $100,000 Does the additional contribution apply to all the children of the same family attending subsidized childcare? No, parents will only have to pay the additional contribution for the 1 st and the 2nd child. For the 3rd child and more children – if they all attend the same childcare at the same time – parents will only have to pay the basic contribution of $7.30. No additional contribution will be payable for these children. When a family is separated, which parent will have to pay the additional contribution on his or her income tax return? Do they have to review the service agreement? In parliamentary committee, the FIPEQ had warned committee members that this adjustment would create a terrible mess for separated parents. And, so it has! In theory, it is the parent who signs the service agreement who pays the additional contribution on his or her income tax return. The additional contribution will be determined according to this 6 parent's family income, that is, only one income if the parent does not have a spouse, and two incomes if the parent has a spouse. The additional contribution may therefore be different, depending on which parent signs the service agreement. On the other hand, if the separated parents share the payment of the basic contribution ($7.30), the additional contribution will then be calculated separately according to the family income of each parent. The Ministère de la Famille also states that: Service agreements signed before April 22, 2015 will remain in effect until their expiry date. If the parents want to change the name of the parent indicated on the service agreement in effect, or add the name of the other parent in order to determine, as they wish, the amount for which they are each responsible, they can do so by making a request to their childcare service provider. To do so, the childcare service provider and the parents can use l’ Entente concernant la répartition du paiement de la contribution de base. (Agreement for splitting the basic contribution payment) Commentaire [CP4]: Agreement for splitting the basic contribution payment : On télécharge le document anglais ici: https://www.mfa.gouv.qc.ca/fr/minister e/publications/Pages/moteur.aspx?rec herche=2&Axe=&Categorie=&Langue= 2&TypePublication=&Frais=&Recherch eSimplifiee=&TypeRecherche=Phrase Exacte Parents who do not wish to use this agreement may also: Cancel their childcare service agreement and sign a new one together, indicating therein how they will split childcare days for the purposes of paying the basic contribution; Cancel their service agreement and let the other parent sign a new one with their childcare service provider. This parent then becomes the person responsible for paying the basic contribution AND the additional contribution.4 Commentaire [CP5]: Une copie en anglais de l’entente de services de garde subventionnés et de ses annexes et de l'Entente concernant la répartition du paiement de la contribution de base sont disponibles dans la section English publications. For any other questions You can call or ask parents to call the Ministère de la Famille at 1 (844) 363-2684. May 2015 4 MINISTÈRE DE LA FAMILLE (2015). New rates and service agreement. https://www.mfa.gouv.qc.ca/fr/services-degarde/revision-programme-services-garde/nouvelle-tarification/Pages/nouvelle-tarification-et-entente-deservices.aspx 7 8