Ooh, you're right. On both counts -- I didn't specify, and it is indeed from the general federal government budget, which is mostly funded by income taxes.

In an accounting sense, it's actually a reduction in revenue, rather than an expenditure, because it's administered as a tax credit on income tax returns. Which means that the feds are outsourcing most of the bureaucracy to whomever is preparing the tax returns. It's probably better than a centralized bureaucracy, not so much for efficiency reasons as for incentive reasons.