17 March 1994 Internal T.I. 9402527 - CHILD TAX CREDIT - SUPPORTING PERSON

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.

							March 17, 1994

	Charlottetown District Office		HEAD OFFICE
	Audit Division				Rulings Directorate
D. Zion
	Attention: B. Howlett			(613) 957-8953

							940252

Child Tax Credit Subsection 122.2(2) of the Income Tax Act (the "Act")

This is in reply to your memorandum of February 2, 1994 in which you request our opinion regarding whether or not the definition of a supporting person pursuant to paragraph 122.2(2)(b) of the Act would be applicable in the situation outlined therein. In the comments that follow unless otherwise stated, all statute references are to the Income Tax Act S.C. 1970-71-72, c.63 as amended, consolidated to June 10, 1993.

You have outlined a situation where a taxpayer,

XXXXXXXXXX

claimed Child Tax Credits (CTC) for the taxation years 1990 to 1992 inclusive based on advice contained in the publication "Preparing Your Income Tax Returns". More specifically, she did not include her common-law spouse's income as that of "other supporting person" for the purposes of calculating the CTC.

Your concern is whether the common-law spouse of an individual could be considered a "supporting person" as defined in paragraph 122.2(2)(b) of the Act.

Our Comments

Provided that XXXXXXXXXX has an "eligible child" (within the meaning assigned by paragraph 122.2(2)(a) of the Act), it is possible that her common-law spouse would qualify as a "supporting person" within the meaning assigned by subparagraph 122.2(2)(b)(ii) and that the supporting person's income would be included by virtue of subparagraph 122.2(1)(b)(i) in computing the amount, if any, of the CTC that may be claimed.

The definition of "supporting person" in paragraph 122.2(2)(b) of the Act includes a person where the eligible child is the child of the individual and the person who resided together at the end of the year. In this instance, it must be determined if the eligible child is the "child" of the common-law spouse who is not the natural parent. An individual will be considered a supporting person of the child in a situation where one of the extended meanings of child apply in respect of the relationship between that individual and the eligible child. The Income Tax Act, pursuant to subsection 252(1), provides that a "child" of a taxpayer includes an individual who is wholly dependent upon the taxpayer for support and is under the custody and control, in law or in fact, of the individual, or an adopted child of the taxpayer.

With respect to paragraph 252(1)(b) which extends the meaning of child to a person who is "wholly dependent" on the taxpayer, we would like to mention that in general terms, custody involves the right of determining the residence, protection, care (physical, mental, and moral), education, and religion of a minor child. The "wholly dependent" for support requirement must be met at some time in the year and this will depend on the facts of the situation.

Alternatively, paragraph 251(6)(c) states that for the purposes of the Act, "persons are connected by adoption if one has been adopted, either legally or in fact, as the child of the other....". Thus, persons for the purposes of the Act, are connected i.e., presumed to be related by adoption if one has been adopted, either legally or in fact, as the child of the other. If this can be established, then the child would be considered "an adopted child of the taxpayer" and thus fall into the extended meaning of "child" under paragraph 252(1)(d) of the Act. It is a question of fact whether or not the cohabitation of

XXXXXXXXXX

for the purposes of paragraph 252(1)(d) and thus meet the definition of a supporting person pursuant to 122.2(2)(b) of the Act.

Generally, the courts will not recognize a de facto adoption unless the "adoptive parent" exercised parental care and guidance on a continuing basis. In Anderson v. M.N.R., 3 DTC 1030, the Exchequer Court of Canada said that

" ...if we take the word "adoption" in its popular sense it means the act by which a person adopts as his own the child of another or, in other terms, the acceptance by a person of a child of other parents to be the same as his own child ".

In summary, given the information you have provided us, we are not in a position to provide you with a definitive answer as to whether the cohabitation of

XXXXXXXXXX

Consequently, the factors you should look for in order to decide if either type of relationship exists are the actual control and custody, exercise of parental care and responsibility on a continuing basis, dependency, and proximity of the individuals to each other.

We trust that our comments have been of assistance.

P.D. Fuoco
Section Chief
Personal and General Section
Business and General Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch