http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/119860/index.do
Letoria v. The Queen (September 11, 2015 – 2015 TCC 221, C. Miller J.).
Précis: Mr. Letoria shared custody of his two children with his former spouse. He made support payments in respect of the children pursuant to two sequential court orders. He claimed $11,038 for the eligible dependent amount pursuant to subparagraph 118(1)(b) of the Income Tax Act (the “Act”) and $2,234 for the child amount pursuant to subparagraph 118(1)(b.1) of the Act in respect of one of the two children. He relied upon language in court order which provided a monthly amount which he “would” pay,a monthly amount his former spouse “would” pay and then a monthly offset amount which he “will” pay.
The Tax Court dismissed Mr. Letoria’s appeal. Based on prior case law the creation of a notional offset was not sufficient to entitle the paying parent to claim child credits for one child. There had to in fact be support payments made by both parents which was not the case in Mr. Letoria’s situation.
Decision: The facts presented a common situation:
[3] The Appellant and his former spouse were separated throughout 2013 due to the breakdown of their marriage. They had two children, both minors at the time. They shared custody of the children.
[4] Mr. Letoria claimed the eligible dependent amount and the child amount on his 2013 tax return in respect of one of the children. The Supreme Court of British Columbia issued an order (the “1st Order”) on November 12, 2012. It required the Appellant to pay his former spouse monthly child support of $962 commencing September 1, 2011 until further order. The Supreme Court of British Columbia issued a further order (the “2nd Order”) on October 22, 2013. This order required the Appellant to pay his former spouse monthly child support of $746 commencing August 1, 2013.
The language of the second order provided for a form of offset:
[6] The 2nd Order reads in part as follows:
2. By consent the Claimant’s 2012 income for the purposes of the Federal Child Support Guidelines is $34,006, and the Respondent’s 2012 income for the purposes of the Federal Child Support Guidelines $84,472.
3. By consent and based on the Federal Child Support Guidelines the Respondent would pay to the Claimant $1,271 a month for the children and the Claimant would pay to the Respondent $525 a month for the children.
4. By consent the Respondent will pay to the Claimant the offset amount of $746 a month for the children commencing August 1, 2013, based on the 2012 agreed annual incomes. This is decrease from the original Order amount of $962 a month registered January 4, 2013.
The language of the second order did not fulfil the requirements of the Act:
[14] It follows that for subsection 118(5.1) of the Act to benefit Mr. Letoria by rendering subsection 118(5) of the Act inoperative, his former spouse must be required to pay child support under the order. She is not. The order is clear that the obligation rests solely with the higher income earner – Mr. Letoria.
[15] It is regrettable that those involved in counselling couples on breakup and drafting their agreements or orders are not intimately familiar with these tax provisions to ensure their clients get the credits they deserve.
[16] This order could have been drafted so as to impose an obligation on the former spouse. It was not. I cannot pretend that it was. Mr. Letoria is precluded by the operation of subsection 118(5) of the Act from claiming this credit and he is not saved by subsection 118(5.1) of the Act, as his former spouse had no legal obligation imposed by the order to make support payments.
As a result the appeal was dismissed (without costs since this was an informal procedure appeal).