How CRA divvies up Canada Youngster Profit for folks who share custody

Jamie Golombek: The period of time spent with the children can decide how a lot, if any, of the profit they get

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Dad and mom who're separated or divorced and share custody of their youngsters ought to be conscious that the period of time the children spend with every mum or dad might be the determinative issue into how a lot, if any, of the Canada Youngster Profit they could obtain. A latest tax case delves into the complexity of this subject. However first, a CCB refresher.

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The CCB is a authorities program that gives low- and middle-income Canadian households with tax-free funds every month to assist with the price of elevating youngsters. For the 2022 profit 12 months, the entire CCB estimated funds is projected to be about $26 billion, paid to greater than 3.5 million households.

For the profit 12 months starting subsequent month, if your loved ones earnings was lower than about $32,800 in 2021, you may get the utmost CCB: almost $7,000 for every baby below the age of six, and nearly $6,000 for every baby aged six to 17. (The funds regularly lower as soon as household earnings is above $32,800.)

The CCB is paid to the mum or dad who's “primarily” answerable for the care and upbringing of the kid. For folks who're separated or divorced, nevertheless, the principles that decide whether or not every mum or dad can gather CCB funds rely upon whether or not the mother and father have shared custody.

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New laws launched in 2021, however retroactive to 2011, expanded the definition of a shared-custody mum or dad to 1 who both resides with the kid a minimum of 40 per cent of the time in a specific month, or “on an roughly equal foundation.”

In a shared-custody association, each mother and father should be primarily accountable for the kid’s care and upbringing when the kid lives with them. If that is so, every mum or dad is entitled to 50 per cent of the CCB cost she or he would have obtained if the kid lived with them on a regular basis (based mostly on their very own household earnings.) Absent a shared-custody association, nevertheless, just one mum or dad can be entitled to 100 per cent of the CCB funds.

The latest tax case explored whether or not a mum or dad who didn’t fairly meet the 40-per-cent check in a specific month may nonetheless qualify to obtain the CCB that month based mostly on the argument that the children lived with that mum or dad all through the remainder of the 12 months on “an roughly equal foundation.”

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Mother and pa have three youngsters. They separated in December 2018. Mother claimed the month-to-month CCB from January 2019 via June 2021. The Canada Income Company initially paid 100 per cent of the profit to her, but it surely later concluded that each mother and pa had been shared-custody mother and father and so dad was entitled to half the CCB (based mostly on his web earnings).

The important thing subject earlier than the courtroom was whether or not mother ought to have been entitled to assert the complete CCB for the children throughout the complete interval. The CRA took the place that mother was not entitled to the complete CCB as a result of she was a shared-custody mum or dad and, subsequently, solely entitled to half of the profit.

At trial, the decide defined that entitlement to the CCB is set on each a child-by-child foundation and a month-by-month foundation. In reviewing the proof, the decide discovered that for the reason that couple’s youngest baby wasn’t sufficiently old to attend college throughout the months in query and the kid’s care throughout the day on weekdays fell solely to mother, it couldn't be stated that the kid resided with dad a minimum of 40 per cent of the time.

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It was additionally clear from the proof that mother was the first caregiver of the opposite two youngsters throughout the next intervals: January to March 2019 (the months instantly following the separation, when dad’s housing was “unstable”), July and August 2019 (when there was no college), and April 2020 to June 2021 (initially, when the faculties had been closed as a consequence of COVID-19; later, once they had been off college for the summer time of 2020; and from September 2020, when mother started homeschooling them.)

From April to June 2019, mother offered the courtroom with calendars that recorded the place the children slept throughout these months. Dad, alternatively, had no information of his time with the kids throughout these months and “little in the way in which of a particular recollection.” Accordingly, the decide discovered that dad didn’t meet the 40-per-cent assessments throughout this era.

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As for the months from September 2019 via February 2020 (aside from December), when mother and pa established a hard and fast schedule, the decide concluded that the eldest youngsters had been with dad a minimum of 40 per cent of the time. That left solely two months in dispute: December 2019 and March 2020.

The proof was clear that dad primarily by no means cared for the kids throughout the day on weekdays once they had been on college trip. The care that may in any other case have been offered by the kids’s college was, subsequently, left to be offered by mother. In every of December and March, the proof confirmed that mother cared for the children when college was out because of the Christmas and spring break holidays.

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The decide then turned to the brand new laws, which contemplates a scenario the place a mum or dad who usually meets the 40-per-cent threshold quickly slips beneath it in a given month due to, for instance, sickness, trip or one thing related.

“The addition of the ‘roughly equal foundation’ check seems to have been designed to acknowledge that irregularities in a given month might upset an in any other case established schedule however that, over time, these irregularities will steadiness out,” the decide stated.

However that was not the case right here, based on the decide. “College holidays (and the summer time months) usually are not uncommon occasions … These 4 breaks happen commonly annually and collectively contain a good portion of the 12 months. They depart mother and father ready of both having to care for his or her school-age youngsters throughout what would in any other case be the college day or having to search out an alternate type of baby care.”

Thus, the decide concluded that the children didn’t reside a minimum of 40 per cent of the time with dad throughout the months of December 2019 and March 2020, and so mother was entitled to 100 per cent of the CCB in these months.

Jamie Golombek, CPA, CA, CFP, CLU, TEP, is the managing director, Tax & Property Planning with CIBC Non-public Wealth in Toronto.


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