Child Tax Benefit, does it offset Section 7?
- Thread starter BluePat
- Start date
SingingDad
New member
I have actually been looking into this myself recently, and the short answer is yes... if there is a tax benefit associated with the expense (ie medical expenses, child's activity amount, child's art amount) it should be considered with the benefit. My interpretation is that the tax benefit is taken of the top and the rest is shared. Also (I actually asked this in this same forum a few days ago) Benefits paid from CCRA for the child is included as income for apportioning the s. 7 expenses.
Here are the relevant sections from the Guidelines (if I'm understanding your question correctly).
From: Family Law Act - O. Reg. 391/97
Subsidies, tax deductions, etc.
(3) Subject to subsection (4), in determining the amount of an expense referred to in subsection (1), the court must take into account any subsidies, benefits or income tax deductions or credits relating to the expense, and any eligibility to claim a subsidy, benefit or income tax deduction or credit relating to the expense. O. Reg. 159/07, s. 2.
And from: Family Law Act - O. Reg. 391/97
Special or extraordinary expenses
3.1 To calculate income for the purpose of determining an amount under section 7 of this Regulation, deduct the support, not including child support, paid to the other parent or spouse and, as applicable, make the following adjustment in respect of universal child care benefits:
(a) deduct benefits that are included to determine the parent or spouse’s total income in the T1 General form issued by the Canada Revenue Agency and that are for a child for whom special or extraordinary expenses are not being requested; or
(b) include benefits that are not included to determine the parent or spouse’s total income in the T1 General form issued by the Canada Revenue Agency and that are received by the parent or spouse for a child for whom special or extraordinary expenses are being requested.
Here are the relevant sections from the Guidelines (if I'm understanding your question correctly).
From: Family Law Act - O. Reg. 391/97
Subsidies, tax deductions, etc.
(3) Subject to subsection (4), in determining the amount of an expense referred to in subsection (1), the court must take into account any subsidies, benefits or income tax deductions or credits relating to the expense, and any eligibility to claim a subsidy, benefit or income tax deduction or credit relating to the expense. O. Reg. 159/07, s. 2.
And from: Family Law Act - O. Reg. 391/97
Special or extraordinary expenses
3.1 To calculate income for the purpose of determining an amount under section 7 of this Regulation, deduct the support, not including child support, paid to the other parent or spouse and, as applicable, make the following adjustment in respect of universal child care benefits:
(a) deduct benefits that are included to determine the parent or spouse’s total income in the T1 General form issued by the Canada Revenue Agency and that are for a child for whom special or extraordinary expenses are not being requested; or
(b) include benefits that are not included to determine the parent or spouse’s total income in the T1 General form issued by the Canada Revenue Agency and that are received by the parent or spouse for a child for whom special or extraordinary expenses are being requested.
SingingDad
New member
From the pdf of the alberta guidelines: http://www.qp.alberta.ca/documents/Regs/2005_147.pdf
Schedule 3 Page 22.
"Special or extraordinary expenses
4 To calculate income for the purpose of determining an amount
under section 7 of these Guidelines, deduct the spousal or adult
interdependent partner support paid to the other parent and, as
applicable, make the following adjustment in respect of universal
child care benefits
(a) deduct benefits that are included to determine the parent’s
total income in the T1 General form issued by the Canada
Revenue Agency and that are for a child for whom special
or extraordinary expenses are not being requested, or
(b) include benefits that are not included to determine the
parent’s total income in the T1 General form issued by the
Canada Revenue Agency and that are received by the
parent for a child for whom special or extraordinary
expenses are being requested."
I couldn't find a correlating section for the one that says tax deductions must be considered, but you can read the specifics on page 5 of the PDF.
Schedule 3 Page 22.
"Special or extraordinary expenses
4 To calculate income for the purpose of determining an amount
under section 7 of these Guidelines, deduct the spousal or adult
interdependent partner support paid to the other parent and, as
applicable, make the following adjustment in respect of universal
child care benefits
(a) deduct benefits that are included to determine the parent’s
total income in the T1 General form issued by the Canada
Revenue Agency and that are for a child for whom special
or extraordinary expenses are not being requested, or
(b) include benefits that are not included to determine the
parent’s total income in the T1 General form issued by the
Canada Revenue Agency and that are received by the
parent for a child for whom special or extraordinary
expenses are being requested."
I couldn't find a correlating section for the one that says tax deductions must be considered, but you can read the specifics on page 5 of the PDF.
SingingDad
New member
Took another look and here is what I was looking for on page 7
"(3) Subject to subsection (4), in determining the amount of an
expense referred to in subsection (1), the court must take into
account any subsidies, benefits or income tax deductions or credits
relating to the expense, and any eligibility to claim a subsidy,
benefit or income tax deduction or credit relating to the expense."
Both sections are exactly the same.
"(3) Subject to subsection (4), in determining the amount of an
expense referred to in subsection (1), the court must take into
account any subsidies, benefits or income tax deductions or credits
relating to the expense, and any eligibility to claim a subsidy,
benefit or income tax deduction or credit relating to the expense."
Both sections are exactly the same.
