Principal Issues: [TaxInterpretations translation] (1) Who will a child of an individual and his or her former spouse be an eligible dependant of for the purposes of the Working Income Tax Benefit?
(2) What is the explanation for the variation in the amounts paid under the WITB in Quebec, depending on the family situation of the individual claiming this benefit?
Position: (1) Question of fact.
(2) The amount to which an individual is entitled in Quebec will depend, in particular, on the amount that the individual will be entitled under the Work Premium, provided for by the Taxation Act.
Reasons: (1) An eligible dependant of an individual is a child of the individual who, at the end of the year
(a) resides with the individual
(b) is under 19 years of age;
(c) is not an eligible individual.
(2) For more information, see CRA publication RC4227.
XXXXXXXXXX
2010-035709
November 9, 2010
Dear Sir,
Subject: Working Income Tax Benefit
This is in response to your email of February 10, 2010, in which you requested our opinion regarding the working income tax benefit ("WITB") under section 122.7 of the Income Tax Act (the "Act").
Unless otherwise indicated, all legislative references herein are to the provisions of the Income Tax Act (the "Act").
Specifically, you described a situation where an individual has been separated from his spouse for a number of years. The individual and his former spouse have had a child together and share custody of that child. Neither the individual nor the former spouse is required to pay support, and neither has a new spouse. We have assumed that the individual's former spouse is not a "cohabiting spouse" within the meaning of the definition of "cohabiting spouse" in section 122.6.
For the purposes of the WITB, you wish to know of whom the child would be the eligible dependant.
You also noted that in Quebec, the amounts an individual can receive under the WITB may vary depending on whether the individual has an eligible spouse and/or an eligible dependant.
Our Comments
It appears to us that the situation described in your letter and summarized below could constitute an actual situation involving taxpayers. As explained in Information Circular 70-6R5, it is not the practice of this Directorate to provide comments on proposed transactions involving specific taxpayers otherwise than in the form of an advance income tax ruling. If your situation involved specific taxpayers and one or more completed transactions, you should submit all relevant facts and documentation to the appropriate Tax Services Office for its opinion. However, we can offer the following general comments that may be helpful to you.
The WITB is a refundable tax credit for eligible low-income individuals and families. The amount of the WITB that will be paid depends on whether the individual lives in Quebec or the rest of Canada. In this regard, we invite you to consult the publication RC4227 issued by the Canada Revenue Agency ("CRA") entitled "Working Income Tax Benefit", which you can view by visiting the CRA website at http://www.cra-arc.gc.ca/E/pub/tg/rc4227/READ-ME.html.
In Quebec, the amount an individual can receive under the WITB for 2009 can vary between $908.88 and $2,401.37 depending on his or her personal situation. An individual who claims the “Family” WITB - either because he or she has an eligible spouse or an eligible dependant, or both - must have working income for the year above a certain level ($2,400 if the individual does not have an eligible spouse but has an eligible dependant and $3,600 in other cases). Similarly, once the individual's adjusted net income exceeds a certain threshold (footnote 1), there is a reduction in the amount of WITB that can be claimed.
An eligible dependant for a taxation year is a child of an individual who, at the end of the year:
(a) resides with the individual
(b) is under 19 years of age;
(c) is not an eligible individual.
Thus, in the situation you described, it is necessary to determine with whom the child resides on December 31 of the taxation year. If the child resides with the individual and meets all the other criteria in the definition of "eligible dependant", then the individual must claim the “family” WITB.
We confirm that, in Quebec, an individual who has an eligible dependant as of December 31, 2009, will be able to claim an amount of $908.88 under the WITB and that an individual who has neither an eligible spouse nor an eligible dependant will be entitled to an amount of $1,552.67. This distinction exists because the amount of the WITB to which an individual residing in Quebec is entitled is also based on the amount that the individual may receive under the Work Premium provided for in the Quebec Taxation Act (footnote 2).
We hope that these comments will be of assistance.
Best regards,
François Bordeleau, Advocate
Manager
Business and Partnerships Section
Income Tax Rulings Directorate.
FOOTNOTES
Due to our system requirements, footnotes contained in the original document are reproduced below:
1 Please see publication RC4227 for more information.
2 L.R.Q. c. I-3.