Principal Issues: [TaxInterpretations translation] 1. Does the presumption in paragraph (f) of the definition of eligible individual in section 122.6 of the Income Tax Act apply in a situation where the parents are living apart?
2. Could the mother be considered to be the person who has primary responsibility for the care and upbringing of the child throughout the year, even where the child resides with the father?
Position: 1. No. The Act provides that there can be only one parent as an eligible CCTB individual in a given month. It is not possible to determine whether an eligible dependant resides with the female parent at any given time in a shared custody situation for equivalent periods of time because the dependant may spend equal amounts of time with either parent and their residence may vary from month to month. The presumption in paragraph (f) of the definition of "eligible individual" in section 122.6 of the Act is not only rebuttable in cases where the circumstances set out in subsection 6301(1) apply, but also in cases where the criteria listed in section 6302 favour the other parent. The shared eligibility administrative policy applies for a six-month rotational period in a shared custody situation for equivalent periods of time, if it is not contested, because the Canada Revenue Agency presumes that the qualified dependant resides with each of his or her two parents and that each of them is primarily responsible for the care and upbringing of the qualified dependant.
2. A question of fact, but possibly yes.
Reasons: 1. The Income Tax Act and relevant jurisprudence. The presumption in paragraph (f) of the definition of "eligible individual" is not an irrebuttable presumption.
2. A question of fact. Possibly if the mother appeals a possible determination by the Minister and demonstrates that she actually meets the requirements of the definition of "eligible individual" in section 122.6 of the Act, while taking into account the criteria listed in section 6302 of the Income Tax Regulations.
2009-030803
XXXXXXXXXX Lucie Allaire, Advocate,
CGA, D. Fisc.
June 10, 2009
Dear Sir,
Subject: Canada Child Tax Benefit for shared custody
This is in response to your request for a technical interpretation dated January 29, 2009, in which you requested our opinion on the administrative policy of the Canada Revenue Agency (the "Agency") regarding shared eligibility for the Canada child tax benefit (the "CCTB").
Unless otherwise indicated, all legislative references herein are to the provisions of the Income Tax Act (the "Act").
You have presented us with the situation described below (the "Particular Situation") in the context of your request for a technical interpretation:
- The father and mother, both Canadian citizens residing in Canada, are the parents of a minor child, a "qualified dependant" as defined in section 122.6 of the Act;
- The father and mother are separated, have no new spouses and remain in the same neighbourhood in their respective residences;
- The father and mother have joint custody of a child, living alternately with each other (either four days with one and three days with the other, or one week with one, and one week with the other);
- The mother received the amount of the CCTB but the Minister of National Revenue (the "Minister") denied it to her for a period of six months per year under its CCTB shared eligibility policy;
- The facts show that the mother assumed primary responsibility for the care and upbringing of the eligible dependant throughout the relevant year in accordance with the criteria set out in section 6302 of the Income Tax Regulations (the "Regulations");
- The father has never applied for the CCTB (on Form RC66);
- None of the circumstances referred to in subsection 6301(1) of the Regulation apply.
In relation to the particular situation, you asked the following two questions:
(a) Does the presumption in paragraph (f) of the definition of "eligible individual" in section 122.6 apply in a situation where the parents live apart?
(b) In a situation of shared custody, can the mother be considered to be the person who assumes primary responsibility for the care and education of the child for a full year, if the application of the criteria listed in section 6302 of the Regulation confirms this state of affairs?
Our Comments
It appears to us that the situation described in your letter and summarized below could constitute a real 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 other than in the form of an advance income tax ruling. If your situation involved specific taxpayers and one or more transactions being completed, you should submit all relevant facts and documents to the appropriate Tax Services Office for its opinion. However, we are able to offer the following general comments that may be of assistance to you. It should be noted that the application of one or more provisions of the Act generally requires the analysis of all the facts relating to a particular situation. Accordingly, and given that your letter only summarily describes a hypothetical situation, the comments we make below may not apply in full in a given particular situation.
For the purposes of the CCTB, the definition of "eligible individual" in section 122.6 sets out a number of conditions that must be satisfied by an individual at a particular time.
An individual may be considered the "eligible individual" in respect of a "qualified dependant" if the individual resides with the dependant and is the individual who primarily fulfills the responsibility for the dependant's care and education. In this regard, the criteria set out in section 6302 of the Regulations must be used to determine who of the father or mother primarily fulfills the responsibility for the care of the dependant. In addition, paragraph (f) of the definition of "eligible individual" in section 122.6 provides that the mother is presumed to primarily fulfill the responsibility for the care and upbringing of the child when the child resides with her.
Under section 122.61, the calculation of the amount of the CCTB is based on a deemed refund of a notional overpayment of tax, which is deemed to have arisen during a month where the person to whom the CCTB is payable is, at the beginning of the month, an eligible individual.
The decision of the Tax Court of Canada in Mark Cabot v. Her Majesty the Queen, [1998] 4 C.T.C. 289 established that the presumption in paragraph (f) is rebuttable, not only in the circumstances set out in subsection 6301(1) of the Regulations, but also in light of the criteria listed in section 6302 of the Regulations. Thus, the mere fact, in the Particular Situation, that the father did not send a notice to the Minister in accordance with subsection 122.62(1) with respect to the "qualified dependant", thereby resulting in the non-application of paragraph 6301(1)(d) of the Regulations, does not make the presumption absolute.
Consequently, it is necessary to determine which parent, at the beginning of each month, primarily fulfilled the responsibility for the care and upbringing of the qualified dependant. Sometimes deciding for the father, and sometimes for the mother, the jurisprudence dealing with eligibility for the CCTB has confirmed that, in situations of shared custody, the determination of the "eligible individual" for a given period of time is made, on a balance of probabilities, by applying the criteria set out in section 6302 of the Regulations.
To address the difficulty of determining the "eligible individual" in a shared custody situation for equivalent periods of time, the Agency has developed a CCTB shared eligibility policy that recognizes that there may be, in these specific situations, two eligible individuals for the same child.
More specifically, each person, who is granted shared custody for more or less equal periods, is considered, by administrative position, to be primarily responsible for the care and upbringing of the child during the time the child lives with him or her. Thus, if a child lives with two different persons and both are considered to be primarily responsible, the Agency allows each person to be eligible for the CCTB on a six-month rotation. This rotation will continue until the situation changes or until the child turns 18 years of age. In addition, agreements between persons who have shared custody of a child to choose who will be the "eligible individual" are not permitted.
In light of the foregoing and the factors to be considered under section 6302 of the Regulations, if the facts of the Particular Situation support the conclusion that the mother is the person who primarily fulfills the responsibility for the care and upbringing of her child in a year, she potentially will qualify as the eligible individual throughout that year.
Where the Minister determines who is the eligible individual for CCTB purposes, subsection 152(3.3) requires the Minister to notify the individual in writing of that determination. Of course, this determination is one of fact that is made by the Tax Centre in the region where the eligible individual lives.
In this regard, if an eligible individual wishes to obtain more information regarding the determination made by the Minister pursuant to subsection 152(3.3), the individual may contact the appropriate Tax Centre in writing. Alternatively, any person who asks the Minister to determine the amount that is deemed to be an overpayment in respect of amounts owing by virtue of Part I of the Act, for the purposes of subsection 122.61(1), may challenge the Minister's notice of determination through the objection process. This process is described in the publication P-148 Resolving your Dispute: Objection and Appeal Rights under the Income Tax Act.
Best regards,
François Bordeleau, Advocate
Manager
Business and Partnerships Section
Income Tax Rulings Directorate