13 April 1999 Internal T.I. 9905747 - CAREGIVER TAX CREDIT

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:

The spouse of an individual (“Individual A”) wishes to claim the caregiver tax credit under proposed paragraph 118(1)(c.1) of the Act in respect of Individual A’s foster parent. The foster parent received social assistance in respect of Individual A from a provincial agency or the province of Newfoundland until Individual A reached the age of 19. In order for the spouse to be entitled to claim the credit, Individual A must have been the foster parent’s child pursuant to paragraph 252(1)(b) of the Act. This provision refers to a person who is wholly dependent on an individual for support and under the individual’s custody and control in law or in fact or was so immediately before such person reached the age of 19. Can Individual A be regarded as having been the foster parent’s child?

Position: No

Reasons:

The “wholly dependent” test and, arguably, the “custody and control” test have not been satisfied as the foster parent received social assistance payments from a provincial agency or the government of Newfoundland which was ultimately responsible for the care of the child.

		April 13, 1999

	SAINT JOHN TSO	HEADQUARTERS
	Client Services Directorate	M. Eisner
	Kathy Hackett	(613) 957-2138
		990574

Caregiver Tax Credit (the “Credit”)

This is in reply to your memorandum dated March 4, 1999 concerning the subject.

In the circumstances of your situation, XXXXXXXXXX (“Individual A”) lived with a foster parent (“Individual B ”) from XXXXXXXXXX until XXXXXXXXXX when Individual A was XXXXXXXXXX years of age. Individual B received social assistance payments for the care of Individual A until Individual A reached the age of 19. During XXXXXXXXXX when Individual B was unable to upkeep her residence, Individual A and her family (her husband and daughter) moved into Individual B’s residence and have resided there since that time. Individual B is currently XXXXXXXXXX years of age. The issue is whether Individual A’s spouse is entitled to claim the caregiver tax credit (the “Credit”) for the XXXXXXXXXX taxation year pursuant to proposed paragraph 118(1)(c.1) of the Income Tax Act (the “Act”).

Our Comments

In relation to the above circumstances, proposed paragraph 118(1)(c.1) of the Act allows the Credit to be claimed by an individual in respect of a parent for a taxation year who is resident in Canada and is 65 years or older where the individual, either alone or jointly with one or more persons, maintained a dwelling in which the parent resided.

With respect to the above comments, paragraph 252(2)(a) of the Act provides that a reference to a parent of a taxpayer includes a person whose child the taxpayer is or had previously been within the meaning of paragraph 252(1)(b) of the Act or a person who is the parent of the taxpayer’s spouse. Accordingly, in order for Individual A’s spouse to be eligible to claim the Credit, one of the requirements is that Individual A must have been Individual B’s child.

Paragraph 252(1)(b) of the Act refers to a person who is wholly dependent on the individual for support and under the individual’s custody and control in law or in fact or was so immediately before such person reached the age of 19. It is our view that the “wholly dependent” test has not been satisfied as Individual A received social assistance payments from a provincial agency or the Government of Newfoundland which was ultimately responsible for the care of the child. Accordingly, it is our view that Individual A would not have been Individual B’s child with the result that Individual A’s spouse would not be entitled to claim the Credit.

In connection with the above comments, we also refer you to the second bullet under the heading “Child” in Appendix A of Interpretation Bulletin IT-513R “Personal Tax Credits” which indicates that a child of an individual does not include a foster child for whom the foster parents receive support payments from an agency responsible for the child’s care.

Should Individual A wish to pursue an amendment to the Act with respect to her circumstances, she should contact the Department of Finance whose responsibilities include amendments to the Act. The address of that Department is 140 O’Connor St., Ottawa Ontario, K1A 0G5.

If you require further technical assistance, we would be pleased to provide our views.

For your information, a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the legislation Access Database (LAD) on the Department’s mainframe computer. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the LAD version or they may request a copy severed using the Privacy Act criteria which does not remove client identity. Requests for this latter version should be made by you to Jackie Page at (613) 957-0682. The severed copy will be sent to you for delivery to the client.

Jim Wilson
Section Chief
Business, Property & Employment Section II
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch