Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
Following a marriage breakdown where parents have joint custody of the two children, can a parent who is paying non-deductible child support claim equivalent-to-spouse credit?
Position TAKEN:
Yes, in year of marriage breakdown, subject to subsection 118(5). No, in subsequent years.
Reasons:
Consistent with earlier opinions. Question of fact.
XXXXXXXXXX 2000-002947
T. Young
August 31, 2000
Dear Sir:
Re: Equivalent-to-Spouse Credit
This is in reply to your letter of June 1, 2000, requesting our opinion on the equivalent-to-spouse credit in a situation involving joint custody.
In your letter, you describe your situation where, following a marriage breakdown in 1999, you have joint custody of your two children. Under the arrangement, the children's primary residence is with their mother. However, the children reside with you every alternate weekend and for two evenings each week (including meals and sometimes overnight). You also pay 50% of daycare expenses and other expenses, transport your children to medical appointments, and take time off work when they are ill. You have indicated that you pay child support for the children but that the payments are not deductible.
Your enquiry was whether you are allowed to claim the equivalent-to-spouse credit for one child under paragraph 118(1)(b) of the Act.
Written confirmation of the tax implications inherent in particular transactions is given by this directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R3, dated December 30, 1996. Since this enquiry relates to an existing situation, it should be addressed to the relevant Tax Services Office. Also, it would be necessary to review all relevant documentation (including all court orders) before a determination of the tax implications could be made. However, we can provide you with the following general comments.
The requirements for claiming the equivalent-to-spouse credit are discussed in paragraphs 11 through 22 of IT-513R, Personal Tax Credits (copy enclosed). In order to claim the equivalent-to-spouse credit, an individual must meet the conditions set out in paragraph 118(1)(b) of the Act. To qualify for this tax credit, among other criteria, an individual must "at any time in the year" support in a residence that is lived in and maintained by the individual a person who "at that time" is wholly dependent for support on the individual and under 18 or dependent because of mental or physical infirmity.
In order for a child to be considered wholly dependent on a parent, the parent must be responsible for the usual day-to-day activities of raising the child, such as ensuring the child attends school, preparing regular meals, etc. In other words, the child would have to live with the parent during the days in question. This can be contrasted with situations where the parent only has visitation rights or "legal access" rights where the child would still be considered to be living with the other parent. It is a question of fact whether a child is wholly dependent on a taxpayer "at any time in the year" and it is unclear based on the information you provided if your situation would meet the criteria.
Subject to subsection 118(5) of the Act (see comments below), in a joint custody situation where there are at least two children, generally one parent would be able to claim the equivalent-to-spouse credit for one child and the other parent would be able to claim the equivalent-to-spouse credit for another child. If there is only child, then only one parent may claim the equivalent-to-spouse credit because of the restriction in paragraph 118(4)(b) of the Act. If the individuals are unable to agree as to who should claim the tax credit, neither can claim the credit. As well, each parent must also meet the other requirements of subparagraph 118(1)(b)(i) of the Act, i.e., the parent is an unmarried person or a married person who neither supported nor lived with the married person's spouse and is not supported by the spouse. Under the proposed amendments to that subparagraph applicable after 2000, the parent must be:
(A) a person who is unmarried and who does not live in a common-law partnership, or
(B) a person who is married or in a common-law partnership, who neither supported nor lived with their spouse or common law-partner and who is not supported by that spouse or common-law partner.
In the year of marriage breakdown, paragraph 118(5)(b) of the Act may prevent a parent from claiming the equivalent-to-spouse credit in respect of a child if the parent claims a deduction for the year because of section 60 in respect of a support amount paid to the spouse or former spouse. Based on the information you provided, it appears that paragraph 118(5)(b) would not, in and of itself, prevent you from claiming the equivalent-to-spouse credit for 1999.
For years subsequent to the year of marriage breakdown, where the spouses live separate and apart, paragraph 118(5)(a) of the Act prevents a parent from claiming the equivalent-to-spouse credit in respect of a child if the parent is required to pay a support amount to that parent's spouse or former spouse in respect of that child. Based on the information you provided, paragraph 118(5)(a) will prevent you from claiming the equivalent-to-spouse credit in years subsequent to the year of marriage breakdown. We refer you to paragraph 39 of IT-513R for further comments on individuals making support payments.
Please note that role of the Canada Customs and Revenue Agency is to administer and enforce the Act as passed by Parliament. Tax policy and amendments to the Act are the responsibility of the Department of Finance. Should you wish to pursue these concerns further, you may contact the Tax Policy Branch of the Department of Finance by writing to L'Esplanade Laurier, 140 O'Connor Street, Ottawa, Ontario K1A 0G5.
We trust our comments will be of assistance to you.
Yours truly,
Roberta Albert, CA
for Director
Business and Publications Division
Income Tax Rulings Directorate
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