Economic and Social Reports
To what extent do newcomers receive the Canada child benefit? Insights from newly landed immigrants with employment income in Canada

Introduction

The Office of the Auditor General of Canada (2022) has called for an examination of the degree to which Canada’s hard-to-reach populations receive the government benefits they are entitled to. Studying this question is challenging for a variety of reasons. First, some individuals may not satisfy the residency criterion for receiving specific benefits if they temporarily reside abroad during a given year.^Note  This might be the case for highly skilled immigrants who have spells of residence outside the country (henceforth, temporary international emigration) (Qiu, Hou and Crossman, 2021; Bérard-Chagnon et al., 2024). Second, although take-up rates are commonly estimated using the population of tax filers—under the rationale that tax-filing is a prerequisite for receiving most benefits—some individuals, such as newly landed immigrants, may be entitled to specific benefits initially without having to file T1 income tax forms. This might happen with the Canada child benefit (CCB).^Note  However, to continue receiving subsequent entitlements, individuals must file their T1 tax forms.

This study tackles these two challenges for a specific population and a specific government benefit: it assesses the degree to which newly landed permanent resident couples (married or common-law) with children younger than 18 receive the CCB shortly after landing. The study aims to improve the measurement of CCB take-up among this group in two ways.

It builds on the databases used by Mehdi et al. (2023)—the Longitudinal Immigration Database (IMDB) and T1 personal master file (T1PMF)—to examine the tax-filing behaviour of newly landed immigrants by adding monthly CCB files and the annual T4 Statement of Remuneration Paid into the analysis. As will be shown below, integrating the CCB files yields a more precise measurement of the number of CCB recipients among these couples than is feasible with the IMDB and T1 files.

The study addresses concerns regarding temporary international emigration by identifying couples where at least one spouse received paid employment income in Canada in a given year, as measured by a worker’s province of employment on T4 records. Along with their counterparts where at least one spouse filed T1 income tax forms, these couples are presumably less likely than others to have resided abroad temporarily in a given year. The study compares the take-up rates of the CCB for these groups with those of other newly landed couples where neither spouse filed a T1 or appeared on the T4 files in the year following landing.^Note  These two strategies will help improve knowledge of CCB take-up for newly landed immigrant families.

This study answers the following research questions:

• What percentage of couples who landed in year t with children younger than 18 had at least one spouse file a T1 income tax return or receive paid employment income (T4) in Canada in t+1?
• What percentage of couples who landed in year t with children younger than 18 received the CCB in t+1? How does this percentage vary
  • between couples appearing on the T1 or T4 files and other couples
  • by landing characteristics, including immigration class of the principal applicant?
• To what extent are group differences in CCB take-up rates driven by differences in tax-filing behaviour and in paid worker status—In other words, by differences in the percentage of couples where
  • at least one spouse filed a T1 income tax return and reported paid employment income but no self-employment income, or appeared on the T4 file with paid employment income in Canada in the year following landing
  • at least one spouse filed a T1 income tax return and reported self-employment income in the year following landing, regardless of whether they received paid employment income
  • at least one spouse filed a T1 income tax return and did not report any employment income in the year following landing
  • neither spouse filed T1 income tax returns or received paid employment income (T4) in the year following landing?
• To what extent could the CCB have reduced low-income rates for newly landed couples with children younger than 18 who did not receive the CCB in the year following landing?

Data and samples

The study builds on the databases used by Mehdi et al. (2023)—the IMDB and T1PMF—to examine the tax-filing behaviour of newly landed immigrants by adding monthly CCB files and the annual T4 Statement of Remuneration Paid into the analysis. Integrating the CCB files yields a more precise measurement of the number of CCB recipients among these couples than is feasible with the IMDB and T1 files.

The IMDB includes the annual Immigrant Landing File containing a record of all immigrants who landed in Canada from 1980 onward (Evra and Prokopenko, 2022). The T1PMF is an annual dataset consisting of the T1 individual income tax return records of Canadian tax filers who submitted their returns before an assessment date. The T4 Statement of Remuneration Paid is an annual tax form issued to employees by their employer. It identifies a worker’s province of employment and enumerates paid employment income earned, as well as deductions such as pension and employment insurance contributions. The CCB file is a monthly record of all CCB recipients and their children, available from March 2017 onward. CCB payments are reassessed every July based on the information reported on the T1 income tax return from the previous tax year.^Note  Combining the T4 Statement of Remuneration Paid with the IMDB and T1 files creates a more inclusive sample of potential CCB recipients residing in Canada because it captures couples who did not file T1 income tax returns but still received paid employment income in Canada, as indicated by a worker’s province of employment. Because an income registry (independent of international emigration and tax-filing) before and after landing is not available, this study cannot assess the degree to which the rates of non-receipt of the CCB for various groups reflect income levels that are too high (ineligibility) or truly reflect non-receipt of the CCB by fully eligible families.

The study focuses exclusively on permanent resident couples, where both spouses were aged 25 to 64 at landing, who landed together from 2016 to 2019 with at least one child younger than 18 at the time of landing. The sample excludes couples where at least one spouse held temporary resident status in Canada prior to landing as a permanent resident.^Note  Including this subgroup would introduce many challenges to the analyses because some of them already received the CCB before becoming permanent residents. Moreover, retroactive CCB payments could further complicate analyses. From 2016 to 2019, over 200,000 immigrant couples landed in Canada; in 90% of cases, both spouses were aged 25 to 64 in the year of landing. Those aged 25 to 64 are more likely to be employed and therefore more likely to be residing in Canada, which is a criterion for accessing many benefits. Of these over 200,000 immigrant couples, more than half had a child younger than 18 at the time of landing, and in nearly 100% of those cases, both spouses were aged 25 to 64 at the time of landing. In around one-third of these couples, at least one spouse held temporary resident status in Canada prior to landing as a permanent resident. The study selects the two-thirds of couples who had no prior history in Canada. These couples represent about 30% of the over 200,000 couples who landed in Canada from 2016 to 2019.^Note  Henceforth, any references to couples should be understood to mean permanent resident couples with no prior history in Canada, where both spouses were aged 25 to 64 at landing and who had at least one child younger than 18 in the year of landing. This restriction excludes the Canadian Experience Class from analyses because everyone admitted through that immigration class held temporary resident status to gain Canadian work experience prior to landing as permanent residents. However, the Canadian Experience Class represented less than 7% of all immigrant couples who landed from 2016 to 2019 with children younger than 18.

