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  • eligible dependant

    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payor of child support in shared custody parents to claim the eligible dependant tax credit, and this is an unfair and outdated application of the law.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”

  • #2
    Nicely written.

    You know they'll just close the loophole and make it so net payor's can't claim eligible dependants. You need to understand this

    Precedence:
    government > children > women > men

    The reason receivers of child support can claim eligible dependants is because generally they are poorer anyways and so one way or another the government is going to pay for them. Same reason for legal fees, child tax benefits etc... Its also why welfare payments are reduced to people who receive child support (the government considers it as "income").

    For these types of things to succeed it will take a lot more work and more of a lobbying effort with the dual pronged approach of "we have votes" and "you're doing the right thing for the kids"

    Divorce/Marriage/Child Support/Spousal Support is a privatized welfare system and its essential to the economy which is why even without being married, you are considered married because they need a legal basis to entrap you.

    Comment


    • #3
      This is very simple (yet complicated )to fix.

      It is very sad but the wording does have to be exact

      Parent1 pays parent2 $xxxx per month in child support as per the guidelines

      Parent2 pays paren1 $xxxx per month in child support as per the guidelines

      If your order does not specify this and you can prove that this actually happens file a formal appeal and take them to tax court.

      If you have tried all of that then the letter probably won't help but is worth sending

      Comment


      • #4
        I actually emailed this to both the Minister of Revenue and the Taxpayers' Ombudsman :-)

        =========
        Dear Ms. Findlay / Mr Dubé,

        I am writing to you today, seeking assistance with an appeal that I made for my 2012 tax return and now my 2013 tax return is under review for the same issue. CRA has denied my right to claim one of my children under a shared custody arrangement. I have gone through all the various CRA appeal stages and my next step is going to tax court. Every discussion I have had with a CRA agent I find myself having to educate them on their own guideline documents and I have been given the runaround on many occasions because I feel they do not want to spend a few minutes to better understand the facts. On several occasions I have asked to speak with a supervisor but they refused to transfer the call or the supervisor refused to speak with me. It has been so frustrating, as a single dad, every penny counts.

        In 2011 I separated from my ex-spouse and had shared custody (50/50) of my two children in Ottawa Ontario. When filing my taxes I made use of the CRA website to make sure I met all the conditions to claim an eligible dependant. On page 11 of the P102 – Support Payments guideline it clearly identifies a shared custody situation that was identical to mine (see Example 2). I have provided evidence (Separation Agreement with additional documentation) that clearly shows both my ex-spouse and I are required to make support payments but because I am the higher income earner, we both decided that I would pay the difference also known as the offset amount. For both taxation years, CRA agent’s refused to acknowledge their own guidelines on shared custody support payments and basically told me that because I am the only parent making support payments (Section 118 (5) of the Tax Act), I cannot claim my child. This totally contradicts the P102 guideline. It is unfortunate the CRA agents do not seem to understand their own guidelines or the Tax Act. Section 118 (5.1) of the Tax Act provides a caveat whereby, when both parents are required to make payments, like in my situation, they are both entitled to claim a child as an equivalent-to-spouse. In my situation I have two children so both my ex-spouse and I claim one child, which we both agreed on as captured in the separation agreement.

        I have done a lot of research in this area and I feel like an expert, especially when I have to point out the tax rules and guidelines to the CRA agent. I am not sure if it is related to a lack of competence or training? I feel the system has let me down two years in a roll now. I feel that the process is prolonged by CRA in an attempt to discourage tax payers to follow through. Fortunately I have the stamina to see this through until the end, no matter how much I feel mistreated. I feel that I am not only fighting for myself but other parents in my situation. It seems the only way to resolve wrongs these days is to go to the media, which I am totally prepared to do, however I wish to speak with you first before going that route.

