Claiming Spousal and Child Tax Benefits, Credits and Deductions

Claiming Spousal and Child Tax Benefits, Credits and Deductions/

Claiming Spousal and Child Tax Benefits, Credits and Deductions

Nicholas J. Van Duyvenbode 29 March 2018

Claiming child tax benefits and spousal support tax deductions after separating from your spouse and divorcing is extremely important to have confirmed to avoid disagreement and delay by the Canada Revenue Agency (CRA) processing these credits, benefits and deductions. 

Child Tax Benefits and Deductions

Parties often do not understand who claims the Canada Child benefit (CCB)[i] as well as childcare costs[ii] and if applicable the amount for Eligible Dependant[iii], as well as ensuring the appropriate documentation of spousal support payments[iv].

The custody and parenting arrangements contained in your Separation Agreement or Court Order can affect your ability to claim child tax benefits, credits and deductions.   Critically important is to have clarity in these legal documents as poorly drafted Separation Agreements and Orders can result in disputes and the CRA disqualifying both parties as recipients until there is certainty as to who is entitled to these claimed credits, benefits and deductions. Parties can lose out in thousands of dollars that they expected to rely upon and did not budget for such delays.

Spousal Support Tax Credits and Payments

Ensuring the clear claiming of spousal support payments and the necessary documentation that needs to accompany claims of spousal support is also a major misstep for parties that then learn that these payments they have made will not be recognized by the CRA.  In the first year (and in all other years as a matter of fact) when claiming spousal support payments, it is highly recommended parties have, in addition to an executed Separation Agreement or Court Order that clearly sets out spousal support payments, confirmation from both the payor and payee a signed summary of payments during the calendar year.   This is in addition to retaining documentation of payments made during the calendar year.  Essential to these claims will also be the legal entitlement of spousal support payments as tax deductible vs. non-deductible spousal support payments. This in itself can be fraught with complexity and entails careful drafting of clauses regarding spousal support payments.

If you are not fully aware of the impact of entering a Separation Agreement or Court Order on your benefits, credits and deductions, do not hesitate to contact RCMV LLP to speak to a lawyer on this matter.

 


[i] https://www.canada.ca/en/revenue-agency/services/child-family-benefits/canada-child-benefit-overview.html

[ii] https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-214-child-care-expenses.html

[iii] https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-305-amount-eligible-dependant.html

[iv] https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/lines-230-220-support-payments-made.html

 

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