Typical handling of SS/CS and Tax Credits

M

MS Mom

Active member
A friend asked for some advice in updating his current SS/CS obligations due to a recent raise in his income. He has 50/50 custody and pays child support on an offset calculation.

His ex is currently enrolled in school full time, works part time and is somehow supported on ODSP. ODSP is paying for her college and she works part time at minimum wage.

He wasn't even aware of CCTB at all, let alone the increases low income recipients will receive as of July 2016. He estimates her income to be less than $18000/a. His income is substantially higher at $55000/a. He pays his own daycare and she pays her daycare, but he pays 100% of everything else - hockey, soccer, etc. He provides all health insurance for both her and the child, and pays all deductibles and uncovered amounts for the child.

What is the typical way shared parenting with offset handle the CCTB?
 
Parents with 50/50 can opt to share the tax benefit - it's paid to parent 1 for the first six months of the year and parent 2 for the latter six months (instead of being split 50/50 every month). I can't remember what ex and I had to give CRA to set this up, but I'm sure you can find out with a phone call.
 
stripes said:
Parents with 50/50 can opt to share the tax benefit - it's paid to parent 1 for the first six months of the year and parent 2 for the latter six months (instead of being split 50/50 every month). I can't remember what ex and I had to give CRA to set this up, but I'm sure you can find out with a phone call.
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Opt to share? I thought that it was enforced by CRA that if you have your child 50% of the time and can prove it with a court order/signed agreement that CRA must automatically split the UCCB/CCTB between both parents.
 
SuzieSunshine said:
Opt to share? I thought that it was enforced by CRA that if you have your child 50% of the time and can prove it with a court order/signed agreement that CRA must automatically split the UCCB/CCTB between both parents.
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This person wasn't even aware of CCTB let alone how much the monthly amount is. So, it isn't an automatic adjustment made by CRA I guess.

It was never an issue in my cs agreements as the ex made too much to qualify. It's helpful knowing that a split is typical and common.

Thanks.
 
Okay "opt to share" wasn't great word choice. If the parents provide CRA with the necessary info, CRA will split the benefit, but it's up to the parents to inform CRA. Otherwise I believe the benefit goes to whoever claims the child on taxes.
 
stripes said:
Okay "opt to share" wasn't great word choice. If the parents provide CRA with the necessary info, CRA will split the benefit, but it's up to the parents to inform CRA. Otherwise I believe the benefit goes to whoever claims the child on taxes.
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True, but if both parents claim the kid(s) on their taxes they will both be audited and CRA will decide to share.
 
stripes said:
Parents with 50/50 can opt to share the tax benefit - it's paid to parent 1 for the first six months of the year and parent 2 for the latter six months (instead of being split 50/50 every month). I can't remember what ex and I had to give CRA to set this up, but I'm sure you can find out with a phone call.
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I didn't have that as an option, don't think I'd want it as it makes budgeting difficult. With myself, the monthly payment is split in half, with my ex receiving one half, and myself the other, each month. It can also be backdated to the point it should have started being split. I ended up receiving nearly $2000 when I got it started, and my ex stopped receiving any until her deficit was cleared due to that. It had been well over a year since separation before I realized I should be doing that.

For proof, they required my court order, and multiple letters from various places stating that I had custody of the kids. Daycare, school, dentist and doctor. There are a few other options they list I believe, it's quite similar if not the same as the demands of proof they make of you for claiming a child on your taxes.
 
As for the CRA doing an audit and realizing things should be shared, I highly disagree based on my experiences.

For 2 of my last 3 tax returns they have disallowed me to claim a child as a dependant on my taxes, based on my paying child support. I have 50% custody, pay offset, at the whopping rate of $1 per month. We have two children and each claimed only one child, and ensured they were not the same child.

I had to appeal both times, and while it took 4-6 months or so each time, and a bunch of hoops to jump through, the appeal was eventually granted. It makes me wonder how many eligible people have been denied and are unaware that they should be appealing that incorrect decision.

They in fact seem very eager to deny benefits being shared, and try to prevent it.
 
Soiled said:
As for the CRA doing an audit and realizing things should be shared, I highly disagree based on my experiences.

For 2 of my last 3 tax returns they have disallowed me to claim a child as a dependant on my taxes, based on my paying child support. I have 50% custody, pay offset, at the whopping rate of $1 per month. We have two children and each claimed only one child, and ensured they were not the same child.

I had to appeal both times, and while it took 4-6 months or so each time, and a bunch of hoops to jump through, the appeal was eventually granted. It makes me wonder how many eligible people have been denied and are unaware that they should be appealing that incorrect decision.

