I'm sending this to the Minister of Finance and my MP. Does anyone have any comments or corrections?
I've taken out two parts (marked by [...] to stay a bit more private here.
Dear Hon. Joe Oliver,
I am writing to you today to let you know that tax law in Canada is unfairly applied to single parents that have shared custody of their children. My concern is specifically regarding line 305 (eligible dependant) and, by extension, line 366.
According to the guidance provided by Canada Revenue Agency (CRA), in shared custody situations, neither parent is allowed to claim the eligible dependant credit because both pay child support[i]. CRA does, however, allow the credit to be claimed by either parent if certain conditions are satisfied. In particular, the conditions require a specific wording to allow the net payor of child support in shared custody parents to claim the eligible dependant tax credit, and this is an unfair and outdated application of the law. I explain below.
In shared custody situations, both parents are obligated by law to provide for the children, both in terms of care and financial support, under the provisions of the applicable legislation. This is the relevant and constant element in any shared custody regime. In this way, it can be said that both parents are “payors” of child support.
The amount of child support the parents are required to pay to each other is usually determined with reference to tables that specify different amounts of child support owing based on total income and number of children, with the higher-income parent paying the net difference of the prescribed table amount to the other parent. In this way, the financial contribution of each parent to the raising of the children is equalized. Such a calculation method is used federally and in most provinces and territories (except Quebec which uses the same principle but a different calculation). For convenience, both shared-custody parents do not pay each other each month: the parent the with higher prescribed table amount of child support owing pays the other parent the difference between the two amounts. Divorce or Separation judgments are usually written to detail the how much this parent owes the other each month, with a specification that they are operating under a shared custody regime. The underlying legislation is also indicated. The details of how the amount was determined is not usually indicated because it is standard.
The CRA recognizes that both parents are effectively payers of child support in their Guidance by indicating that neither parent is entitled to claim the credit because both pay child support. However, as explained Pamphlet P102, Support Payments, they require that the official documentation provides a detailed explanation of how the mathematical calculations are made, and that “for convenience” only one makes an actual payment each month. Thus, for CRA, who is eligible for the credit depends on the actual wording in official documentation concerning the separation or divorce of the parents of the child(ren). Eligibility is thus dependent on semantics: using the correct words to describe a routine mathematical exercise when the fundamental basis for shared custody is always the same. Some parents that pay a net amount of child support can claim the credit; others cannot even though the underlying provisions of their shared-custody regime are exactly the same.
I suggest that this is unnecessary, illogical, non-intuitive, outdated (the law presumably was drafted to be applicable to a sole-custody situation), and discriminatory. If both parents are obligated to provide for their children in a shared custody regime, then either (or neither) should be eligible to claim the credit for a child. Eligibility should not be dependent on precise wording in separation or divorce documentation.
For example, [...] As a single parent, I am denied over $2000 each year that this continues.
I am aware that this is not a problem isolated to my situation, as evidenced by discussions of many Canadians in similar situations on the Ottawa Divorce Forum: http://www.ottawadivorce.com/forum/ (an information and advice forum for Canadians going through separation or divorce), and conversations with acquaintances in a similar situation.
I propose that the application of the law should be updated to better reflect the situation of many parents that have shared custody of their children. Both parents (or neither parent) in a shared custody situation should be eligible to claim the eligible dependant credit if they can demonstrate that the child(ren) are indeed in a shared custody situation (e.g., through official documentation). The provision would thus properly acknowledge and reflect the underling provisions that are always associated with shared custody and ensure the provision is fairly applied to all those in the same shared-custody situation. Attempting to identify who is a payor of child support (and basing it on semantics) may be applicable in a sole-custody situation but not in a shared custody situation.
I hope you will consider my concern and my suggestion in review of your policies for implementation of the eligible dependant credit and in discussion with my MP [...]. There are a number of shared-custody parents on the Ottawa Divorce forum that will also be interested in your reply.
Thank you very much for your consideration and I look forward to your reply.
[i] From the 2013 Guidance Document: If you and another person had to make support payments for the child for 2013 and, as a result, no one would be entitled to claim the amount for an eligible dependent for the child, you can still claim this amount if you and the other person(s) paying support agree you will be the one making the claim”
I've taken out two parts (marked by [...] to stay a bit more private here.
