Claiming eligible dependant

[noblefather]

CRA has recently rejected my claim for an eligible dependant. I have joint and shared custody of my children. My separation agreement clearly states the agreement of who will claim each dependant. My seperation agreement states that child support is based on Federal & Provincial Child Support Guidelines.

CRA is well aware of both of the incomes as it pertains to the agreement however despite numerous lawyers reviewing our agreement, CRA has decided to take things into their own hands and reject the fact that the amount that I pay is based on the child support guidelines.

I have already appealed this decision and once again been rejected. My next course of action if to go to court to get this overruuled. The issue seems to be that my agreement does not clearly indicate (for Canada Revenue's purposes) that my ex pays me for child support and hence I pay the offset.

Could someone please help me with the exact phrases re: child support that should appear in an agreement that CRA wouldn't have an issue with. I'm completely perplexed how lawyers use this canned software to create an agreement and CRA rejects it when any legal expert can see that it refers to table and how the amount is determined.

[shellshocked22]

Lawyers know surprisingly little about tax issues. I would strongly recommend you consult with a good accountant. They should be able to help you out - at a fraction of the cost of a lawyer !

As you note, CCRA can be very "picky" so you need to ensure that your accountant approves of your wording in the separation agreement.

[Kenny]

Both my wife (with her ex) and me (with my ex) have been through this with Revenue Canada.

Where a court order exists granting primary residence with both parents, only one parent can claim. If the parents both claim, CRA with (suppose to) deny both.

[Gary M]

Originally Posted by Kenny

Where a court order exists granting primary residence with both parents, only one parent can claim. If the parents both claim, CRA with (suppose to) deny both.

Hmmmmm.... I seem to recall reading that if there is equal residency (60/40 or better) and there are two (or more) children, each parent may claim one child as an eligible dependent.

Cheers!

Gary

[shellshocked22]

My understanding is the same as Gary notes above

[inseperationhell]

Gary and shellshocked22 - can you dig up where you read that? My understanding was only 1 claim not dependent on the # of children in a shared custody arrangement - if you both claim it, it will be automatically denied for both.

[Gary M]

Note
If you and another person were required to make support payments for the child for 2011 and, as a result, no one would be entitled to claim the amount for an eligible dependant for the child, you can still claim this amount provided you and the other person(s) paying support agree that you will be the one making the claim. If you cannot agree on who will claim this amount for the child, neither of you can make the claim.

Can you claim the amount for an eligible dependant?

In effect, in shared residence situations you are both paying support so all you have to do is agree on which child you each will claim.

Cheers!

[Gary M]

As a result, subsection 118(5.1) of the Income Tax Act was enacted for 2007 and subsequent taxation years to allow for one person to claim the credit for a child when both parents share custody and pay support for the child while in the other parent’s custody. This should allow for both parents to claim the wholly dependent person credit in situations where more than one child is involved and both parents have custody and pay support for the child to the other parent during some time duration in the year.

As a result, properly written separation agreements could result in over $4,300 of combined tax savings per year for separated or divorced individuals with more than one child when both parents share custody and pay support for the same children.

The Eligible Dependant Credit and Shared Parenting - 18/03/2011

Cheers!

Gary

P.S. I've got two teens full-time: Anybody want to borrow one for a tax credit?

[Kenny]

Oh yes, if there are two children, then sure, one parent for each child. I was thinking that both parents were trying to claim the same child. Gary's post is 100% correct!

Noble Father, you said, "CRA has decided to take things into their own hands and reject the fact that the amount that I pay is based on the child support guidelines." My question is, why should CRA care if child support is guideline or not?

Gary is again correct in his note from CRA. In my opinion, I think you are being screwed around with from CRA.

Once I had both kids in my full-time care, both my ex-spouse and I tried to claim both kids. Of course our claims were rejected, but they did send us both a series of forms to complete that were used to determine the primary parent for CRA purposes. At the end of it, I was allowed to claim.

[billm]

Originally Posted by Gary M

The Eligible Dependant Credit and Shared Parenting - 18/03/2011

Cheers!

Gary

P.S. I've got two teens full-time: Anybody want to borrow one for a tax credit?

This from Gary's link:

"As a result, properly written separation agreements could result in over $4,300 of combined tax savings per year for separated or divorced individuals with more than one child when both parents share custody and pay support for the same children."

So if someone could post a "properly written separation agreement" clause that works for the CRA that would be great.

The CRA has their head up their ass, I have been denied claiming one of my three kids (the ex claims one of the other) despite having 50/50 and paying offset CS and proving it, but I won't give up!

In 2011 I did successfully claim UCCB etc and now the kids are listed on my CRA online account as being a dependent of mine so maybe 2011 will work.