Principal Issues: [TaxInterpretations translation] Is a child assistance payment referred to in section 1029.8.61.18 of the Taxation Act (Quebec) that is transferred to a minor child subject to the attribution rules in subsection 74.1(2)?
Position: Yes.
Reasons: Wording of the Act. This payment belongs to the recipient and is not an excluded amount under subsection 74.1(2).
XXXXXXXXXX 2007-021980 Michel Lambert CA, M.Fisc. May 28, 2007
Dear Madam,
Subject: Child support credit
This is further to your fax of January 8, 2007, in which you asked whether income from a child assistance payment made by the Régie des rentes du Québec and invested on behalf of a minor child should be attributed to the parents or to the child.
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. These comments may, however, under certain circumstances, not apply to your particular situation.
Section 1029.8.61.18 of the Taxation Act (Quebec) provides in part as follows:
Where an individual and, where applicable, the individual's cohabiting spouse at the beginning of a particular month included in a taxation year file the document referred to in section 1029.8.61.23 for the base year in relation to the particular month, an amount equal to the amount determined by the following formula is deemed, for the particular month, to be an overpayment of the tax payable by the individual under this Part, in this division referred to as the “child assistance payment”: (2006, c. 13, s. 181(1))"
According to section 1029.8.61.28 of the Taxation Act, the Régie des rentes du Québec is responsible for making child assistance payments.
We are of the opinion that an amount paid by the Régie des rentes du Québec to a person as a child assistance payment under section 1029.8.61.18 of the Taxation Act is a refundable tax credit for that person. In addition, in our view, the attribution rules in subsection 74.1(2) of the Income Tax Act apply to an individual who has received such a payment if the individual transfers it to or for the benefit of a person under 18 years of age who does not deal with the individual at arm’s length or is the niece or nephew of the individual.
As stated in Information Circular 70-6R5, this opinion is not an advance income tax ruling and is not binding.
Best regards,
Manager
Financial Sector and Exempt Entities Section
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch