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  • Eligible Dependant-Shared Custody-2 Kids-Yet Again

    So I have been told both yes and no from different CRA employees. And I know I have posted on this topic before. But CRA is reassessing me now, as I expected that they would.

    2 kids, 50% at each home, payor paying offset amount of CS as well as SS.

    Recipient has claimed child A as eligible dependant. My argument is (and one person I have spoken with at CRA has agreed with me on this, trying to reach her again though has been tough) that we are both technically paying each other CS, therefore the recipient receives the offset amount. Which then means that technically neither of us are allowed to make the eligible dependant claim. However, as has been mentioned here, and as I keep pointing out, there is that rule around "if you and another person were required to make support payments for the child for 2009 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 providing that 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".

    As mentioned, in our situation, there are 2 children. Why can't we each claim 1 child as eligible dependant? They just keep saying, no...you (the payor) are paying child support and so no you can't make that deduction. To me, it seems as though the CRA reps I have spoken to do not understand the way that child support is calculated, and offset, when there is a shared custody situation.

    Once and for all, am I mistaken? If not, any advice on how to sort this out? Thanks in advance. And apologies for beating this dead horse so badly...

  • #2
    To me, your position has merit. On the face, this scenario appears too complex for CCRA front line agents to contend with. I think, you may have to raise your concerns at a higher level. I hope you're communicating in writing with CCRA.

    Comment


    • #3
      I have made a few phone calls to ask questions. But otherwise, yes I am communicating in writing.

      Just wondering if anyone else can comment from experience...someone in the same situation. 2 kids, shared custody (50/50), paying offset CS.

      Thanks.

      Comment


      • #4
        I went through this same procedure a couple of years ago. See this thread:

        http://www.ottawadivorce.com/forum/f...t-spouse-5573/

        I sent in a re-assessment request to claim equivalent to spouse for the previous years that I thought I wasn't able to. I spelled out our situation exactly and enclosed a copy of the text you quoted, and was granted the deduction.

        Please let us know if you have the same result.

        DD

        Comment


        • #5
          From the Divorcemate document that was referenced in the other thread...

          Tax Considerations of Shared Parenting
          A party may claim the eligible dependant credit (formerly, the equivalent-to-spouse
          credit) if a party is single, divorced, separated and not supporting his/her spouse, or
          widowed and has a dependant person (child under age 19 years old, infirm child, parent
          or grandparent who is living with him/her) whom the party is supporting. The dependant
          child must be related to the party claiming the credit by blood, marriage, common-law
          partnership or adoption. It is important to note that the payor of child support cannot
          claim the dependant credit for any child for whom he or she is paying support.

          In cases of shared custody, the Canada Revenue Agency (“CRA”) has indicated in the
          past that neither parent is entitled to claim the eligible dependant credit, presumably on
          the basis that each is paying an amount of child support to the other, even if the amount
          results in one net payment. To get around this past treatment, agreements were usually
          structured to reflect only one party as paying support to the other in cases of shared
          custody (ie. as opposed to reflecting the support paid as the net amount paid by way of
          setoff of each party’s payment to the other). However, recently, in its 2008 General
          Income Tax and Benefit Guide (the “2008 Guide”), the CRA has indicated that where the
          child resides with both parents throughout the year (ie. both parties required to make
          support payments for the child), either parent may make the claim for the eligible
          dependant credit, provided the parents agree. If the parents cannot agree on who is
          entitled to make the claim, neither parent will be able to claim the credit. It would
          therefore appear that it is not necessary to worry about papering the agreement/order to
          reflect support as being paid by only one party. It would also appear that the higher
          income earner (ie. the one who could most benefit from the credit from a tax perspective)
          could claim the credit as long as the parties agree. On that basis, it would also appear
          possible for each party to be able to claim the eligible dependant credit where there are
          two or more children in shared custody. Nevertheless, one must bear in mind that the
          2008 Guide is just that – a guide – and CRA retains the ultimate decision-making power
          with respect to these credits.

          Thanks for the info DD. I will keep you posted.

          Comment


          • #6
            Eligible dependant, shared custody 2 children

            Just won a case for my son whose Court Order stated that based on his income of x and her income of x he had to pay an offsett amount of x. The CRA insists that the wording has to state he pays x and she pays x or they will not qualify for the deduction in income tax. So I applied to the court for a change in wording (readily approved) and then applied to the Income Tax Court to overrule the CRA decision and WON !
            Check the CRA site for the wording and google "How to change a family order"
            Family Law in British Columbia: Legal Services Society It is of course easiest if you can get the consent of your spouse rather than having to go to court to have the order changed. I drafted the forms (29, 30 and 33), had them signed and delivered to the court and within two weeks got the signed off change to the Court Order.

            Comment

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