S1-F4-C1, Basic Personal & Dependant Tax Credits

Introduction

The purpose of a Chapter History page is to highlight any amendments to the information contained in an interpretation bulletin that is now reflected in a chapter of an income tax folio as well as to identify any subsequent amendments to a folio chapter. It outlines amendments that have been made as a result of legislative changes and proposed legislative changes, precedential court decisions, as well as new or revised interpretations of the Canada Revenue Agency (CRA).

Except as otherwise noted, all statutory references herein are references to provisions of the Income Tax Act, R.S.C., 1985, c.1 (5th Supp.), as amended and all references to a Regulation are to the Income Tax Regulations, C.R.C., c. 945, as amended.

Update April 29, 2017

General

Income Tax Folio S1-F4-C1, Basic Personal & Dependant Tax Credits, replaces and cancels Interpretation Bulletin IT-513R, Personal Tax Credits.

In addition to consolidating the content of the former interpretation bulletin, general revisions have been made to improve readability. Any substantive technical and interpretive changes to the information outlined in the former interpretation bulletin are described below.

Legislative and other changes

Throughout the Chapter, all references to spouse have been changed to spouse and common-law partner based on the 2000 same-sex partner bill. The age tax credit under subsection 118(2) is not covered in this Chapter, as information related to this tax credit can be found on the CRA website. Similarly the Bankruptcy section of IT-513R is not included within this Chapter.

¶1.1 (formerly included in ¶2 of IT-513R) has been expanded to include the new credits that have been added since 1998 that form part of subsection 118(1).

¶1.2 (formerly included in ¶2 of IT-513R) has been updated to reflect the current lowest tax rate percentage of 15%.

¶1.3 (formerly ¶2 of IT-513R) has been updated to reflect that the dollar amounts and income limits for the basic personal & dependant tax credits (which are collectively referred to as the personal tax credits) under subsection 118(1) are indexed annually based on the Consumer Price Index. The indexation is no longer for annual increased amounts over 3% of the CPI. This paragraph also introduces a link to CRA’s indexation chart.

¶1.7 has been added to describe a legal parent of an individual.

¶1.12 (formerly part of the description of Spouse under Appendix A - Terminology of IT-513R). The description of marriage under subsection 252(4) was removed as the provision was repealed as a result of the same-sex partner bill.

¶1.13 and 1.14 have been added to describe a common-law partner as defined under subsection 248(1). An example has been added to illustrate living apart for 90 consecutive days.

¶1.15 (formerly part of the description of Spouse under Appendix A - Terminology of IT-513R) has been expanded to indicate that, for the purpose of these credits, family relationships do not continue to exist when a separation occurs for reasons other than death.

¶1.17 (formerly part of the description of Income under Appendix A - Terminology of IT-513R) has been expanded to reference the exception for situations involving a breakdown in a relationship when calculating the spouse or common-law partner tax credit.

¶1.22 - 1.23 have been added to introduce the family caregiver amount which was added by S.C. 2011, c.24, s.23(1).

¶1.24 (formerly described in ¶15 of IT-513R) has been expanded to clarify the term self-contained domestic establishment as defined in subsection 248(1).

¶1.27 (formerly ¶5 of IT-513R) has been modified to remove the reference to an income threshold for the spouse or common-law partner, which was removed for 2007 and subsequent tax years.

¶1.28 has been added to discuss eligibility for the family caregiver amount for a spouse or common-law partner.

¶1.29 (formerly ¶4 of IT-513R) has been updated to explain the income limit for the spouse or common-law partner in greater detail.

¶1.34 has been added to clarify the difference between living separate and apart due to a breakdown in a relationship and living separate and apart for other reasons.

¶1.38 (formerly ¶10 of IT-513R) has been updated to refer the reader to Income Tax Folio S1-F3-C3, Support Payments.

¶1.39 and 1.40 (formerly ¶11 and ¶13 of I-T513R) have been updated to replace the term "qualified relative" with the term "eligible dependant."

¶1.42 has been added to discuss eligibility for the family caregiver amount for an eligible dependant.

¶1.46 and 1.47 have been added to discuss the concept of being wholly dependent for support.

¶1.48 (formerly ¶14 of IT-513R) has been modified to remove the sentence, "No tax credit is allowable for a fetus or a stillborn child" to remove wording that could be considered insensitive. The interpretive position has not changed.

¶1.51 (formerly ¶19 of IT-513R) reflects the limitation for the eligible dependant tax credit under paragraph (b) of the description of B in subsection 118(1) and therefore ¶17 of IT-513R has been removed as it was no longer required.

¶1.52 has been added to introduce the limitation found under paragraph 118(4)(a.1) which was added as part of the 1998 federal budget (S.C. 1999, c.22).

¶1.53 and 1.54 (formerly ¶21 of IT-513R) have been expanded to further explain "for the same person" and "the same domestic establishment."

¶1.55 (formerly ¶21 of IT-513R) has been expanded to include Example 7 which explains the concepts discussed in ¶1.53 and 1.54.

¶1.56 has been added to discuss shared custody situations where parents with multiple children may each be eligible to claim the eligible dependant tax credit in respect of one child (but not the same child).

¶1.58 (formerly ¶22 of IT-513R) has been updated to refer the reader to Income Tax Folio S1-F3-C3.

¶1.59 - 1.69 have been added to provide details of the caregiver tax credit under paragraph (c.1) of the description of B in subsection 118(1). This is a new credit added to subsection 118(1) that was introduced in the 1998 federal budget by S.C. 1999, c.22.

¶1.71 (formerly part of ¶25 of IT-513R) has been updated to include "common-law partner."

¶1.73 has been added to identify that the family caregiver amount for an eligible dependant is included in the calculation for the dependant tax credit.

¶1.74 (formerly part of ¶24 of IT-513R) has been updated to clarify how the net income threshold impacts the calculation of the dependant tax credit.

¶1.76 (formerly part of ¶27 and ¶28 of IT-513R) has been updated to include a reference to Example 9 which illustrates an example showing how the dependant tax credit under paragraph (e) of the description of B in subsection 118(1) applies.

¶1.77 has been added to describe the limitation under paragraph 118(4)(d) which was added with the caregiver tax credit as part of the 1998 budget (S.C. 1999, c.22).

¶1.79 (formerly ¶30 of IT-513R) has been updated to refer the reader to Income Tax Folio S1-F3-C3.

¶1.80 - 1.85 have been added to provide details of the family caregiver tax credit under paragraph (b.1) of the description of B in subsection 118(1). This is a new credit added to subsection 118(1) that was introduced in the June 2011 budget (S.C. 2011, c.24, s.23(3)), for 2012 and subsequent tax years.

¶1.86 - 1.89 have been added to discuss the child tax credit which was introduced under the 2007 budget (S.C. 2007, c.29, s.9(4)) for 2007 and subsequent tax years. The child tax credit portion of (b.1) was repealed for 2015 and subsequent tax years by S.C. 2015, c.36, s.30.

¶1.90 - 1.92 (formerly paragraphs 35 to 38 of IT-513R) have been modified to remove information that is more administrative in nature. The reference to Income Tax Folio S5-F1-C1, Determining an Individual’s Residence Status has been added.