Principal Issues: Whether a single parent is entitled to claim the wholly dependent person credit for a non-resident child who has not yet immigrated to Canada.
Position: No
Reasons: The parent does not support the child in the self-contained domestic establishment.
XXXXXXXXXX 2009-031302
Michael Cooke
May 12, 2009
Dear XXXXXXXXXX :
Re: Non-Resident Child and the Wholly Dependent Person Credit
We are writing in response to your email of March 9, 2009 requesting our comments about the tax credit for a wholly dependent person ("equivalent-to-spouse credit") in particular circumstances. Specifically, you ask whether an individual who has immigrated to Canada and is therefore factually resident here would be entitled to claim the equivalent-to-spouse credit in respect of his or her child where the child has not yet immigrated to Canada.
Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. This Circular and other publications referred to in this letter are available on our website at http:///www.cra-arc.gc.ca. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office, a list of which is available on the "Contact Us" page of our website. Notwithstanding the above we are prepared to offer the following general comments.
Pursuant to paragraph 118(1)(b) of the Income Tax Act (the "Act") an individual who does not claim a spousal tax credit for the year and who, at any time in the year, was unmarried and not living in a common-law partnership, or was married or in a common-law partnership but neither supported nor lived with their spouse or common-law partner and who is not supported by such person, may, subject to certain other requirements, claim an equivalent-to-spouse credit for his or her child if, at that time:
- the individual maintains and lives in a self contained domestic establishment ("residence") either alone or with other persons; and
- the individual actually supports that child in that residence. (emphasis added)
As explained in paragraph 16 of Interpretation Bulletin IT-513R, "Personal Tax Credits", although the equivalent-to-spouse credit is available where an individual supports a child who lives away from the individual's residence while attending school, that child must ordinarily live with the individual in that residence when not in school. As noted in paragraph 18 of IT-513R, this means that in most cases the equivalent-to-spouse credit will not be available in respect of a non-resident child because that child is not supported in a residence in which both the individual and the non-resident child live in the taxation year.
Several decisions of the Tax Court of Canada confirm that the foregoing interpretation of paragraph 118(1)(b) of the Act applies even in the somewhat unique factual context of immigration. In this regard, you may refer to the 2008 case of Pascual v. The Queen, which can be found on the Tax Court of Canada website at www.tcc-cci.gc.ca.
We trust that these comments will be of assistance.
Yours truly,
Renée Shields
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy & Regulatory Affairs Branch