        Sincerely,
        ==========

        Comment


        • #5
          Great letter. Keep us posted whether you get a reply. We are in a similar situation. My husband pays half of child care directly to the provider and receives a tax receipt in his name. CRA has indicated over and over that Dad can claim Child as a dependent in order to claim the child care he pays. Yet when Dad receives his assessment, the child care is never included. It's frustrating to say the least.

          Comment


          • #6
            I guess I should have added some context around my letter... I've been replying to several different treads lately and not thinking too much about the interconnections (or lack of) :-)

            I was in a battle with CRA and recently won my appeal for 2012 & 2013 (just prior to getting a court date) for claiming an eligible dependant under shared custody arrangement.

            I used this letter during the appeal process and really think it helped expedite my case. I actually received a response back from Ms Findlay's office on the issue a week after it all got settled and there were suggestions in the letter that it was elevated.

            Comment


            • #7
              FB has the correct wording. I helped draft successful separation agreements for shared custody that so far, have never been questioned. I reviewed the CRA guidelines before drafting my wording. Here is what we stated:

              "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) Father’s table amount is $500 per month for 2010.
              (b) Mom’s table amount is $600 per month for 2010.
              (c) The parties agree that the total support obligation for the family is the sum which is $1100 per month for 2010, and each party is responsible for $550.00.
              (d) Mother agrees that Father is owed the balancing amount of $50.00 per month in child support.


              Note that this is a half-offset calculation, but it would be worded similarly for full offset.

              Comment


              • #8
                I fully agree with you fighting. I worded my amendment of the original separation agreement (SA) almost exactly like this... but when I spoke to the supervisor of the CRA agent handling my appeal... she said plain and simple... "as soon as we hear the word offset (or difference) .. we do not recognize this as both parents paying child support (CS)" ... she even told me to look at the court decisions on the Tax Court's website. And she is right, look up the cases on offset and line 305 they have not been favorable to the Appellant.

                When I pointed out that this totally contradicts the CRA P102 guidelines, after some stumbles I was told to take the appeal to the Tax Court of Canada. Which I did. Never quite got there since they reversed their decision (more details in other threads).

                I'm not saying don't write your SA like the above, I think this is a good approach or even copy & paste the example text right from the P102 document. In my opinion I think it really depends on which CRA agent is looking at your case, they are not consistent on this subject.

                I'm pretty sure if the wording of my original SA was written like the above, claiming my dependant probably would not have gotten reviewed and denied. I'm not the only one with SAs written incorrectly... the onus needs to be on the lawyers writing these things... that's why they get paid the big bucks... simply using old templates is no longer valid.

                As mentioned in a different thread, another option could be... to actually exchange full table amounts with your ex... thereby taking away assumptions made by the incompetent CRA agent... so there is no longer an argument whether "offset" means only one parent paying.

                Comment


                • #9
                  Anybody in Quebec deal with this issue?

                  Comment


                  • #10
                    The calculation method for shared custody child support is different for Quebec when both parents are in Quebec or when you are separated in Quebec (it's the federal method when one parent is in Quebec and the other is elsewhere).

                    It's the same idea though: In shared custody, both parents are contributing financially towards their children. I don't know what the proper wording would be for Quebec because of the different calculation method, and you certainly can't use the exact wording from the Interpretation Bulletin and actually describe what is done!

                    Comment


                    • #11
                      Line 305

                      I find myself in the same boat regarding the Eligible Dependant Decuction. I have retained a Tax Lawyer to help my family lawyer with the new wording of my child support agreement.
                      This whole thing is going to cost me at least $2000 in legal fees assuming Mom cooperates. If she doesn't it could go as high as $5000. Plus if I am not successful in winning the appeal retroactively I'm out another $5000 for the last two years of tax refunds.
                      118(5) and 118(5.1) need their intent clarified. The way CRA are enforcing this policy is pure lunacy.
                      [you cannot advertise your group or business here without the express permission of the forum owner]
                      Last edited by blinkandimgone; 02-12-2015, 05:08 PM. Reason: advertising

                      Comment

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