http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/120721/index.do
Belway v. The Queen (September 25, 2015 – 2015 TCC 249, Paris J.).
Précis: This case is the latest decision of the Tax Court holding that offset child support amounts are not eligible for tax credits in respect of a wholly dependent person. As a result the appeal was dismissed.
Decision: The law has been clear for some time now that agreements between former or estranged spouses to pool and offset their respective child support obligations do not entitle the net payor to claim tax credits in respect of a wholly dependent person. While the Court acknowledged that this may give rise to unfairness the matter was up to Parliament to resolve:
[38] Although in each of those cases the parents were required to pay support to one another at different points during the year, subsection 118(5.1) has been drafted to make it applicable in any case where both parents are required by court order or under a written agreement to make support payments to the other, including those where the parents are required to make payments to each other for the same periods of time. This has led to new difficulties, such as those described by this Court in Ochitwa. At paragraphs 8 and 9 of that decision, Campbell Miller, J says:
[8] … I am perturbed by the implications that in the same circumstances of a shared custody arrangement, that simply due to the crafting of an order or agreement, a parent will or will not get the eligible dependant amount. For example, where there is a shared custody arrangement with two children it strikes me there are three possible ways to craft the child support, where each parent earns some income:
1. Each parent agrees to or is ordered to pay support for one child ($400 for one for example and $300 for the other – net $100.00): both could claim the eligible dependant amount.
2. As in example 2 above, both parents agree or are ordered to pay support for both children (one pays $300 for example and one pays $400 – net $100.00: both can rely on subsection 118(5.1) of the Act kicking out the effect of subsection 118(5) of the Act).
3. As Mr. Ochitwa did, the higher earning parent is obligated to pay support for both children (net $100.00: no eligible dependant amount would be allowed).
[9] So, same shared custody arrangement, same fiscal effect, but different result. This is unfortunate. Why should each parent (where both parents earn income), in a two or more child shared custody arrangement of at least two children, not be able to claim the eligible dependant amount – one child each? I suggest these provisions could be clarified to more clearly ensure the policy objectives are being met, presumably for the benefit of the children.
[39] However, the remedy to these difficulties, as noted by the Court in Ochitwa, lies with Parliament.
[Footnote omitted]
As a result the appeal was dismissed.