Principal Issues: [TaxInterpretations translation] Can an individual claim the wholly dependent person credit when that person is not resident in Canada?
Position: Under certain circumstances, yes.
Reasons: An individual who lives outside Canada with his or her child may claim the wholly dependent person credit if the individual is deemed to be a resident of Canada under subsection 250(1) of the Income Tax Act.
July 13, 2009
Montreal Tax Services Office Headquarters Business and Partnerships Division Attention: Josée Lafleur François Bordeleau, Advocate
2009-032816
Wholly dependent person credit
This is further to your letter we received on June 18, 2009 regarding the wholly dependent person credit. In particular, you are interested in knowing whether an individual can claim this credit in respect of a dependant - in this case, a child of the individual - where the dependant is not a resident of Canada.
Unless otherwise indicated, all statutory references herein are to the provisions of the Income Tax Act (the "Act").
Our Comments
As you are doubtless aware, in order for an individual to claim this credit in respect of a dependant, the individual must live in a self-contained domestic establishment in which the individual supports the dependant. In other words, the individual must generally live with the dependant.
In addition, section 118.94 specifies that several tax credits, including the one in paragraph 118(1)(b), are not generally available to non-residents of Canada unless all or substantially all of their income for the year is included in computing their taxable income earned in Canada for the year.
Finally, subparagraph 118(1)(b)(ii) provides that the dependant must generally be a resident of Canada, unless the dependant is a child of the individual.
The result of the application of these rules means that an individual, living outside Canada with his or her child, will be able to claim the tax credit in paragraph 118(1)(b) if the individual is deemed to be resident in Canada under subsection 250(1).
Access to Information
For your information, unless exempted, a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Canada Revenue Agency's electronic library. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, the electronic library version can be provided. Alternatively, the client may request a severed copy using the Privacy Act criteria, which does not remove client identity. Requests for this latter version should be made by you to Ms. Jackie Page at (819) 994-2898. A copy will be sent to you for delivery to the client.
We hope that these comments are of assistance.
François Bordeleau, Advocate
Manager
Business and Partnerships Section
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch.