03/22/2016 05:05 EDT | Updated 03/23/2016 12:00 EDT

New Canada Child Benefit, Guaranteed Income Supplement Increase Unveiled In Budget

"That is money in the pockets of mom and dad."

Ottawa is revamping the tax benefits for families with young children in the federal budget to put more money in the wallets of low and middle-income families starting in July.

However, the changes announced Tuesday will see families earning more than $150,000 a year generally receive less under the new Canada Child Benefit program.

Finance Minister Bill Morneau said nine out of 10 families will receive more than they do under the existing programs.

Prime Minister Justin Trudeau walks with Minister of Finance Bill Morneau as he arrives to table the budget on Parliament Hill on March 22, 2016 in Ottawa. (Photo: Justin Tang/The Canadian Press)

"That is money in the pockets of mom and dad,'' he said. "Money that can go directly to eating healthier food, paying the rent and buying new clothes for back to school.''

The new program will pay up to $6,400 per child under six and up to $5,400 per child for those aged six through 17. However, the benefits begin to phase out starting at $30,000 in net family income.

Under the current system, families with $30,000 in net income and one child under six would have received $4,852 in child benefits and $3,916 if the child is six through 17.

“That is money in the pockets of mom and dad.”

— Bill Morneau, Finance Minister

The changes were a key plank in the Liberal campaign platform.

They replace the current Canada Child Tax Benefit, National Child Benefit and Universal Child Care Benefit.

Ottawa is also eliminating income splitting for couples with children as well as phasing out the children's fitness tax credit and the children's arts tax credit.

The fitness and arts tax credits, worth up to $150 and $75 respectively for those who claim them, will be cut in half for 2016 and eliminated for 2017.

The changes for families come as Ottawa also makes changes to some of the tax credits for students and increases the guaranteed income supplement for single seniors starting in July.

The government is eliminating the education and textbook tax credits effective next year because it said they were not targeted based on income. The tuition tax credit will remain unchanged.

Education and textbook tax credits carried forward from years before 2017 will still be claimable in 2017 and subsequent years.

The government is also cancelling plans to allow the donations of real estate and shares of private corporations to be included in the income tax exemption on capital gains for donations.

The change, which was announced in the budget last year by the Conservatives, was set to start next year.

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