Canada Child Tax Benefits Post Separation
As tax season is approaching I thought it might be a good time to touch on the subject of Canada Revenue Agency’s treatment of separating couples who have children. As a family law lawyer I never give advice about taxes but there are some helpful links here and as always, speak to your accountant or a tax lawyer if you are unsure.
Your marital status is important to Canada Revenue Agency because it impacts your eligibility for tax benefits and credits. Information on how and why to inform CRA about your marital status can be found at the link HERE If you are a parent you may be eligible to receive the Canada Child Tax Benefit (CCTB) which is a tax-free payment made to eligible families to help with the cost of raising children under the age of 18. To qualify, you must file your annual tax returns and CRA needs information about your relationship status.
Firstly, are you a spouse? CRA defines a spouse as someone you are legally married to or someone who you have been in a ‘conjugal’ relationship with, for 12 consecutive months. (Note the difference here between the definition for family law purposes: the Family Law Act defines common law spouses in part, as non-married parties who have been living in a marriage like relationship for two years or more FLA SPOUSE DEFINITION ) You are also a common law spouse if you are living in a conjugal relationship with someone who is the parent of your child by birth or adoption.
Are you separated? CRA says you are separated when you have lived separate and apart because of a breakdown in your relationship for 90 days or more. Once the 90 days have passed, you are considered separated on the first day that you started living separate and apart. If you continue to live together at the same address, as many couples do, sharing parenting and other financial responsibilities, you are not separated in the eyes of CRA and you are not eligible for sharing or division of Canada Child Tax Benefits. Interestingly, if your separation is involuntary (your spouse is incarcerated, is away for school, health or work reasons) you are not considered separated.
After separation, in joint custody situations, the CCTB will be paid to the parent with whom the child primarily or ordinarily resides. If the child ordinarily resides with both parents, each parent will be entitled to half of the CCTB which would be paid if they were the sole and primary caregiver.
If you get married or start living in marriage like relationship and either of you has children who live with you, CRA will put all of the children on the female parent’s account for the purpose of calculating and paying the CCTB. If you are a same sex couple, the CRA website, simply says, that “one of you” will get the CCTB for all of the children in the house. Both parents must file income tax returns in order to receive these benefits. For other credits such as GST/HST credits, only one ‘spouse’ can receive these credits and they are paid to the party whose tax return is first assessed for each taxation year and the amount is the same regardless of which spouse receives is, since it is based on family income.
The CRA website is a useful tool if you want to calculate your payments or update your status. Information about claiming child care expenses can be found here: CRA WEBSITE
The important thing to note is that you need to update your relationship status on FB and the CRA site, or you may be on the hook for significant repayments if you have been less than forthcoming with the information you and or your spouse has provided.