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: Is example 2 in paragraph 39 of IT-513R correct in view of subsection 118(5) of the Act?
Position: Yes
Reasons: Paragraph 118(5)(a) of the Act applies to deny a deduction under subsection 118(1) of the Act in respect of a person where throughout the year the taxpayer lives separate and apart from the spouse or former spouse to whom the taxpayer is required to pay a support amount.
XXXXXXXXXX 2001-007001
J. E. Grisé
March 20, 2001
Dear XXXXXXXXXX:
Re: Personal Tax Credits
This is in reply to your letter of February 3, 2001, requesting clarification of Example 2 in paragraph 39 of Interpretation Bulletin IT-513R, Personal tax Credits.
You are particularly concerned with the following statements in the example:
"In addition, for years subsequent to the year of separation, throughout which John and Karen live separate and apart because of the breakdown of their marriage, John cannot claim the dependant tax credit for Mark. This is because John is required to pay support amounts to Karen in respect of Mark."
The restriction of not being able to claim the dependant tax credit for Mark is set out in subsection 118(5) of the Income Tax Act (the Act) which reads as follows:
"No amount may be deducted under subsection (1) in computing an individual's tax payable under this Part for a taxation year in respect of a person where the individual is required to pay a support amount (as defined in subsection 56.1(4)) to the individual's spouse or former spouse in respect of the person and the individual
(a) Lives separate and apart from the spouse or common-law partner or former spouse or common-law partner throughout the year because of the breakdown of their marriage or common-law partnership; or
(b) Claims a deduction for the year because of section 60 in respect of a support amount paid to the spouse or common-law partner or former spouse or common-law partner."
A claim for the dependant tax credit for Mark would be denied on the basis of paragraph 118(5)(a) of the Act where in a taxation year John is required to pay support payments to Karen, and John and Karen lived separate and apart throughout that year because of the breakdown of their marriage. Although the example deals with a claim for the dependant tax credit, paragraph 118(5)(a) of the Act would also apply to deny a claim for the equivalent-to-spouse amount for Mark.
We hope our comments are helpful
Yours truly,
John Oulton, CA
For Director
Business and Partnerships Division
Income Tax Rulings Directorate
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