Baby bump – EI assistance for expecting parents

Informed use of employment insurance with a new child on the way

The decision to have children is as personal as it gets. But as impersonal as it may sound, one of the first considerations in deciding on a family expansion, is determining its impact on family finances. This means not just being ready to bear the cost, but also the potential reduced income.

At least at the start, the EI system offers some help to new parents.

Managing your expectations – Not full income replacement

Any way around it, you will be receiving less if you are not working. The general rule of EI is that is designed to replace 55% of your average weekly earnings, up to the maximum yearly insurable amount, which is $68,900 in 2026. That equates to a maximum of $729 per week, or less if your own income is less than that prescribed maximum. Either way, just like employment income itself, EI payments are taxable.

The general qualification requirement is that you need 600 hours of insurable employment in the 52 weeks preceding the claim. This criterion also applies to those applying for maternity and parental benefits (discussed below), in addition to showing that your regular weekly earnings from work have decreased by more than 40% for at least one week.

Types of benefits

Maternity benefits – For the expecting mother

This is for biological mothers, including surrogate mothers who are away from work due to pregnancy or a recent birth. It runs for up to 15 weeks, beginning as early as 12 weeks before the expected date, and may continue as far as 17 weeks after the due date or the date of birth, whichever is later.

As with general EI, it applies at a 55% benefit replacement rate, again up to the current prescribed dollar maximum (indexed annually) per week for the benefit period.

Parental benefits – Relief time that can be shared by two parents

Parental benefits are available to one or both parents of a newborn or newly adopted child. Both parents may be receiving benefits at the same time, or they may take them at different times. For a biological mother, application may be made for both the maternal benefit and parental benefit at the same time, allowing for seamless continuity from one benefit to the other.

Benefits may begin the week of the date of birth, or the week of placement in the case of an adoption. Benefits are available/measured in weeks, but do not have to be taken consecutively, allowing parents to start and stop according to their circumstances. There is a time limit by which all benefit weeks must be taken, based on either the standard option, or the extended option that pays less for a longer time:

    • Standard parental option – All benefit weeks must be taken within 52 weeks (being 12 months)
    • Extended parental option – Benefit weeks may be taken for as long as 78 weeks (being 18 months)

Once an option has been chosen and paid to either parent, the clock starts running on that time limit. As well, the option cannot be changed after payment begins, and the other parent must use that same option.

As between them, there is a maximum number of weeks any one parent may claim, being 35 for the standard option and 61 for the extended option. This condition accompanied the increase in the number of benefit weeks from 35 to 40 weeks and 61 to 69 weeks for the two benefit options respectively, as announced in the 2018 Federal Budget. The purpose of this condition/limit is to encourage more equitable sharing of parental responsibilities.

Further key details of both parental options and the maternity benefit are shown in the table on the following page.

Summary table by type of benefit
– For 2026

Personal savings strategies to get you to and through baby’s arrival

Inevitably a new child means new costs, though some lifestyle expenses may drop off as your time and attention are diverted. The net cost may be ambiguous, but most certainly your income will be less. The prudent course is to establish a savings routine early on:

    1. As soon as you decide or become aware of your new addition, sit down together as parents-to-be and review your financial picture, ideally with the assistance of a financial advisor. While you may have managed without a budget in the past, parenthood will be extra difficult to navigate without good financial organization.
    2. Inform yourself about the kind of products and services you may need during pregnancy and after birth/arrival. You can start by asking your own parents about their experiences, but be sure to update to the present. Beyond allowing for cost inflation over the intervening generation, educate yourself on current nutrition and healthcare practices, and safety devices (e.g. sleeping furniture, car seats), both legally-mandated and as recommended by recognized experts. Also, be cautiously skeptical about any gadget offerings you come across, some which may indeed save time and money, and others that may make you net worse-off for using them.
    3. Arrive at a reasonable target for your planned weekly spending once baby arrives, and think carefully how long you will be away from work. On the income side, remember that the most you will receive from EI is just over half of your working income, and at a time when new expenses often crop up. Total up the potential weekly shortfall and multiply by the number of weeks you expect to be away from full-time work.
    4. Divide the total shortfall above by the number of weeks from the present until you plan to begin your maternity/parental leave. That will tell you how much to save each week to accumulate exactly enough to carry you through the post-arrival time period. Don’t panic if this is a stretch. Rather, use it reinform your assumptions and intentions, and if necessary to motivate you to identify other savings sources to tap into.

