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FCA: at least 45% of parenting time required to split CCB and GST credits (and bonus AED decisions)

Ken Proudman Executive
 view Arbitrator profile
  BARR LLP
   Edmonton, Alberta


Shared parenting and CCB, GST credits

As you may be aware, the Income Tax Act permits parents to split the CCB and GST/HST credit where parenting time is "equal or near equal". There have been many Tax Court of Canada decisions setting various thresholds, however the Federal Court of Appeal has now weighed in, in two separate decisions of two different panels, which appear to have settled the issue. The Court determined that by not referring to the Guidelines, parliament must have meant something different in the Income Tax Act's definition of shared parenting. The Court's reasoning was that if it doesn't round up to 50%, it's not "near equal", and set a threshold of 45% (which is of course different than the Guidelines' threshold).

Since the threshold is now different for the set-off and tax credits, I suppose ChildView and DivorceMate will now have to add a question to determine whether shared parenting time is "near equal"/45%.

The decisions aren't on CanLII yet, but if you have Westlaw, they're Lavrinenko v Canada, 2019 FCA 51 at paras 41-42, and Morrissey v Canada, 2019 FCA 56 at para 29.

Amount of Eligible Dependent (AED)

This won't really affect the AED because the AED doesn't refer to "equal or near equal", it depends primarily on who's paying child support, but there were some interesting decisions last year.

You might recall that back in 2016, one Judge of the Tax Court of Canada suggested that in shared parenting situations, each parent should both actually make their table payment (Harder v R, 2016 TCC 197). The same Judge referred to "actual" and "factual" payment in another decision last year (Stevenson v the Queen, 2018 TCC 176 at paras 10, 11). Both of these decisions were through the non-precedential informal procedure. As a result, the CRA removed the "for convenience" set-off example from their website (and likely because in several of these decisions, taxpayers argued that the CRA had misled them).

Where it got interesting last year though, was that the same Judge in that later decision (Stevenson v the Queen, 2018 TCC 176 at paras 8, 9), as well as another Judge in a separate decision (Lawson v the Queen, 2017 TCC 131 at para 28), suggested that there may be an exception to actual payment, or even an exception to the prohibition against agreements/orders refering to a net amount, if the net amount isn't calculated according to a simple set-off.

Examples are provided such as where there is a deviation following a Contino analysis, where the net amount just doesn't reflect the simple set-off, or whether payment is based on another factor such as the deduction of travel costs.

These aren't Federal Court of Appeal decisions, so the jurisprudence may change, and taking advantage of these exceptions may cause difficulty when recalculating, but it's an interesting development nonetheless.


0 4 years ago - edited 4 years ago

Anonymous 2017
   Edmonton Region, Alberta


Thanks, Ken!

Would you recommend putting clauses relating to the claiming of benefits or credits in the Divorce Judgment? My gut instinct is no.


0 4 years ago

Ken Proudman Executive
 view Arbitrator profile
  BARR LLP
   Edmonton, Alberta


You can't agree to change who can claim the Canada Child Benefit (CCB), and courts can't order it. If it's shared parenting, instead of splitting the GST/HST credit you can agree that only one party will receive it, which you could memorialize into the preamble of the Divorce Judgment. Similarly, you can't agree/order a change in who claims the Amount for Eligible Dependent (AED), but for the AED you may be able to set up the right conditions to be able to split it where there's shared parenting, but that's a fairly complicated topic, see http://familycounsel.ca/chat.php?id=42

0 4 years ago

Ken Proudman Executive
 view Arbitrator profile
  BARR LLP
   Edmonton, Alberta


FYI there is a legislative proposal to change the threshold to 40%, not sure what will happen to it given the election though.

0 4 years ago

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