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.
Principal Issues: In a situation where two parents share custody, does the same parent have to claim both the amount for a wholly dependent person and the child tax credit in respect of the child.
Position: Yes. If the child did not reside with both parents throughout the year, only the parent or the spouse or common-law partner who claims the wholly dependent amount for the child may claim the child tax credit for that child.
Reasons: Wording of the legislation and as per guidance found in General Income Tax Guide - 2009.
XXXXXXXXXX
2009-035109
Elsey Trang
June 24, 2010
Dear XXXXXXXXXX :
Re: Child Tax Credit - Paragraph 118(1)(b.1) of the Income Tax Act (the "Act")
We are writing in response to your fax dated December 9, 2009 regarding the child tax credit. In your fax, you have outlined three scenarios and have asked for our views regarding the claiming of the child tax credit (line 367 on Schedule 1 of the 2009 Federal Tax return) and the wholly dependent person credit (line 305 on Schedule 1 of the 2009 Federal Tax return) in respect of each situation. In our phone conversation on February 23, 2010, you further confirmed that in all three scenarios, the divorced parents live separate and apart, are unmarried and do not live in a common-law partnership.
The three scenarios, as we understand them, are as follows:
In scenario 1, divorced parents share joint custody of one child 50/50 between them. No child support is paid by either parent to the other and the divorced parents are in agreement with respect to the claiming of the credits. You have asked for confirmation that it is possible to split the credits in the following manner: one parent claims the wholly dependant person credit for the child while the other parent claims the child tax credit in respect of the child (i.e., the same parent does not have to claim both credits in respect of the child).
In scenario 2, divorced parents share joint custody of two children 50/50 between them. No child support is paid by either parent to the other and the divorced parents are in agreement with respect to the claiming of the credits. You have asked for confirmation that it is possible to split the credits in the following manner: one parent claims the wholly dependant person credit for one child and the child tax credit for both children while the other parent claims the wholly dependant person credit for the other child.
In scenario 3, divorced parents share joint custody of three children 50/50 between them. No child support is paid by either parent to the other and the divorced parents are in agreement with respect to the claiming of the credits. You have asked for confirmation
that it is possible to split the credits in the following manner: one parent claims the wholly dependant person credit for one child and the child tax credit for two of the children while the other parent claims the wholly dependent person credit for one child and the child tax credit for the third child.
Pursuant to subparagraph 118(1)(b.1)(ii) of the Act, only an individual who is the parent of a child who is under the age of 18 at the end of a taxation year who claims the non-refundable tax credit for a wholly dependent person in respect of that child, can claim the child tax credit in respect of that child. This is further confirmed in the General Income Tax and Benefits Guide- 2009 at line 367 - Amount for children born in 1992 or later, as follows:
You can claim $2,089 for each of your and your spouse's or common-law partner's children who are under 18 years of age at the end of the year if the child resided with both of you throughout the year.
If the child did not reside with both parents throughout the year, the parent or spouse or common-law partner who claims the amount for an eligible dependent (line 305) for that child can make the claim.
Therefore, in all three scenarios described above, only the parent that claims the amount for a wholly dependent person for a child (at line 305 of Schedule 1 of the Federal tax return) may claim the child tax credit (at line 367 of Schedule 1 of the Federal tax return) in respect of that same child.
Yours truly,
Randy Hewlett
for Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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