They in fact seem very eager to deny benefits being shared, and try to prevent it.
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Part of this issues is he hadn't filed his taxes since 2012. So, step one was getting him caught up on tax filing. The 2015 tax filing asked the question about shared parenting, the previous years did not. The 2015 tax filing also calculated his CCTB, which was very eye-opening to him. He doesn't care much about recouping CCTB benefits for previous years, but until his returns are assessed, he won't know the $$ figures involved.

He stated he claimed the child as a dependent for those years. She probably did as well. So, how does that one work? Will CRA split that credit 50/50?
 
The following applies for offset child support situations.

Taken from - What are the situations in which you cannot claim the amount for an eligible dependant?

If you and another person had to make support payments for the child for 2015 and, as a result, no one would be entitled to claim the amount for an eligible dependant for the child, you can claim this amount if you and the other person(s) paying support agree you will be the one making the claim. If you cannot agree who will claim this amount for the child, neither of you can make the claim.
 
Soiled said:
The following applies for offset child support situations.

Taken from - What are the situations in which you cannot claim the amount for an eligible dependant?

If you and another person had to make support payments for the child for 2015 and, as a result, no one would be entitled to claim the amount for an eligible dependant for the child, you can claim this amount if you and the other person(s) paying support agree you will be the one making the claim. If you cannot agree who will claim this amount for the child, neither of you can make the claim.
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Is the case when the support payment is an offset amount? Technically, both parties pay support in offset.
 
Yep, that was all regarding an offset situation. Both parents pay child support to each other, bringing the info in the post above into effect.

Have him be prepared to appeal a denial.
 
Soiled said:
Yep, that was all regarding an offset situation. Both parents pay child support to each other, bringing the info in the post above into effect.

Have him be prepared to appeal a denial.
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Well, that makes no logical sense. One would think you could divide that credit somehow, each then taking the appropriate credit at the appropriate level of taxation.
 
Yeah it's a poor system for split families with only one kid. Less of a headache in my situation where there are two kids, so we each just claim one and don't have any issue.
 
Soiled said:
Yeah it's a poor system for split families with only one kid. Less of a headache in my situation where there are two kids, so we each just claim one and don't have any issue.
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You'd think the CRA would want it split as well.

Equiv to spouse amount renders the ex in this case with essentially zero income, which means no taxes and higher benefits. For the other party, it's just a deduction on income.
 
MS Mom said:
You'd think the CRA would want it split as well.

Equiv to spouse amount renders the ex in this case with essentially zero income, which means no taxes and higher benefits. For the other party, it's just a deduction on income.
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Yeah, but when the ex claims it in the situation your asking about, it's deducting income at the lowest tax bracket whereas if your friend claims it, it is likely at a higher tax bracket, 'costing' the government more money when the deduction is used by him.

It follows the same logic as when a family is claiming child care. The lower income spouse is supposed to claim it. The deduction is then worth less to you due to tax brackets, and saves the government some money.

If they get along well enough to cooperate on those things the smart thing to do would be to have him claim it, and split the refunf and any increase, if any, in benefits. Fortunately for the pockets of the CRA alot of people can't work together with their ex well enough for that sort of thing.
 
So I am actually going through this right now in Ontario. My tax court date is October and so far CRA has denied all my appeals because they do not seem to consider offset support as being that " both parents pay ". We have 50 - 50 custody for 2 kids and the third lives with me exclusively .
I tried to get my ex to sign an agreement further clarifying our lawyer prepared separation agreement but after much stalling she declined as she is afraid that CRA will try to re-coup her last 2 tax refunds and all the new CCTB payments she has received .

Can anyone tell me exactly what hoops you had to jump through to prove the 50 - 50 custody etc .

Letters from doctors, dentists , school ?

anything else ?
 
The technicality is in the wording - it needs to say person A pays person B and person B pays person A.

In your case though if the 3rd kid lives with you exclusively you can use her for equivalent to spouse credit.

For the other child benefits, i am fairly sure that is split 50/50 no matter what.
 
Understood that it has to do with the wording . Mine happens to say

" to satisfy each parties obligation to pay child support in accordance to the guidelines and based on income of X and Y , father will pay to mother Z "

Being in a vulnerable state at the time and very new to the whole separation scene , it did not dawn on me that the lawyer was not writing this correctly , because later on in the agreement she wrote

" mother may claim CTB and GST/HST credits for the first 6 months of the year and father may claim CTB and GST/HST credits for the latter 6 months "

Further along in the agreement it states

" the parties may each claim the eligible dependant credit for one child " and in the event that only one child qualifies for the eligible credit, mother shall claim in even numbered years and father in odd numbered years "

It is obvious to anyone reading it what the intentions of both parties was and the onus should have been on the lawyer to make sure their form letter documentation was current and correct .

Do I just need to sit tight and hope that logic prevails or do I have to nudge CRA in the right direction ?
 
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