How CRA divvies up Canada Little one Profit for fogeys who share custody

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

Publishing date:

Jun 09, 2022 • 11 minutes in the past • 5 minute learn • Be part of the dialog

For fogeys who’re separated or divorced, the foundations that decide whether or not every mother or father can accumulate CCB funds rely upon whether or not the dad and mom have shared custody. Picture by Sean Gallup/Getty Pictures

Mother and father who’re separated or divorced and share custody of their children ought to be conscious that the period of time the children spend with every mother or father will be the determinative issue into how a lot, if any, of the Canada Little one Profit they might obtain. A current tax case delves into the complexity of this challenge. However first, a CCB refresher.

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 kids. For the 2022 profit yr, the entire CCB estimated funds is projected to be about $26 billion, paid to greater than 3.5 million households.

For the profit yr starting subsequent month, if your loved ones revenue was lower than about $32,800 in 2021, you may get the utmost CCB: practically $7,000 for every youngster below the age of six, and virtually $6,000 for every youngster aged six to 17. (The funds step by step lower as soon as household revenue is above $32,800.)

The CCB is paid to the mother or father who’s “primarily” accountable for the care and upbringing of the kid. For fogeys who’re separated or divorced, nonetheless, the foundations that decide whether or not every mother or father can accumulate CCB funds rely upon whether or not the dad and mom have shared custody.

New laws launched in 2021, however retroactive to 2011, expanded the definition of a shared-custody mother or father to at least one who both resides with the kid not less than 40 per cent of the time in a selected month, or “on an roughly equal foundation.”

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

The current tax case explored whether or not a mother or father who didn’t fairly meet the 40-per-cent take a look at in a selected month might nonetheless qualify to obtain the CCB that month based mostly on the argument that the children lived with that mother or father all through the remainder of the yr on “an roughly equal foundation.”

Mother and pa have three children. 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 dad and mom and so dad was entitled to half the CCB (based mostly on his internet revenue).

The important thing challenge earlier than the court docket was whether or not mother ought to have been entitled to assert the total CCB for the children throughout the complete interval. The CRA took the place that mother was not entitled to the total CCB as a result of she was a shared-custody mother or father 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 because the couple’s youngest youngster wasn’t sufficiently old to attend college in the course of the months in query and the kid’s care in the course of the day on weekdays fell solely to mother, it couldn’t be mentioned that the kid resided with dad not less than 40 per cent of the time.

It was additionally clear from the proof that mother was the first caregiver of the opposite two children 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 colleges had been closed as a result of COVID-19; later, once they had been off college for the summer season of 2020; and from September 2020, when mother started homeschooling them.)

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

As for the months from September 2019 via February 2020 (apart from December), when mother and pa established a hard and fast schedule, the decide concluded that the eldest children had been with dad not less than 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 in the course of 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.

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

“The addition of the ‘roughly equal foundation’ take a look at 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 mentioned.

However that was not the case right here, in keeping with the decide. “College holidays (and the summer season months) should not uncommon occasions … These 4 breaks happen repeatedly every year and collectively contain a good portion of the yr. They go away dad and mom ready of both having to care for his or her school-age kids throughout what would in any other case be the college day or having to seek out an alternate type of youngster care.”

Thus, the decide concluded that the children didn’t reside not less than 40 per cent of the time with dad in the course of 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 Personal Wealth in Toronto. [email protected]

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