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 funds received by a person as child support payments can be invested without the income and/or capital gains being attributed to the person receiving the child support payments.
Position: Attribution rules in 74.1(2) apply to attribute to the transferor income earned on funds transferred to a minor child. There is no rule to attribute capital gains and/or capital losses
Reasons: While the attribution rules were not applied to the old family allowance received on behalf of a child (an administrative position), subsection 74.1(2), amended in 1994 applicable to 1993 and subsequent years, specifically excludes the child tax credit from attribution. Given that there is no exception provided in subsection 74.1(2), the attribution rules would apply.
XXXXXXXXXX 980599
A. M. Brake
June 5, 1998
DearXXXXXXXXXX:
Re: Child Support payments
This is in reply to your letter of February 26, 1998, requesting our views as to whether income arising from the investment of child support payments attributes to the child or the parent receiving the payment. You indicated the old family allowance, the new child tax benefit program, and also the BC child tax credit can be used for investment in the minor child’s name, with all capital gains or losses accruing to the child, without attribution.
While we agree that the Department did not apply the attribution rules to income and losses arising from the investment of the family allowance, this treatment did not extend to alimony and maintenance payments made under the old system. Subsection 74.1(2) of the Income Tax Act now specifically excludes the new child tax benefit from the attribution rules. There is no specific exclusion with respect to child support payments and, therefore, the provision may apply. It should be noted, however, that subsection 74.1(2) only applies to attribute income and losses to, in this case, the recipient of the child support payments, since that person has the sole discretion with respect to the use of the money. There is generally no attribution of taxable capital gains and allowable capital losses on property acquired with funds transferred to minors.
We trust our comments will be of assistance to you.
Yours truly,
Jim Wilson
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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