Dear Hon. Joe Oliver,
I am writing to you today to let you know that tax law in Canada is unfairly applied to single parents that have shared custody of their children. My concern is specifically regarding line 305 (eligible dependant) and, by extension, line 366.
According to the guidance provided by Canada Revenue Agency (CRA), in shared custody situations, neither parent is allowed to claim the eligible dependant credit because both pay child support[i]. CRA does, however, allow the credit to be claimed by either parent if certain conditions are satisfied. In particular, the conditions require a specific wording to allow the net payor of child support in shared custody parents to claim the eligible dependant tax credit, and this is an unfair and outdated application of the law. I explain below.
In shared custody situations, both parents are obligated by law to provide for the children, both in terms of care and financial support, under the provisions of the applicable legislation. This is the relevant and constant element in any shared custody regime. In this way, it can be said that both parents are “payors” of child support.
The amount of child support the parents are required to pay to each other is usually determined with reference to tables that specify different amounts of child support owing based on total income and number of children, with the higher-income parent paying the net difference of the prescribed table amount to the other parent. In this way, the financial contribution of each parent to the raising of the children is equalized. Such a calculation method is used federally and in most provinces and territories (except Quebec which uses the same principle but a different calculation). For convenience, both shared-custody parents do not pay each other each month: the parent the with higher prescribed table amount of child support owing pays the other parent the difference between the two amounts. Divorce or Separation judgments are usually written to detail the how much this parent owes the other each month, with a specification that they are operating under a shared custody regime. The underlying legislation is also indicated. The details of how the amount was determined is not usually indicated because it is standard.
The CRA recognizes that both parents are effectively payers of child support in their Guidance by indicating that neither parent is entitled to claim the credit because both pay child support. However, as explained Pamphlet P102, Support Payments, they require that the official documentation provides a detailed explanation of how the mathematical calculations are made, and that “for convenience” only one makes an actual payment each month. Thus, for CRA, who is eligible for the credit depends on the actual wording in official documentation concerning the separation or divorce of the parents of the child(ren). Eligibility is thus dependent on semantics: using the correct words to describe a routine mathematical exercise when the fundamental basis for shared custody is always the same. Some parents that pay a net amount of child support can claim the credit; others cannot even though the underlying provisions of their shared-custody regime are exactly the same.
I suggest that this is unnecessary, illogical, non-intuitive, outdated (the law presumably was drafted to be applicable to a sole-custody situation), and discriminatory. If both parents are obligated to provide for their children in a shared custody regime, then either (or neither) should be eligible to claim the credit for a child. Eligibility should not be dependent on precise wording in separation or divorce documentation.
For example, [...] As a single parent, I am denied over $2000 each year that this continues.
I am aware that this is not a problem isolated to my situation, as evidenced by discussions of many Canadians in similar situations on the Ottawa Divorce Forum: http://www.ottawadivorce.com/forum/ (an information and advice forum for Canadians going through separation or divorce), and conversations with acquaintances in a similar situation.
I propose that the application of the law should be updated to better reflect the situation of many parents that have shared custody of their children. Both parents (or neither parent) in a shared custody situation should be eligible to claim the eligible dependant credit if they can demonstrate that the child(ren) are indeed in a shared custody situation (e.g., through official documentation). The provision would thus properly acknowledge and reflect the underling provisions that are always associated with shared custody and ensure the provision is fairly applied to all those in the same shared-custody situation. Attempting to identify who is a payor of child support (and basing it on semantics) may be applicable in a sole-custody situation but not in a shared custody situation.
I hope you will consider my concern and my suggestion in review of your policies for implementation of the eligible dependant credit and in discussion with my MP [...]. There are a number of shared-custody parents on the Ottawa Divorce forum that will also be interested in your reply.
Thank you very much for your consideration and I look forward to your reply.
[i] From the 2013 Guidance Document: If you and another person had to make support payments for the child for 2013 and, as a result, no one would be entitled to claim the amount for an eligible dependent for the child, you can still claim this amount if you and the other person(s) paying support agree you will be the one making the claim”
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