CRA and Eligible Dependants

CRA and Eligible Dependants

Eligible dependents

When a parent separates, divorces or loses a spouse and becomes a single parent (or has always been single), the Income Tax Act in certain circumstances permits the claim of a minor aged child for the Amount for an Eligible Dependent on their income tax return. This credit can be claimed for thousands of dollars in tax savings (which often results in a similarly large tax refund). Section 118.5 of the Act sets out the rule that if a parent is paying child support for the same child that he/she would like to claim, that parent is not allowed to make the claim. When a parent is not paying child support for the child, then of course a parent is permitted to make the claim. The exception to the rule that was passed in 2007 (118.5(1)) was that if BOTH parents are paying child support for the children and they also have shared parenting, then where they can agree on who will claim which child (assuming they meet the other qualifications of a single parent, etc), then each can claim one child (assuming there are two and regardless of if there are more than two). Each parent must pay child support. A recent Tax Court of Canada decision set out the requirement that not only do both parents have to be paying child support but the agreement or court order has to set out same, and proof of both of these monthly payments to the other will have to be provided (among other supporting documentation).

The CRA request of certain language and requirements seems to have changed over the years, but in the end, if you want to get those dollars today, these will be the circumstances and rules to abide by to be assured of success (to the extent one ever can with CRA).

If you have additional questions about the CRA and eligible dependents, would like to book a consultation or have your income tax return prepared, please do not hesitate to contact us:

Sharon@AlbertaDivorceFinances.com or (403)703-7176