16 May 2001 Internal T.I. 2001-0081167 - EQUIVALENT-TO-SPOUSE CREDIT

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:

1. How long does the dependent have to reside with parent / guardian in order to qualify for equivalent-to-spouse credit?

2. Must the taxpayer live alone (i.e., single, divorced, separated, or widowed) at the same time as supporting the dependent person?

Position TAKEN:

1. Question of fact.

2. Yes.

Reasons:

1. Dependent on the particular circumstances.

2. Subparagraph 118(1)(b)(i) states that "at that time" the conditions in clauses (A) through (D) must all be met.

XXXXXXXXXX 2001-008116
T. Young, CA
May 16, 2001

Dear XXXXXXXXXX:

Re: Equivalent-to-Spouse Credit

This is in reply to your inquiry of April 20, 2001, which was forwarded to us by the Winnipeg Tax Services Office, requesting our views on the equivalent-to-spouse credit.

You have asked us how long a dependent has to reside with the taxpayer in order for the taxpayer to be able to claim the equivalent-to-spouse credit. You also stated that the instructions in the "General Income Tax and Benefit Guide" for completing line 305 (Equivalent-to-spouse amount) of the personal income tax return are unclear as to whether the taxpayer must live alone (i.e., single, divorced, separated, or widowed) at the same time as supporting the dependent person. You have asked us for clarification.

Our Comments

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 70-6R4, Advance Income Tax Rulings, dated January 29, 2001. Also, it would be necessary to review all relevant documentation before a determination of the tax implications could be made. Therefore, we can only provide you with the following general comments.

The requirements for claiming the equivalent-to-spouse credit are discussed in paragraphs 11 through 22 of interpretation bulletin IT-513R, Personal Tax Credits. In order to claim the equivalent-to-spouse credit, an individual must meet the conditions set out in paragraph 118(1)(b) of the Income Tax Act (the "Act"). To qualify for this tax credit, 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. During the time, the child would have to live with the parent. This would not include situations where the parent only has visitation rights or "legal access" rights and the child is still living with the other parent. Whether a child is wholly dependent on a taxpayer "at any time in the year" is a question of fact and can only be determined by examining all of the facts in a given situation. Although the child must be wholly dependent, the Act does not set out a specific length of time necessary for a taxpayer to qualify for the credit.

Subject to subsection 118(5) of the Act, 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 one 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. The parent claiming the credit must also meet the other requirements of subparagraph 118(1)(b)(i) of the Act, i.e., 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.

For years subsequent to the year of marriage breakdown, where the spouses or common-law partners or former spouses or common-law partners live separate and apart, subsection 118(5) of the Act also 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. Proposed amendments to the preamble of subsection 118(5) of the Act included in the March 16, 2001, Notice of Ways and Means Motion would change "spouse or former spouse" to "spouse or common-law partner or former spouse or common-law partner."

With respect to your concern that the instructions in the "General Income Tax and Benefit Guide" for completing line 305 (Equivalent-to-spouse amount) of the personal income tax return are unclear as to whether the taxpayer must live alone at the same time as supporting the dependent person, the 2000 Guide states in part (underlined for emphasis):

You may be able to claim an equivalent-to-spouse amount if, at any time in the year, you met all of the following conditions:

• you were single, divorced, separated, or widowed;
• you supported a dependant; and
• you lived with the dependant (in most cases, in Canada) in a home that you maintained.

In our view, this means that all of the conditions must be met at the same time, which is supported by the provisions of the Act outlined above.

You can obtain a copy of the above-mentioned publications, as well as other Canada Customs and Revenue Agency (CCRA) publications, from our website at www.ccra-adrc.gc.ca or from your local Tax Services Office.

We trust our comments will be of assistance to you.

Yours truly,

John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate

c.c. Leigh Williamson, Winnipeg Tax Services Office

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