What Is Provincial Parental Insurance Plan (PPIP)?

Provincial Parental Insurance Plan, or PPIP, is a Canadian tax deduction relating to taxes, paid or payable, on regular or self-employed income. The Provincial Parental Insurance Plan (PPIP) gives maternity, paternity, parental, and adoption benefits to qualified persons. This aid is to support and encourage parents staying home with their children for the first year of the child's life.

The plan is considered a boon for Canadian parents, as infant care can be more costly than toddler care.

Provincial Parental Insurance Plan (PPIP) Definition

The Provincial Parental Insurance Plan is a tax deduction that was designed to help Canadian parents spend a year at home after the birth or adoption of a child. The Canada Revenue Agency (CRA) administers the plan. The income replacement plan is available to all taxpayers who are parents, regardless of marital status or sexual orientation. It also applies to parents who are adopting a child.

The province of Quebec has a different plan called the Quebec Parental Insurance Plan (QPIP). The plan is in place for the same reasons but has differing rules, regulations and tax implications. The Quebec Parental Insurance Plan pays up to 75% of weekly income for new parents.

Quebec's parental insurance plan came into effect on Jan. 1, 2006.

Other Benefits for Parents

In addition to the Provincial Parental Insurance Plan, there are other tax benefits geared toward helping Canadian parents. Here are some of the other programs and deductions.

There is a program called Automated Benefits Application (ABA) that makes it easy for parents to automatically apply for child benefits when registering the birth of a new baby. In provinces that don't offer the ABA, new parents can apply for benefits directly.

There is the Canada child benefit (CCB), which is a tax-free monthly payment made to eligible families to help with the cost of raising children. In 2019, a tax-paying household could be due to receive up to $6,496 per year for each eligible child under the age of six and up to $5,481 per year for each plan-eligible child from six to 17 years of age.

There is also the goods and services tax/harmonized sales tax (GST/HST) credit. This credit is a tax-free quarterly payment of up to $560 per year with an additional $147 annually, per child, for eligible individuals and families who have low and modest incomes. The payment is meant to offset all or part of the GST/HST that they pay.

There are also some related provincial or territorial programs that are administered by the Canada Revenue Agency (CRA). The majority of provinces and territories also have child and family benefits and credits. Eligible individuals and families can receive these deals in addition to the other deductions.

Among other potential benefits, there is a child disability benefit - a tax-free benefit for eligible families who care for a child under 18 who is eligible for the disability tax credit. The child disability benefit is paid each month, along with the Canada child benefit.

There is also the working income tax benefit (WITB), which is a refundable tax credit that provides tax help for working low-income individuals and families. Eligible individuals and families may be able to pay for quarterly WITB advance payments.

Key Takeaways

  • The Provincial Parental Insurance Plan (PPIP) is a tax deduction available to Canadian parents. In Quebec, the plan is known as the Quebec Parental Insurance Plan.
  • The plan provides maternity, paternity, parental, and adoption benefits to qualified taxpayers.
  • The support is meant to encourage and enable parents to stay at home during the first year of their child's life.

Real World Example

In a hypothetical example, Celine, a full-time employee of an eCommerce company in Quebec, has given birth to a baby girl and would like to spend the first year of her new daughter's life full-time in the care of the child. She would seek out many tax deductions and supportive tax breaks, including the Quebec version of the PPIP, the QPIP, for people in the province of Quebec.

According to 2019 tax rules for the QPIP, Celine's maximum insurable earnings for the year are $76,500. She would receive weekly checks throughout the year for up to 75% of her income. If she earns less than $2,000 per year, she will not have taxes assessed on these earnings. If she makes over $2,000 per year, both she and her employer will have a tax assessment. Regarding taxes, she will be charged a premium rate of 0.526% for a maximum of $402.39 and her employer will be charged 0.736% for a maximum of $563.04