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.
Principal Issues: Whether income of a supporting person who has no Canadian sourced income must be considered for the purpose of subsection 63(2) of the Act.
Position: Yes
Reasons: Legislation and intent of Finance (see 9716927).
XXXXXXXXXX 2005-013844
Shaun Harkin, CMA
November 15, 2005
Dear XXXXXXXXXX:
Re: Technical Interpretation Request: Childcare Expenses/Exception
We are writing in response to your email of June 23, 2005, wherein you asked whether you are eligible to claim childcare expenses in the following situation:
? You are working in Canada on a temporary 6-month contract.
? Your wife, who is non-resident, is residing with you but working full time for an employer based in the United Kingdom. She has no Canadian source income.
? You have employed a person to provide childcare to your children who reside with you in Canada during your 6-month period of work.
We understand that your concern is whether you can claim childcare expenses when your income exceeds your spouse's world income.
It is our opinion that income of a supporting person referred to in subsection 63(2) of the Income Tax Act (the "Act") means income as determined under section 3 of the Act notwithstanding that the supporting person is a non-resident person of Canada. In other words, it is our opinion that the word "income" of a supporting person as used in subsection 63(2) of the Act means world-wide income not only Canadian source income which is required to be included in computing taxable income earned in Canada under subsection 115(1) of the Act.
Accordingly, where your world income exceeds your spouse's world income subsection 63(2) of the Act would apply and the amount you may deduct for childcare expenses under that provision would be nil. The fact that your spouse has no Canadian source income is not one of the exceptions, described in subsection 63(2) of the Act, to the general rule that the lower income supporting person must claim the childcare expenses.
Please note that our comments are based on specific provisions of the Act. The role of the CRA is to administer and enforce the Act and Income Tax Regulations as enacted by Parliament. It is the role of the Department of Finance, which is responsible for tax policy, to consider changes to existing tax legislation.
The foregoing comments represent our general views with respect to the subject matter. As indicated in paragraph 22 of Information Circular 70-6R5, the above comments do not constitute an income tax ruling and accordingly are not binding on the Canada Revenue Agency. Our practice is to make this disclaimer in all instances in which we provide an opinion.
We trust the above comments are of assistance.
Yours truly,
Robin Maley
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch
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