Spousal Equivalent for CRA

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Cobourg

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Here is the situation.
Separated Jan 9, 2009.
A couple of Temporary Consent Orders.
Have 3 children. 1 is no longer "child of the marriage"
For the other two we have "joint custody" with ex having "primary residence". My access is under review due to a court ordered assessment. I do not currently enjoy more than 40% access.
I would like to be able to claim one of my children as "equivalent to spouse" on my Income Tax documents.
If I were to get my ex to agree to allow me to claim one of them, what are the implications to her?
I would assume her CTC would be reduced but not sure?
It would certainly put me in a better position financially due to the tax implications.
She is asking / threatening a motion for Section 7 expences. We just had a case conference and the Judge suggested rather strongly that she should be careful in moving forward with a motion due to my financial situation, in that I am running at a loss of about $2K per month. There is just no more money right now. I do realize that I should be contributing to some of these expences and I thought that this might be a way of "making" extra money to fund this request.
Does anyone have any thoughts?
 
I don't know too much about this. But I would think if you each claim one child for equivalent to spouse then tax wise that would be the most savings between you. There is not much of a deduction when you claim a second child.

I'm sure someone has a much better answer for you though.
 
Do you pay any CS? If yes, you may not be able to claim your child as Equivalent to Spouse. My ex claims our son as her dependent even though she does not spend a dime on him and does not pay me any CS. In 2007 we both claimed him as our Equivalent to Spouse - I don't know about her claim but mine was allowed. She did claim him again for 2008.

You can anonymously call CRA tax help line and ask for their advice.
 
Yes, I do currently pay child support.
I am hoping in the next couple of months to get the kids 40% which means that there would be off setting cs which means neither of us could claim equivalent to spouse?
 
Cobourg said:
Yes, I do currently pay child support.
I am hoping in the next couple of months to get the kids 40% which means that there would be off setting cs which means neither of us could claim equivalent to spouse?
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CRA no longer looks to see if you paid CS or not. If you have shared custody, meaning that you have the child between 40 and 60% of the time, you can claim "equivalent to a spouse". They changed it sometimes in 2009, so it's still new and you won't find a lot of information online.

The reasoning is that with shared custody, you're both technically paying CS.

If you have two children, you can both claim one. And, I believe this would mean you can both claim CCTB/UCCB for one child each.
 
IF I don't end up with them 40% of the time, and if I can get my ex to agree, could I still claim the equivalent of spouse?
 
Cobourg said:
IF I don't end up with them 40% of the time, and if I can get my ex to agree, could I still claim the equivalent of spouse?
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if she agrees to it (in writing;)) then YES! It shouldn't matter if you don't have the child more than 40%. If you look at the differences in savings between her claiming both kids, and each claiming one, she would see that there will big a bigger savings if you each claim 1 child. You could always offer to split the part of ther refund relating to it as an incentive.
 
That is exactly what I was hoping to achieve.
Not sure if I will be talking to someone who is willing to listen and participate in the process or the usual bitter ex that is extremely difficult to get along with at the best of times.

Thanks for the help and info. We will see what happens.
 
I do believe you need shared custody in order for CRA to accept it.

By CRA's standard, there is no difference between having your for 5% of the time or 39% of the time.

I am sure you could sign an agreement with your ex that states you have shared custody and allowed to both claim one child as a dependent, but that CS payments will remain what they are now.

I am not sure if this would be accepted by CRA if you were audited.
 
Foredeck said:
I do believe you need shared custody in order for CRA to accept it.

By CRA's standard, there is no difference between having your for 5% of the time or 39% of the time.

I am sure you could sign an agreement with your ex that states you have shared custody and allowed to both claim one child as a dependent, but that CS payments will remain what they are now.

I am not sure if this would be accepted by CRA if you were audited.
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The CRA doesn't ask for copies of custody orders. They also don't check where your kids are sleeping at night (the exact words of clerk on the CRA help phone line).

As long as the two parents are in total agreement about their arrangement, then the CRA won't police it. I've been told by my accountant that it would be a nightmare for them to try to police the custody and access of children across the country.

They would flag a situation where there seemed to be too may claims being made for one child, or if one parent disputed the level of access of the other parent.

So basicly, if you were audited, they don't audit your child's bedroom at night. It's up to you to decide to tell them if you are at 39% or 40%, as long as the other parent agrees.

I do believe that if you change access levels it gets a bit trickier, and they do write follow up letters asking for clarification but they don't ask for custody orders. I did get a letter from them asking for confirmation of my daughter's residency (over 60% with me, so considered 100%) and they wanted me to mail them a photocopy of her birth certificate, as though that "proved" anything.
 
Mess said:
The CRA doesn't ask for copies of custody orders.

I do believe that if you change access levels it gets a bit trickier, and they do write follow up letters asking for clarification but they don't ask for custody orders.
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OH YES they do!! I've seen it many many times.
 
If there's a dispute between the two parents, CRA would investigate it further.

However, everything seems to indicate that if both parents stay quiet, CRA will not waste ressources investigating anything and will let people "abuse" or bend the rules slightly on this for now.
 
They are the government...as long as there is agreement from the parents They won't waste time trying to find out the details.
 
So basically, in everything I'm reading, CRA won't dispute a shared parenting situation unless one of the parents disputes the claim? We found out that we were going to get the CCTB (after the children being with us 50% of the time for two years), and a month later we got a letter stating that they were reviewing the case and to provide a large amount of information (had previously sent the custody orders). So, CRA really doesn't care, it's the other parent (who is obviously losing half of the CCTB) that is creating the case? Even the person we spoke to at the CCTB was shocked to see it being reviewed one month after being approved.
 