50 timely tax tips to help you file your 2025 income tax return

Due date: Midnight Thursday, April 30, 2026

Tax-filing season is not a time of joy and celebration – that is unless you are the Canada Revenue Agency (CRA), or someone who makes a living preparing tax returns. While we must all pay our fair share, we are allowed to legally arrange our affairs to minimize tax. Doing so effectively means taking the time to plan, and now that it is time to report, here are some tips to help you claim all the deductions and benefits you are entitled to receive.

This is intended to get you started, not to be a comprehensive guide. To that end, 5 tips are offered within each of the 10 profiles below, along with a CRA hyperlink at the end of each profile so you can explore further as you wish. And bear in mind that though each tip appears under the profile to which it’s most commonly connected, some apply to more than one profile, so look over the full list to get a broad view of what may be relevant to you.

Caution when considering a HELOC to supplement living expenses

Getting a full picture of the financial trade-off

Through no fault of their own, a family may find themselves in the position where their income is not keeping up with their cost of living. Whether operating under one or two incomes, one option they may be considering is a home equity line of credit (HELOC) to supplement their household needs.

A HELOC can indeed provide breathing room to a family, but preferably it is coupled with a plan on how they will emerge from that pause when their finances are back on track.

When an emergency fund isn’t enough

On a short-term basis, borrowed funds may be necessary to bridge the gap if there are expenses in excess of income. For example, someone may become unexpectedly unemployed and doesn’t have an emergency fund, or needs to stretch out that emergency fund to accommodate a longer transition back to work.

Still, it should be appreciated that like any borrowing, this is using future income to support current living costs, which can become unsustainable if one is not careful. Once beyond the employment gap and stabilized, the elimination of the line of credit ought to be a top priority.

Tax cost of non-deductible interest

Interest may be tax-deductible when money is borrowed for business or investment purposes. But if loan proceeds are being used to “live on”, those are non-deductible personal expenses. The person’s other income must be earned and taxed before cash is then available to pay the interest charges.

With each additional draw on the line of credit, interest will become an increasing drag on that other income. The build-up may be slow, but it will progressively reduce the spendable amount of those other income sources, again bringing into question the sustainability of the practice.

Accordingly, there must be a plan as to how and when the principal is to be paid down/off, else it becomes so large that only the sale of the home will be sufficient to pay off the debt. This could be especially damaging if market conditions are not in a seller’s favour when the homeowner may be compelled to take action.

Appeal and concession of capitalized interest

With some loans – which is fundamentally the nature of a line of credit – the lender may not require regular principal payments. Or, the lender may permit some or all of the interest to be capitalized to the principal.

While this may be appealing for immediate cash flow, it results in faster growing debt. The borrower remains responsible for the interest on the principal, and must now pay interest on the interest on a continuing basis.

That’s the compounding effect that is often highlighted when investments grow through reinvested income, but here it’s working in the opposite direction.

Compound interest as an expense will erode home equity at an accelerated pace if not understood, monitored and serviced. In addition, unlike investments that have an open-ended opportunity to grow in a positive direction, a lender will have a maximum limit for a line of credit, generally tied to the practical boundary of (a percentage of) the market value of the property that is the collateral. 

Aging-in-place in retirement

Longer term, particularly in retirement, a homeowner/borrower must be extra cautious about the effect this may have on their future housing options. Downsizing to a smaller property may be part of one’s financial plan, but just how far ‘down’ depends on how much is realized on the sale of a current home.

Most people are on a fixed income in retirement. Hoped-for inheritances and lottery windfalls aside, there will likely be no new income sources or capital materializing in future. Once people begin to draw on a HELOC at this stage of life, it can be a one-way path. With no other way to allow them to eliminate the line of credit, it could end up as a hefty closing cost taken out of the proceeds on sale.

Ideally, this is a considered and conscious decision that allows an individual or couple to remain in comfortable, familiar surroundings for as long as possible. In fact, with informed planning, it can be a carefully controlled process of aligning money to milestones, be that downsized ownership, seniors’ rental, assisted living or long-term care.

So, whether it’s short-term or long-term, it’s best if there is a plan when contemplating a HELOC. Be clear at the outset what it is intended to bridge from and to, in terms of time, money and lifestyle requirements. Then, keep track of the accumulation, and be prepared for those next steps once your “to” is on the horizon.