SingingDad
New member
Not to get this thread off topic, but one problem I have is that parts seem to contradict each other, specifically regarding the UCCB.
The UCCB is issued by the CRA and is supposed to offset Child care expenses for children under 6. To me it makes sense that it is included since Child care is a s. 7 expense and it's issued by CRA. but Section 7 (4) explicitly says it's not included.
The UCCB is issued by the CRA and is supposed to offset Child care expenses for children under 6. To me it makes sense that it is included since Child care is a s. 7 expense and it's issued by CRA. but Section 7 (4) explicitly says it's not included.
It's not really dedicated to child care. It is issued to all families, even if there is a stay-at-home parent, or if the children are cared for by grandparents during the day, etc. Familiies that have no child care costs still receive the benefit.
The only thing that ties the benefit to child care is the name. There is no legal obligation to dedicate it to daycare fees. Thus, the benefit is included in total income, just like the CCTB.
The only thing that ties the benefit to child care is the name. There is no legal obligation to dedicate it to daycare fees. Thus, the benefit is included in total income, just like the CCTB.
SingingDad
New member
But then what does 7 (4) mean?
Universal child care benefit
(4) In determining the amount of an expense referred to in subsection (1), the court shall not take into account any universal child care benefit or any eligibility to claim that benefit. O. Reg. 159/07, s. 2.
Universal child care benefit
(4) In determining the amount of an expense referred to in subsection (1), the court shall not take into account any universal child care benefit or any eligibility to claim that benefit. O. Reg. 159/07, s. 2.
The previous subsection (3) states that:
I'll try to be clearer: If you have 20k income and the gross amount of child care is 8k. You would receive (ballpark) 4.6k in CCTB and 1.2k UCCB. The child care is 50% subsidized, and for my example the subsidy is paid to the parent. The parent would have 8k in receipts but we have to apply the subsidy. It usually doesn't work that way, but this is for illustration...
Subsection (4) states that the UCCB is an exception to that, and will not be applied directly to calculation of the expense. It is still added to income.
I'll try to be clearer: If you have 20k income and the gross amount of child care is 8k. You would receive (ballpark) 4.6k in CCTB and 1.2k UCCB. The child care is 50% subsidized, and for my example the subsidy is paid to the parent. The parent would have 8k in receipts but we have to apply the subsidy. It usually doesn't work that way, but this is for illustration...
- The 1.2k UCCB is taxable income in the eyes of CRA and is added to the 20k.
- The parent would have 8k of gross child care, minus 4k in subsidy, so net child care is 4k.
- Child care is further reduced by the tax benefit. At 21.2k, the marginal tax rate is about 20%. The average tax rate is about 10% The child care would receive a deduction at the 20% rate, so should be reduced by that amount.
- Final net child care is therefore 3.6k.
- CCTB is now added to line 150 to determine the amount used for proportionate split of the expense. This gives 25.8k for the calculation of the split.
- Assuming the other parent's income is 75k, you are looking at a 26/74 split.
SingingDad
New member
Thank you that does make more sense.
Basically UCCB is still included as income for section 7 expenses, but it is not attributed to any specific expense.
Now if I could only get my STBX to disclose all the pertinent amounts it would be great. I have estimates, but that's it.
Basically UCCB is still included as income for section 7 expenses, but it is not attributed to any specific expense.
Now if I could only get my STBX to disclose all the pertinent amounts it would be great. I have estimates, but that's it.
In this thread, nobody mention the factors in the calculation.
Canada child tax benefit/related provincial and territorial benefits calculator
UCCB is taxable and only for children under 6 yr of age to a maximum of 100/month.
CCTB is base on the income and given to the primary care provider and if you declare you have share custody, you only received half. The other parent will received the other half base on his salary meaning if it is higher, he will get less than the parent with the lower salary.
Situation scenarios will influence greathly and i do not beleive that you can easily do those calculations.
If you beleive you are entitle to it because of sharing custody, you should file the RC66 form RC66 - Canada Child Benefits Application
Canada child tax benefit/related provincial and territorial benefits calculator
UCCB is taxable and only for children under 6 yr of age to a maximum of 100/month.
CCTB is base on the income and given to the primary care provider and if you declare you have share custody, you only received half. The other parent will received the other half base on his salary meaning if it is higher, he will get less than the parent with the lower salary.
Situation scenarios will influence greathly and i do not beleive that you can easily do those calculations.
If you beleive you are entitle to it because of sharing custody, you should file the RC66 form RC66 - Canada Child Benefits Application
Thanks so much everyone, especially SingingDad for the elaboration on page 7, that nails it as far as I can tell!
It's truely sad when your ex's legal respresentation tries to use tactics that circumvent the truth or acuality of what is in effect, the right and honest way of compensating your ex for expenses incurred on behalf of the child. Another way to put it is, the ex's lawyer advocating deception and cheating to obtain settlement...
Thanks again!
It's truely sad when your ex's legal respresentation tries to use tactics that circumvent the truth or acuality of what is in effect, the right and honest way of compensating your ex for expenses incurred on behalf of the child. Another way to put it is, the ex's lawyer advocating deception and cheating to obtain settlement...
