2 October 1992 Income Tax Severed Letter 9227847 - Transfer of Disability Tax Credit, Meaning of Reside

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.

October 2, 1992

SURREY TAXATION CENTRE Personal and General
Taxpayer Service Section Section
Assessing Division A. Humenuk
(613)957-2134
Attention: J. Drew

922784

Transfer of Disability Tax Credit We are replying to your memorandum of September 23, 1992, wherein you ask whether disability tax credit can be transferred to a supporting adult child where the individual with the disability is confined to a provincially funded hospital.

For the purpose of our response, we assume that the person with the disability is otherwise entitled to the disability tax credit and that the portion of the credit which the supporting child seeks to deduct is the excess as described in paragraph 7 of IT-519 "Medical Expense and Disability Tax Credits". We also assume that no other person has made any claim under section 118 in respect of the physically or mentally infirm parent. There are 3 circumstances enumerated in subsection 118.3(2) of the Act in which a supporting child may be entitled to claim the transferrable portion of the disability tax credit in respect of a parent who is physically or mentally infirm; that is,

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IV. where the child is
entitled to claim a
personal tax credit
under paragraph
118(1)(b) of the Act
in respect of that
parent,

V. where the child would
have been so entitled
if the child had been
unmarried and the
parent had had no
income or

VI. where the child would
have been entitled to
a deduction under
118(1)(d) of the Act
in respect of that
parent under the same
two assumptions as
listed above.

The first issue which needs to be considered is whether the parent is wholly or partially dependent upon the child for support. Except as otherwise noted below, we will assume that the parent is dependent upon the child for support and that if either of the first two circumstances are otherwise applicable that the parent is wholly dependent upon child for support.

Another issue involved in a claim for the equivalent to married tax credit is that the taxpayer must maintain a self-contained domestic establishment in which both the taxpayer and the dependant live. In your memorandum you state that an individual would not be denied this credit in respect of a hospitalized dependant, presumably based on the comments in paragraph 6 of IT-513 "Personal Tax Credits". The comments in paragraph 6 of IT-513 address the question of support not residency; unless a taxpayer supports the dependant, no claim can be made under either paragraph 118(1)(b) or (d) of the Act. As stated above, in addition to the requirement for a greater degree of support paragraph 118(1)(b) also includes a requirement that the dependant actually reside in the same self-contained domestic establishment.

It is a question of fact as to whether a parent confined to a hospital can be considered to reside in the self-contained domestic establishment with the supporting child. While a hospitalized spouse would not normally be considered to have changed residences solely by reason a hospital stay (and thus no longer be considered to reside with the other spouse), the same may not be true for parents supported by their adult children. Some factors which may be relevant to the determination of residence would include the dependant's place of residence before the confinement to the hospital and long term plans for that dependant's residency. For example, a hospitalized parent would not be considered to reside with the supporting child if the parent did not reside with the child prior to the hospitalization. Alternatively, a parent who did reside with the adult child may be considered to have changed residences if there is no reasonable expectation that the parent will return to the child's self-contained domestic establishment after the period of hospitalization is complete and the adult child makes an alternate use of the parent's former sleeping quarters. On the other hand, a parent who ordinarily resides with a supporting child would not ordinarily be considered to have changed residences if the period of hospitalization was for specific, albeit lengthy period of time.

If the child is unable to claim the equivalent to married tax credit in respect of the parent because the parent does not reside with the child (and consequently would not have been able to claim the credit under paragraph

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118(1)(b) even if the parent's income had been nil and the child had been unmarried), a transfer of the disability tax credit may still be available if the child would have been able to claim a personal tax credit for the parent under paragraph 118(1)(d) of the Act under the appropriate assumptions. As you have stated, a person who provides support to a dependant is not precluded from claiming a tax credit under paragraph 118(1)(d) in respect of that dependant solely by reason of the dependant's long term stay in a provincially funded hospital. Nevertheless it is still a question of fact as to whether the hospitalized individual is dependent upon that other person for support.

Accordingly, it is our view that in the appropriate circumstances, the unused portion of the disability tax credit would be transferrable to a supporting child even if the parent does not reside with that child.

J.A. Szeszycki
for Section Chief
Personal and General Section
Business and General Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch

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