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: Is a grandmother entitled to the wholly dependent person tax credit in a situation where the grandmother is caring for a grandchild under a kinship care arrangement?
Position: No, an individual that receives support payments from a government agency to be used for the purposes of caring for the person would mean that the person is not wholly dependent for support on the individual and therefore is ineligible to claim the Credit.
Reasons: One of the requirements for an individual to be able to claim the Credit is that the person must be wholly dependent for support on this individual. In general terms, support involves the provision of the basic necessities of life such as food, shelter, and clothing. “Wholly dependent for support” on the individual means that the person is financially dependent on the individual such that the individual provides almost entirely for the person’s well-being.
XXXXXXXXXX
Dear XXXXXXXXXX:
Thank you for your correspondence expressing your concern about how employees of the Canada Revenue Agency (CRA) treat taxpayers and how they interpreted the provisions of the Income Tax Act regarding the tax credit for a wholly dependent person, also known as the amount for an eligible dependant. I apologize for the delay in replying.
You are concerned that the CRA denied a grandmother’s claim for the tax credit because she is receiving monthly payments from social services to care for her grandchild under a kinship care arrangement. However, without more information, I can only offer the following general comments.
Kinship care is an important option for placing children and youth who are under the government’s care. Kinship care placements are part of the range of placement options for a child in care. According to information on the XXXXXXXXXX Web site, kinship care is when children are placed with extended family, such as a grandparent, or someone with whom they have a significant relationship. Kinship caregivers receive financial compensation, training, and support similar to that of foster parents.
For an individual to claim the tax credit, the person must be wholly dependent for support on this individual. In general terms, support involves providing the basic necessities of life, such as food, shelter, and clothing. “Wholly dependent for support” on the individual generally means the person is financially dependent on the individual such that the individual provides almost entirely for the person’s well-being. If an individual receives support payments from a government agency responsible for the person’s care to care for the person, the person is not wholly dependent for support on the individual.
In other words, the government agency is providing significant financial support when it pays support to the kinship caregiver. As well, the agency also sets certain standards of care for the child’s well-being that it monitors and expects the kinship caregiver to provide to the child. Therefore, a child is not wholly dependent for support on a kinship caregiver, and the caregiver is ineligible to claim the tax credit.
The Act states that an individual can claim the tax credit only for a person who is wholly dependent for support on the individual. I understand from your letter that you disagree with this tax policy. The CRA is responsible for administering the tax system and applying the current tax legislation as enacted by Parliament, while the Department of Finance Canada is responsible for developing and evaluating federal income tax policy and amending income tax law. I am therefore forwarding a copy of our correspondence to the Honourable James M. Flaherty, Minister of Finance, for his consideration.
I would like to thank you for bringing to my attention your experience with CRA employees and the length of time it took to resolve this issue. The CRA is constantly striving to improve its response times, give individuals information that is technically correct, and communicate clearly and concisely. I have therefore asked CRA officials to review this issue the next time they update the CRA Web site and the General Income Tax and Benefit Guide.
I trust that the information I have provided is helpful.
Yours sincerely,
Gail Shea, P.C., M.P.
c.c.: The Honourable James M. Flaherty, P.C., M.P.
Minister of Finance
House of Commons
Ottawa ON K1A 0A6
Ms. Joanne Bessette
Manager
Individual Information Section
Taxpayer Services Directorate
Room 640
750 Heron Road
Ottawa ON K1A 0L5
Nancy Shea-Farrow
(905) 721-5099
2012-043385
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