Principal Issues: [TaxInterpretations translation] Does a parent have to have legal custody of a child in order to claim the wholly dependent person credit for that child?
Position: It is not per se necessary to have legal custody of a child in order to obtain the wholly dependent person credit. It is sufficient to examine the facts to determine whether the child is wholly dependent on an individual.
2006-019760 XXXXXXXXXX François Bordeleau, Advocate
March 27, 2008
Dear Sir,
Subject: Wholly dependent person credit
This is in response to your request of 20 July 2006 for our opinion on the wholly dependent person credit ("WDPC"). We apologize for the delay in responding to your question.
More specifically, where a parent wishes to claim the WDPC for a minor child, you wish to know whether that parent must have legal custody of the child in order for the child to be considered wholly dependent on the parent.
Unless otherwise indicated, all statutory references herein are to the provisions of the Income Tax Act (the "Act").
Our Opinion
The situation you have indicated in your letter appears to relate to an actual situation involving a specific taxpayer. As stated in paragraph 22 of Information Circular 70-6R5 dated May 17, 2002, it is our practice not to issue written opinions on proposed transactions otherwise than by way of advance rulings. Furthermore, when it comes to determining whether a completed transaction has received appropriate tax treatment, that determination is made first by our Tax Services Offices as a result of their review of all facts and documents, which is usually performed as part of an audit engagement. However, we can offer the following general comments that we hope may be helpful to you.
In light of the relevant jurisprudence, we confirm that the question of whether a child - referred to in subparagraph 118(1)(b)(ii) - is wholly dependent on an individual for WDPC purposes is one of fact. Furthermore, having legal custody of a child is not a sine qua non for an individual to claim the credit. Thus, the fact that an individual has a right of access or legal custody of the child will only be one of the relevant elements to consider in this analysis.
These opinions are not advance rulings and, as stated in paragraph 22 of Information Circular 70-6R5 of 17 May 2002, are not binding.
Best regards,
Randy Hewlett
Manager
Business and Partnerships Section
Business and Partnerships Division
Income Tax Rulings Directorate.