Yup, it's all about the other parent contesting it. Although it would have been smoother if you'd both signed a letter agreeing to the facts of the situation, that's what my ex and me did. But what you've done isn't "wrong" and this will have to work itself through and your ex will look like an ass.
 
I have to disagree.....in my case right now as I write, my ex and I are going through exactly the same thing. She received "the letter" from CRA requesting details and written confirmation of our arrangements which is 50/50 week to week. For no apparent reason.

She receives all benefits relating to the children and I agree with it 100%. I sent a letter of confirmation on her behalf confirming this. I want her to continue to receive all benefits possible other wise I will most certainly end up picking up the slack out of my pocket.

It seems that more and more people are being ask for clarification on this, thus losing benefits.

A decision has not been made yet although if it is the law I suspect they will have no choice but to split the benefits. Not happy about that!
 
Mess said:
Yup, it's all about the other parent contesting it. Although it would have been smoother if you'd both signed a letter agreeing to the facts of the situation, that's what my ex and me did. But what you've done isn't "wrong" and this will have to work itself through and your ex will look like an ass.
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Smoother I agree! However we knew that the ex would never agree (obviously, as it's being contested now!), so just jumped in. Thanks!
 
I asked my accountant to look into this and he secured an opinion from CRA on how this works.

Essentially if you file your tax return with anything listed under Child Support Payments you will be sent a letter asking for a copy of your separation agreement. Payors cannot claim for the child they are paying for.

If you want to do it, and you have multiple children, you can arrange your separation agreement in such a way that you are paying your spouse support for some of the children, and she is paying you for some of the children, and then you can both claim one of the children you are not paying for.

Frankly I think the whole thing is a fantastic bloody mess and I don't know what the heck CRA is thinking in this. It seems to me they took the easy way out by barring payors from claiming the credit and it's just another way to weight the child support tables in favour of Mom's with sole custody. Life these days is far more complicated than this.

Here is the body of the letter my accountant received from CRA you are interested in scenario #3:

(I had to trim this post substantially because there's a size limit on posts)

Source:
CCH Tax/Federal Income Tax/Tax Window Files/Tax Window Files/2000s/2001/July/
Child Support
July 06, 2001
Window On Canadian Tax Commentary
Income Tax Act: 56(1)(b), 60(b), 56.1
Interpretation Bulletins: IT-99R5, Legal and Accounting Fees (Consolidated); IT-530, Support Payments
Information Circulars: IC 70-6R4, Advance Income Tax Rulings
Please note that the following document, although believed to be correct at
the time of issue, may not represent the current position of the Department.


In respect of scenario 1A, which involves sole custody of both children by
Mom and an agreement or order that requires Dad to pay child support for both
children, in our view, Mom is entitled to the equivalent-to-spouse amount and
Dad is not.
In scenario 1B, which involves sole custody of both children by Mom, the
agreement or order requires Dad to pay child support only for Dave and does
not provide for child support for Jane. As it is unclear how in the
circumstances only one child would be entitled to support and whether the
"wholly dependent" requirement in paragraph 118(1)(b) of the Act is met, we
are unable to comment.
In scenario 2, which involves sole custody of Dave by Mom and sole custody of
Jane by Dad (split custody), the agreement or order requires Dad to pay child
support to Mom for Dave and requires Mom to pay support to Dad for Jane, with
the support payments being offset and the difference being paid by the parent
with the liability for the higher support amount to the other parent. In our
view, both Mom and Dad may be entitled to claim the equivalent-to-spouse
amount, Mom for Dave and Dad for Jane.

In scenario 3A, which involves each of Mom and Dad having each child for more
than 40% but less than 60% of the time (shared custody), the agreement or
order requires Mom to pay a specified amount of child support for both
children and Dad to pay a higher specified amount of child support again for
both children. The payment of these two support amounts is effected by Dad,
whose liability for support is higher, having to pay Mom the difference (i.e.,
net amount) between the two support amounts. In our view, assuming that the
order or agreement imposes a liability on Mom and Dad for their respective
specified child support amount (as opposed to one liability being imposed on
Dad for the net amount), neither Mom nor Dad would be entitled to claim the
equivalent-to-spouse amount.
In scenario 3B, which involves the same custody arrangement as in scenario
3A, the agreement or order simply requires Dad to pay a specified child
support amount (which is equal to the net amount paid by Dad in scenario 3A)
for both children and does not require Mom to pay any child support. In our
view, Mom may be entitled to claim the equivalent-to-spouse amount for either
Dave or Jane while Dad cannot claim it for either child.
In scenario 3C, in which, as you stated, the "custody arrangements are
identical to scenario 3A above, except that the agreement or order provides
that, although custody is shared, Dad shall have primary custody of Jane and
Mom shall have primary custody of Dave," the order or agreement provides for
payment arrangements as in scenario 3A, except that the specified amount of
child support to be paid by Dad is specifically for Dave and that to be paid
by Mom is specifically for Jane. We presume that your reference to "primary
custody" is to the amount of time spent by the child with a particular parent,
as opposed to that parent's right to make major decisions affecting the child.
In our view, assuming that the order or agreement imposes a liability on Mom
and Dad for their respective specified child support amount (as opposed to
one liability being imposed on Dad for the net amount), Mom may be entitled to
claim the equivalent-to-spouse amount for Dave and Dad, for Jane.

We trust that the foregoing comments are of assistance.
Yours truly,
Milled Azzi, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
 
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