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  • Lobby to change CCRA rules

    Hi everyone, I am wondering why the rules for CCRA have changed in recent years. I am flat out bewildered as to why the Paying parent can't claim the Child support amounts they are paying to the Full custody parent. As well the parent receiving the payments do not have to claim this as income.

    Can someone explain this to me? Why is this the case. I realize the money is "supposed to be for the child" but in all reality, how can I ever verify that money is being well spent. The amount I am paying per month is quite significant. I am just curious why there is no lobby group in Ottawa to try and change this law as it seems extremely unfair for the paying parent.

  • #2
    I agree with you.
    These rules seem to have changed to benefit the receiving parent in many ways, and equally generates a disadvantage for the paying parent.

    I have read many articals and still I am not sure of the "why".

    Comment


    • #3
      Good luck getting those rules changed!

      Back in the early 90's a woman named Suzanne Thibadeau (sp?) in B.C. brought a constitional challenge all the way to the Supreme Court arguing that child support outght not to be taxable. She lost but the government was watching and siezed on the political opportunity created by the case and changed the rules in May, 1997 to make child support non-deductible to the payer and non-taxable to the recipient.

      The irony of the change was that, notwithstanding that the family was no longer nuclear in these situations, in most cases these rule changes took resources away from the family becuase typically the payer got more tax relief (deduction at higher tax rate) than the recipient had to pay (income inlusion at lower tax rate). Of course that argument presumes some goodwill between the parties (i.e. the net tax savings will see their way through for the children's benefit), which, as we all know, isn't always the case.

      Nonetheless, pretty good deal for the government, who get to keep the savings that would otherwise have gone to the family under the old rules, and they get to look good by championing the rights of downtrodden custodial parents who were (shockingly) being required to pay tax on support income.

      No doubt some will argue that the Federal Child Support Guidelines that flowed out this change in legislation already contemplated the non-taxation o these amounts and that child support amounts would have been higher under these Guidelines to reflect the fact that the payments were previously taxable. I suggest that a decent lawyer (big assumption) prior to the change in rules was always aware of the tax treatment of these amounts and would advise their client appropriately to ensure that the taxation issues were considered. Of course that wasn't always the case, and many many custodial parents found out the hard way after their income tax returns were reassessed to include taxable support.

      Which brings us back to Suzanne Thibadeau - I wonder if she was properly advised regarding the taxation of the child support when the agreement/order was made. Had she been, and I speculate here, then she may have known going in what to expect and may have not have been so upset about the tax rules and may never have gone to court.

      Now, how soon is the government going to change those rules?

      Comment


      • #4
        The CCRA directive changed about May 1996 when the first federal child support guidelines came to be. I believe the reasoning behind the change was apparently separated families were at an advantage compared to intact families.

        lv

        Comment


        • #5
          wasnt going to but have to say something;
          it shouldnt be tax deductible nor should CS be taxable......ITS FOR THE CHILDREN.....receiving parents certainly do not get rich off of it..........when it is paid....my ex hasnt paid any support since december even though in the FRO.....why should my child be yet again penalized for the fathers irresponsibility......by me being taxed that may put me in another tax bracket which would have me paying more taxes...essentially taking food from my childs mouth or clothes from their back......I have included ALL CS payment on my tax returns however (he chooses not to include on his....not my issue)....not like I am getting away with anything here nor is any other parent receiving support........and yes LV I agree that separated/divorced families do have an advantage against married/CL families.......no joint income to declare.......potentially take you from 40k/yr to 80K/per if you were married or CL thus increasing your taxes........

          Comment


          • #6
            Somewhat off topic but nonetheless

            I digress that separated families do not have an advantage over intact families when it comes to extra ordinary and special expenses of children. With intact families; such expenses are family decisions and there is no law to compel an intact family to contribute to such where as with separated families, basically a custodial parent decides and the access parent is left without a voice only by way of court action at considerable expense.

            lv

            Comment


            • #7
              Originally posted by littleman
              wasnt going to but have to say something;
              it shouldnt be tax deductible nor should CS be taxable......ITS FOR THE CHILDREN.....receiving parents certainly do not get rich off of it..........when it is paid....my ex hasnt paid any support since december even though in the FRO.....why should my child be yet again penalized for the fathers irresponsibility......by me being taxed that may put me in another tax bracket which would have me paying more taxes...essentially taking food from my childs mouth or clothes from their back......I have included ALL CS payment on my tax returns however (he chooses not to include on his....not my issue)....not like I am getting away with anything here nor is any other parent receiving support........and yes LV I agree that separated/divorced families do have an advantage against married/CL families.......no joint income to declare.......potentially take you from 40k/yr to 80K/per if you were married or CL thus increasing your taxes........
              What does your ex's irresponsiblity have to do with the fairness of the tax law?

              "May" put you in another tax bracket? Sounds like you're not sure how's it's affecting your situation.

              Why are you inlcuding the CS in your income? You don't have to, unless it is pursuant to an agreement made before the rules changed and the agreement has not been varied since the rules changed. Even then you can go to court to force the new rules to apply.

              In Canada we don't file joint tax returns. Each spouse is still taxed on their incomes alone.

              Comment


              • #8
                Originally posted by dadtotheend
                What does your ex's irresponsiblity have to do with the fairness of the tax law? His irresponsibilty has alot to do with it.....if it was taxable then he would still claim 12 months of support even though he didnt pay it.....past actions can predict future behavior.....my opinion
                "May" put you in another tax bracket? Sounds like you're not sure how's it's affecting your situation. Im positive how it effects my situation......my ex hasnt paid CS in months and doesnt seem to care or nor does it bother him in the least....for others who have 3 or more children and they were receiving (hypothetically) 700$ a month per child...times by 12 that is an additional 8400$/year....and times by 3 thats another 25k per year......tell me that doesnt put you in another tax bracket......and yes some people are getting 700$ per child due to the income of payor.......JUST AN EXAMPLE
                Why are you inlcuding the CS in your income? You don't have to, unless it is pursuant to an agreement made before the rules changed and the agreement has not been varied since the rules changed. Even then you can go to court to force the new rules to apply. I claim it so there is no chance what so ever of it coming back to haunt me EVER!!!!!!

                In Canada we don't file joint tax returns. Each spouse is still taxed on their incomes alone.
                If CCRA was to audit you and they find you are married or in CL you HAVE to file as such.....in which claiming the others income is mandatory.....(I am in tax field I know for sure 100%)....if you solely claim your own income when married and your "lucky number comes up for audit you have serious explaining and more than not back taxes to come clean for.....you cannot pick and choose whether to file jointly or not......married or CL couples do not have the same tax "break" that separated parents of non custodial parents do (claiming equivalent to spouse for at least one child)

                Comment


                • #9
                  Let me get this straight...You're declaring CS on your tax return paid after the change in rules in 1997 because you're afraid that they might review you???

                  If so, can someone please back me up and confirm that those child support payments are not taxable.

                  You might work in the tax business but you don't know the rules.

                  Comment


                  • #10
                    Child Support

                    Child support is non taxable to the recipient but when one files his/her taxes they want to know the amount of support that one gets.Then later there a column where you distinguish the CS non taxable amount

                    Comment


                    • #11
                      That's true, but I fear that the amounts are being included in taxable income.

                      Comment

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