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 a divorced/separated parent can claim a tax credit pursuant to paragraph 118(1)(b) or paragraph 118(1)(d) of the Act for an adult child who attends university.
Position: General comments given because we are missing many important facts. However, if the adult child is not dependent on the particular parent solely because of mental or physical infirmity then the answer is no. Some very general comments on the taxation of child support have also been provided.
Reasons: The law.
XXXXXXXXXX 2009-032178
Michael Cooke, CA
November 17, 2009
Dear XXXXXXXXXX :
Re: Dependant and Equivalent-to-spouse Tax Credits
We are writing in reply to your letter of April 29, 2009, concerning your eligibility to claim a tax credit in respect of your XXXXXXXXXX -year old daughter, who is in full-time attendance at university. We apologize for the delay in our response.
We understand that your former spouse or common law partner ("Former Spouse") pays monthly child support pursuant to a court order made in XXXXXXXXXX . Although you indicate that your daughter suffered an injury and was unable to work for a period of time during the XXXXXXXXXX taxation year, it does not appear that she is mentally or physically disabled.
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 a request for an advance income tax ruling submitted in the manner set out in Information Circular 70-6R5, "Advanced Income Tax Rulings", dated May 17, 2002. This Information Circular and other Canada Revenue Agency ("CRA") publications can be accessed on the internet at http://www.cra-arc.gc.ca.
Since the situation described in your correspondence deals with a completed transaction involving specific taxpayers and because we do not have sufficient information to conclusively determine whether all the conditions would be met for claiming a tax credit, any further consideration of this matter should be handled by the appropriate TSO. However we are prepared to offer the following general comments.
Tax Credits:
We understand you are already aware that your daughter can transfer a portion of her tuition, education and textbook credits to you, so we will not discuss these particular credits. However, also of potential application to your situation is the wholly dependent person credit in paragraph 118(1)(b) of the Income Tax Act (the "Act") or, as it is often referred to, the "equivalent to spouse" credit. In addition to other tests of eligibility (described in detail in Interpretation Bulletin IT-513R, Personal Tax Credits), this credit is available only in respect of children under the age of 18 or in respect of a child who is dependent because of a mental or physical infirmity.
Similarly, the "dependant credit" under paragraph 118(1)(d) of the Act, although available in respect of a dependant who is 18 years of age or over, requires that the dependant be dependent on the particular individual solely because of mental or physical infirmity. As noted in paragraph 23 of IT-513R, it is not necessary for the dependant to live in the same residence as the individual claiming this tax credit. Paragraph 25 of IT-513R explains that a person qualifies as a "dependant" of an individual for a taxation year if the person is dependent on the individual for support at any time in the year and is a child of the individual.
Paragraph 26 and Appendix A (under the heading "Support") of IT-513R, explains that support involves the provision of the basic necessities of life such as food, shelter and clothing. Support is usually given voluntarily, but includes support under a legal commitment. If a child is in receipt of social assistance or any other type of support, the individual must be able to show that the other assistance is insufficient to fully meet their child's basic needs and that the child had to rely on the support provided by the individual in order for the person to claim the dependant tax credit.
As described in Appendix A (under the heading "mental or physical infirmity") of IT-513R, the term "mental or physical infirmity" is not specifically defined for the purposes of subsection 118(1) of the Act and, therefore, takes its ordinary meaning. For the purposes of the equivalent-to-spouse tax credit and the dependant tax credit, for a person who is 18 years of age or over to be dependent on an individual because of mental or physical infirmity, this dependency must be brought about solely by reason of the infirmity, and the degree of the infirmity must be such that it requires the person to be dependent on the individual for a considerable period of time.
Whether or not a person is dependent upon another individual solely because of mental or physical infirmity is a question of fact that can only be determined on a case-by-case basis, which means we cannot offer an opinion regarding your situation. However, we note that in the CRA's view, a temporary illness or injury is not considered to be an infirmity for these purposes.
Support Payments:
You questioned why your Former Spouse is able to deduct the support payments he pays in respect of your daughter. Briefly, as a consequence of amendments applicable after April 1997, the child support provisions of the Act were changed to eliminate both the mandatory inclusion of child support in the recipient parent's income and the deduction available to the payer provided a number of conditions are met. Generally, this revised tax regime for child support applies to written agreements or court orders made after April 1997 and to child support amounts payable under the terms of a written agreement or court order made before May 1997 if the agreement or court order has been varied or changed after April 1997 or a special joint election has been made to have the revised tax regime apply.
In situations where this revised tax regime for child support does not apply, if the payer is able to deduct the child support amounts paid the recipient will generally have to include the amounts received in income. The tax treatment of support payments is discussed in more detail in Interpretation Bulletin IT-530R, Support Payments, and in Guide P102, Support Payments.
Finally, we note that the CRA is responsible for administering the tax system and applying the tax legislation as enacted by Parliament. However, the Department of Finance Canada is responsible for developing tax policy and amending tax legislation and as such any questions relating to the fairness of Canada's income tax laws should be directed to them.
We trust our comments will be of assistance to you.
Yours truly,
Renée Shields
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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