6 June 1996 External T.I. 9609045 - PAYMENT OF 1/2 OF CTB TO SPOUSE AS MAINTENANCE

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.

Principal Issues:

whether wife can deduct, as alimony & maintenance, 1/2 of the Child Tax Benefit which she receives each month and which she is required, as a term of the separation agreement, to split with her spouse. Is a joint custody situation (he is required to pay her $XXXXXXXXXX/mo. as maintenance)

Position:

No

Reasons:

does not appear to be maintenance (he must pay her $XXXXXXXXXX a month whether she receives the CTB or he does). It would appear that the agreement to split the CTB is the same as their agreement to split/share other expenses, reimbursements and benefits between themselves.

		960904
XXXXXXXXXX	Sandra Short

June 6, 1996

Dear XXXXXXXXXX:

Payment of one-half on Child Tax Benefits to (separated) spouse

This is in reply to your enquiry to the Surrey Tax Centre which asks whether you may deduct payments made by you to your spouse, from whom you are living separate and apart. These payments are made pursuant to XXXXXXXXXX of your separation agreement which states that "XXXXXXXXXX".

It is our opinion that you would not be entitled to a deduction for an "alimony or maintenance" amount when you share, with your spouse, any child tax benefits received by you. As with all child tax benefits, the benefits received by you, or your spouse, are not taxable and do not have to be included in income.

There is no provision in the Income Tax Act which provides for the pro-rating of the Child Tax Benefit. Usually, parents in joint custody situations can agree between them who will receive the child tax benefit and, if no agreement can be reached, the Department will agree to alternate cheques between the parents on some equitable basis. The agreement reached between you and your spouse is reflected in your separation agreement. While the agreement contemplates either party receiving child tax benefits, it appears that, at this time, you are the recipient of such benefits and, and in compliance with XXXXXXXXXX of your agreement, you are required to pay one-half of these benefits to your spouse.

A payor of alimony or maintenance is permitted a deduction for periodic payments made as an allowance pursuant to a decree, order, judgment or written agreement for the maintenance of the recipient, children of the recipient or both. We have reviewed the provisions of your separation agreement and it does not appear that the payment of one-half of child tax benefits received by you, and paid to your spouse, is for the "maintenance" of the children while in your spouse's custody. The agreement stipulates, among other things, that your spouse shall pay you $XXXXXXXXXX per month per child for the maintenance of the children for so long as the children are children of the marriage as defined by the Divorce Act, 1985. The requirement that your spouse pay such amounts for the children's maintenance remains constant and is not altered in any way by the receipt, by either party, of child tax benefits. It would appear that the agreement between yourself and your spouse to share equally a number of expenses, reimbursements and benefits, including the child tax benefit, is reflective of an intent by both parties to contribute equally to the financial costs of raising the children - with the exception of the requirement for your spouse to pay you $XXXXXXXXXX per month per child as an allowance which is payable on a periodic basis for the maintenance of the children. This amount, as an allowance payable on a periodic basis for the manintenance of the children, is required to be included in your income.

We trust our comments will be of assistance to you.

Yours truly,

John F. Oulton
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch