2 January 1992 Internal T.I. 9129847 F - Tax Credits for Child Ordinarily Not Resident with Mom

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.

January 2, 1992

Attention:  P. Keirstead

Tax Credit Claims in Respect of a Non-resident Dependant

19(1)

We are replying to your memorandum of October 18, 1991 concerning various tax credit claims made by the above noted individual.

24(1)

You have asked for our opinion on the mother's eligibility to claim a personal tax credit, the child tax credit and the federal sales tax credit in respect of this child.

From the facts provided, it would appear that the child was a non-resident of Canada and did not reside with his mother for the period in question. However we acknowledge that there may be extenuating circumstances of which we are not aware which may indicate that the child remained a resident of Canada during all or part of this period. An example of this might be where a child is absent from Canada for medical or educational reasons and has not severed any ties with Canada. Nevertheless, as stated in paragraph 5 of IT-221R2, an individual is presumed to have become a non-resident of Canada if the stay outside Canada is 2 years or longer.

Personal tax credit

It is your opinion that the taxpayer cannot claim a married equivalent tax credit in respect of the child but that she can claim a dependant tax credit based on the actual amount of support provided by filing form T1E.

We agree that where the mother was otherwise entitled to a married equivalent tax credit in respect of the child, she would not be so entitled for any year during which the child did not ordinarily inhabit the same self contained domestic establishment as she did for at least some period of time. For those years in which the child visited the mother for a period of time, a married equivalent tax credit may be available provided that, at the time of the visit;

1.     the mother was a person described in subparagraph 118(1)(b)(i),

2.     the mother was maintaining the self-contained domestic establishment in which she lived,

3.     the mother was actually supporting her child in that residence,

4.     the child was wholly dependent on the mother or the mother and other persons maintaining that self-contained domestic establishment and

5.     the child was under 18 years of age.

In our view, a visit in the ordinary sense of the word, would not ordinarily meet the above noted criteria since the child would ordinarily still be dependent on the primary caregiver who resides elsewhere. However, if it is established that the child is wholly dependent on the mother for the period of the visit, then the mother would be entitled to a credit under paragraph 118(1)(b) of the Act.

If the married equivalent tax credit is not available for a particular year, the mother may be entitled to a dependant tax credit for the child if the child was dependent upon her for support as determined by the criteria listed in paragraph 43 and 47 of IT-513 "Personal Tax Credits". However, it is not the amount of support which determines the tax credit; provided she is entitled to claim the tax credit (or deduction for years prior to 1988), the amount of the claim would be the amount as determined by paragraph 109(1)(d) or 118(1)(d) of the Act respectively. The primary purpose of submitting form T1E is to ensure that it is support that is being given rather than a gift and to determine whether the child (or other qualifying individual) is truly dependent on the taxpayer for support.

Child Tax Credit

You state that the mother is not entitled to the child tax credit for the years in question because the child was not resident in Canada during those years and that accordingly, the mother was not entitled to the family allowance payments which she received in respect of the child.

While a cursory review of the Family Allowance Act suggests that a family allowance payment is not payable in respect of a non- resident child, it is Health and Welfare Canada that has the responsibility of administering that Act. It may be that Health and Welfare Canada has additional information which may aid in determining the child's residence for the purposes of that Act.

While subsection 241(4) of the Income Tax Act precludes us from communicating information about the child's residency status to Health and Welfare Canada, the taxpayer may be able to obtain a letter from them explaining the circumstances under which her child, who is ordinarily absent from Canada, is entitled to family allowance payments.

Federal Sales Tax Credit

It is your opinion that the taxpayer is not entitled to the federal sales tax credit in respect of the child for 1990 because the child did not reside with the mother at the end of 1990.

While we agree that the credit is not likely available in respect of the child in question, it is our view that the reason for this would be because the child was not resident in Canada throughout the year (if this fact were established) and not because the child did not live with his mother at the end of a particular year.

Based on the definition of "qualified relation" in subparagraph 122.4(1)(b)(i) of the Act, a parent is able to claim the credit in respect of a child who does not reside with the parent at the end of a particular year provided that no one else has claimed an amount under section 118 in respect of that child for that taxation year; however, subsection 122.4(2) of the Act does not permit an amount to be claimed in respect of a qualified relation who was at no time in the year resident in Canada. Note that for 1986 and 1987 the federal sales tax credit is only available in respect of eligible individuals and qualified relations who were resident in Canada throughout the entire year.

B.W. DathDirectorBusiness and General DivisionRulings DirectorateLegislative and IntergovernmentalAffairs Branch

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