Tax - Income tax - Tax credits
Taxpayer and former spouse had shared parenting arrangement of two children. First court order in 2014 provided that taxpayer was to pay set-off amount to spouse for child. Variation order specified that taxpayer and spouse each had legal obligation to pay child support. Third order, made in 2017, specified amount of child support payable by taxpayer and by spouse and provided that taxpayer could pay spouse net amount for convenience. Taxpayer claimed tax credit for wholly dependent person, also known as equivalent-to-spouse or eligible dependent tax credit. Minister of National Revenue disallowed credit until 2017. Taxpayer appealed with respect to 2014 taxation year. Appeal dismissed. Taxpayer was not entitled to claim wholly dependent person tax credit because restriction in s. 118(5) of Income Tax Act applied, as only one parent paid child support. First court order only directed taxpayer to pay child support, and while spouse’s income was taken into consideration, there was no order that she pay child support to taxpayer. Support payments made by taxpayer represented set-off of his and spouse’s financial abilities rather than set-off of child support payments. Sections 56.1(3) and 60.1(3) of Act operated to limit any retroactive effect of third order to one year.
Bayrack v. The Queen (2019), 2019 CarswellNat 649, 2019 CarswellNat 669, 2019 TCC 53, 2019 CCI 53, Susan Wong J. (T.C.C. [Informal Procedure]).
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