CCB payments can be issued retroactively. As a result, it is possible that a newly landed family will not receive its payment shortly after landing but will receive it at some point in the future. In fact, considering the subgroup of couples where both spouses were aged 25 to 64 at landing and who landed from 2017 to 2019 with a child younger than 18 for at least 24 months following landing, around 60% received their first CCB payment within the first 4 months of landing (Chart 1).

For some newly landed families, government transfers such as the CCB might be an important source of income in the short term. Hence, one concern is whether eligible families receive the CCB in a timely manner, if they receive it at all. To shed light on this issue, the study assesses whether couples who landed in year t received the CCB in year t + 1.^Note 

Chart 2 highlights the strength of using CCB files to precisely measure the number of couples who received the CCB in a given year. It focuses on couples who landed in 2019 and compares the percentage of couples where both spouses filed T1 income tax forms in 2020 with the percentage of couples who received the CCB in 2021. For most dimensions considered, the percentage of couples who received the CCB in 2021 exceeds the percentage of couples who filed income tax forms in 2020. Overall, 82% of these couples filed income tax forms in 2020 but 84% received the CCB in 2021. Hence, focusing on tax-filing in the year following landing slightly underestimates the degree to which newly landed couples receive the CCB in the following year. This is possibly because some of them filed their T1 forms late or applied for the CCB but did not file T1 forms that year.

Most newly landed couples file a T1 or receive paid employment income in Canada in the year following landing

This study partitions newly landed couples into four groups defined by their tax-filing status and their receipt of employment income in the year following landing: (1) couples where at least one spouse had paid employment income on their T1 or T4 records but no self-employment income; (2) couples where at least one spouse had self-employment income on their T1 tax records, regardless of whether they received paid employment income; (3) couples where at least one spouse filed a T1 income tax form but had no employment income; and (4) couples where neither spouse filed a T1 income tax form or had T4 records. The first two groups are most likely to reside in Canada because at least one of the spouses has an employment record, as indicated by their employment income reported on the T1 or T4. The third group is likely to reside in Canada, given that people were registered in the income tax system shortly after landing, but less so than the first two groups because the third group does not have a known employment history in Canada. The fourth group is least likely to reside in Canada because people have no income tax record or paid employment income in Canada.

The first three groups of couples represented 87% to 92% of couples who landed from 2016 to 2019 (i.e., at least one spouse filed a T1 or had a T4 record in the year following landing) (Table 1-1 and 1-1).

There is a strong correlation between couples’ propensity to file a T1 and their propensity to receive paid employment income in Canada (results not presented on Table 1-1 and 1-2). For couples where at least one spouse filed a T1 in the year following landing, more than three-quarters also had a spouse who appeared on T4 records during that year. By contrast, for couples where neither spouse filed a T1 tax form in the year following landing, less than 5% had a spouse who was included in T4 records during that year.

For nearly all couples where the principal applicant was a refugee, at least one spouse filed a T1 or received paid employment income in the year following landing (Table 1-1 and 1-2). Although refugee couples were less likely than other couples to be found on T4 records in the year following landing, refugee couples were more likely to have a spouse file a T1 than other immigration classes. For 79% to 84% of Federal Skilled Worker Program (FSWP) couples who landed from 2016 to 2019, at least one spouse filed a T1 income tax return or received paid employment income in the year following landing. These rates were lower than the rates observed for other immigration classes.

For almost all couples where the principal applicant had a high school education at most in the year of landing, at least one spouse filed a T1 or received paid employment income in the year following landing. Lower-educated couples were generally less likely to appear on T4 records than more highly educated couples but were more likely to have a spouse file a T1 in the year following landing. Of couples where the principal applicant had a graduate degree, 82% to 87% filed a T1 or received paid employment income in the year following landing. These rates were lower than the rates for couples with less educated principal applicants in the year of landing.

Differences in the percentage of couples where at least one spouse filed a T1 or had a T4 record could be indicative of who is more likely to reside in Canada. For example, highly educated immigrants or highly skilled workers could be inherently more mobile and prone to international emigration, while refugees—a relatively immobile group—are probably more likely to reside in Canada, at least in the short term (Bérard-Chagnon et al., 2024).

Newly landed couples who file a T1 or receive paid employment income in Canada in the year following landing are more likely to receive the Canada child benefit than other newly landed couples

In the year following landing, 79% to 85% of couples received the CCB, depending on the landing year considered. However, these take-up rates mask considerable variation between different groups of couples. Take-up rates of more than 90% were observed among those with some employment income (who are the most likely to satisfy residency criteria for the CCB and who represent more than four-fifths of all newly landed couples with children). Meanwhile, rates of about 70% were observed among the group where a spouse filed a T1 but had no employment income, and rates of less than 10% were observed among the group with no T1 or T4 presence (who are most likely to reside abroad temporarily and who represent 8% to 13% of all couples, depending on the landing year considered) (Table 2).^Note