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  • Claiming eligible dependant

    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.

  • #2
    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.

    Comment


    • #3
      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.

      Comment


      • #4
        Originally posted by Kenny View Post
        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

        Comment


        • #5
          My understanding is the same as Gary notes above

          Comment


          • #6
            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.

            Comment


            • #7
              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!

              Comment


              • #8
                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?

                Comment


                • #9
                  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.

                  Comment


                  • #10
                    Originally posted by Gary M View Post
                    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.
                    Last edited by billm; 01-30-2012, 12:04 PM.

                    Comment


                    • #11
                      My understanding is CRA just wants you to agree on who will claim the dependent.

                      My ex. wrote up a letter with both of our names and SIN # at the top of the page, then went on to explain we had shared parenting and described the routine.

                      He went on to explain that we had agreed who would make the claim. He did not say anything about who was paying support, (I think this part is the important part), just that we had agreed who would make the claim. He also listed the childs name and SIN #.

                      I signed it and CRA approved his claim.

                      Comment


                      • #12
                        How does this appear to everywhere as a good clause to support the claim from CRA?

                        As the parties agree to share custody, they confirm that they will financially support the children by contributing equally to their combined child support amount in accordance with the Child Support Guidelines.

                        (a) Dad’s table amount is $X per month for 2010.
                        (b) Mom’s table amount is $Y per month for 2010.
                        (c) The parties agree that the total support obligation for the family is the sum which is $X+Y per month for 2010, and each party is responsible for $(X+Y)/2.
                        (d) Mom agrees that Dad is owed the balancing amount of Y-((X+Y)/2) per month in child support.


                        Comment


                        • #13
                          The letter my ex sent didn't say any of this;

                          (a) Dad’s table amount is $X per month for 2010.
                          (b) Mom’s table amount is $Y per month for 2010.
                          (c) The parties agree that the total support obligation for the family is the sum which is $X+Y per month for 2010, and each party is responsible for $(X+Y)/2.
                          (d) Mom agrees that Dad is owed the balancing amount of Y-((X+Y)/2) per month in child support.
                          It just said we agreed who was going to make the claim and we both signed it.

                          Comment


                          • #14
                            i think keeping it simple is best. The quote posted from the CRA indicated that the parents had to agree. So a letter with your full names, SINs, names of children and who will claim which child (or in which year) is the most detail they need. Anything else is going to confuse them.

                            When I hadto clarify I sent in the first page of our order, and the page that dealt with claiming the eligible dependant. I did not send any details on CS, and they were fine with it.

                            Comment


                            • #15
                              Regarding claiming eligible dependent in a 50/50 offset CS situation.

                              I'm not sure if this document has been posted, but I find it very clear regarding my situation (I am denied eligible dependent despite having 50/50 access with offset CS).

                              My SA states:

                              The monthly sum to be paid from one parent to the other starting on the 1st day of September, 2008
                              for so long as each child of the marriage remains a child of the marriage according to the following formula:
                              (it then goes on to describe the CS offset method, adjusting yearly).

                              But in this document:
                              http://www.cra-arc.gc.ca/E/pub/tg/p102/p102-lp-11e.pdf

                              on page 35 it states that the agreement must obligate both parents to pay each other. (Whether they, for convinience, only write one cheque from the greater income earner to the lesser has nothing to do with it).

                              So specifically it seems my SA, though equivalent in outcome to what the CRA is stating is required for a 'payor' to claim a dependent, does not technically meet the requirements. This is because it makes the payment obligation of the offset from the greater income earner to the lessor in writing, rather than stating they must both pay each other. This is crazy because no one actually pays each other! So this is a complete and utter playing with words on the part of the CRA, and makes no sense.

                              I am wondering if I can use my current SA wording though to win an appeal to claim an eligible dependent since it is painfully obvious that my situation and SA matches in practice the very specific example in the CRA document linked above - specifically example 2 on page 35.

                              Or do I have to slightly change the wording of my SA and beg my ex to sign it?
                              Last edited by billm; 11-01-2012, 03:24 PM.

                              Comment

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