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.