Thanks again!
SingingDad
New member
Does anyone know of some applicable case law? I have searched exhaustively and not found any reference to CRA benefits received for the children being considered for Section 7 expenses.
It's completely unlikely that any case law exists. As we already discussed, the inclusion of benefits in calculation of section 7 expenses is explicitly stated in legislation. Case law would only show up if there was an inconsistancy and a judge sought to overrule legislation.
If you are constructing an argument, your first cite is legislation. If the other party seeks an exception, they must justify it and cite their own case law.
So the opposite applies, you are not finding case law that denies application of benefits to the calculations.
If you are constructing an argument, your first cite is legislation. If the other party seeks an exception, they must justify it and cite their own case law.
So the opposite applies, you are not finding case law that denies application of benefits to the calculations.
SingingDad
New member
My question is of a functional nature so I know what to ask for.
WRT the wording of the benefits "that are received by the parent or spouse for a child for whom special or extraordinary expenses are being requested." The specification of received for "a" child brings a few questions to mind:
1) if there are multiple children is it the total amount received or that amount divided by number of children?
2) if only a part of a benefit is received for the children (such as with the OTB and GST credit) is it only the portion that is for the children or the entire amount?
3) If one child has a disability does that portion of the CCTB only get attributed to that child or to all the children (ie separate ratio for the child with the disability)?
4) Similarly, if UCCB is received does it only apply for the child that is under 6?
Example:
(benefit numbers are ballpark estimates)
2 children, Child A has a disability, Child B is under 6
Income (line 150 and line 236 assumed to be the same): $10,000
Total CCTB: $12,000
Child diability benefit (included in CCTB): $2,500
UCCB: $1200
GST Total: $800
Amount associated with the children: $400
OTB Total: $1200
Amount associated with the children: $600
Taking into account just the totals
Adjusted income for all eligible expenses: $25,200
or
Taking into account the wording "for a child"
Adjusted income for eligible expenses relating to Child A: $17,750
Adjusted income for eligible expenses relating to Child B: $16,450
The difference is significant and I don't want to interpret it wrong.
WRT the wording of the benefits "that are received by the parent or spouse for a child for whom special or extraordinary expenses are being requested." The specification of received for "a" child brings a few questions to mind:
1) if there are multiple children is it the total amount received or that amount divided by number of children?
2) if only a part of a benefit is received for the children (such as with the OTB and GST credit) is it only the portion that is for the children or the entire amount?
3) If one child has a disability does that portion of the CCTB only get attributed to that child or to all the children (ie separate ratio for the child with the disability)?
4) Similarly, if UCCB is received does it only apply for the child that is under 6?
Example:
(benefit numbers are ballpark estimates)
2 children, Child A has a disability, Child B is under 6
Income (line 150 and line 236 assumed to be the same): $10,000
Total CCTB: $12,000
Child diability benefit (included in CCTB): $2,500
UCCB: $1200
GST Total: $800
Amount associated with the children: $400
OTB Total: $1200
Amount associated with the children: $600
Taking into account just the totals
Adjusted income for all eligible expenses: $25,200
or
Taking into account the wording "for a child"
Adjusted income for eligible expenses relating to Child A: $17,750
Adjusted income for eligible expenses relating to Child B: $16,450
The difference is significant and I don't want to interpret it wrong.
Last edited:
Chantilly4
New member
i think you are refering to the tax credit we get for sports registrations? if that is the case you can only claim up to $500.00 per child and it gives you $75.00 back at income tax time... now if you child is identified as disabled you can claim more.
I have been reading lots of threads and opinions on section 7 expenses and childcare. My understanding is you take both parents NoA and base your calculation on the %ratio calculated by adding the 2 incomes and dividing each income by the grand total. That give you the ratio proportionate to income. Then assuming a 25% tax benefit ( which is bout average) you deduct 25% from the gross cost and you come up with the Net cost of the expense which is then proportioned according to the income ratios already calculated
Example: income d. 80,000
Income.m.35,000
Grand total incomes. 115,000
Ratio income d. 80,000/115,000. = 69.57%
Income m. 35,000/115000. = 30.43%
Day care costs. 4000. Less 25%tax benefit calculation ($1000) = $3000
Income d. Pays. 3000x 69.57%. $2087.1/year $172.59/ month
Income m pays. 3000x 30.43%. $912.90/ year. $76.pi month
Each year this ratio would be subject to change if income levels of either person change.
If you work out the ratio you can then apply it to monthly daycare costs if they fluctuant.
Example: income d. 80,000
Income.m.35,000
Grand total incomes. 115,000
Ratio income d. 80,000/115,000. = 69.57%
Income m. 35,000/115000. = 30.43%
Day care costs. 4000. Less 25%tax benefit calculation ($1000) = $3000
Income d. Pays. 3000x 69.57%. $2087.1/year $172.59/ month
Income m pays. 3000x 30.43%. $912.90/ year. $76.pi month
Each year this ratio would be subject to change if income levels of either person change.
If you work out the ratio you can then apply it to monthly daycare costs if they fluctuant.