#GlobalNews: “This Ontario dad hasn’t been capable of declare the kid tax credit score in years — and he’s not alone – National ” #Toronto #Montreal #Calgary #Ottawa #Canada


Andrew Haines has two youngsters underneath the age of 18 however says he hasn’t been capable of declare both of them on his tax return for years.

Haines, who acquired separated in 2011, says he’s been audited 4 out of the final six years and at all times as a result of he tried to say one in every of his youngsters as a dependant.

The Pickering, Ont.,-based dad says he has shared custody of his son, 14, and daughter, 11, via an association that sees the youngsters divide their time roughly equally between their mother and father. The couple additionally agreed that they might every declare one of many youngsters as eligible dependants on their tax return.

However, yr over yr the Canada Revenue Agency disallowed Haines’s declare, even because it allowed his ex to say one of many youngsters, he informed Global News.

“At this point, I’ve given up,” Haines informed Global News, including that he hasn’t claimed the credit score on his 2017 return.

READ MORE: A 23-year-old with an $80Ok job and no debt couldn’t get a mortgage – for this reason

The eligible dependant tax credit score, which will be price 1000’s of {dollars}, is supposed, amongst different issues, for single and separated mother and father, who can’t declare their partner or associate as a dependant, as different taxpayers do. Parents need to stay with their youngsters in a home that they preserve themselves in an effort to be eligible for the credit score, and just one dependant per family will be claimed.

At first look, Haines seems eligible to say the credit score however a part of the rationale why he hasn’t been capable of get the credit score may lie with a latest change within the regulation.

“It used to be common practice that parents who have their children on an equal 50/50 schedule could each claim one child for the eligible dependant credit, as long as the parent was otherwise eligible,” Jenny Johnston, a household lawyer at Ottawa-based Mann Lawyers, informed Global News by way of electronic mail.

However, “a recent case from the Tax Court of Canada, Harder v. The Queen, made clear that if one parent is paying the other child support on the basis of a ‘set-off’ amount, that parent cannot claim the eligible dependent credit,” Johnston added.

READ MORE: 5 issues it’s essential to do to win (or survive) a CRA tax audit

Separated {couples} with shared custody of the kids typically organize youngster help funds on the premise of a “set-off” between every mother or father’s obligations, Johnston defined. For instance, if Dad has an earnings of $80,000 per yr, he could be required to pay $1,211 in youngster help for 2 youngsters, she added. But if the kids break up their time equally with Mom, who earns, say, $50,000 per yr, she would even be required to pay $755 a month in help to Dad. Typically, it’s simply simpler for Dad to pay the distinction.

That is the association Haines says he at the moment has together with his former spouse.

The Harder court docket case has “caused family law lawyers to have to draft agreements where, to use the examples above, instead of Dad just paying the $456 set-off to Mom, Dad actually has to pay the $1,211 and Mom actually has to pay the $755. In that case, CRA will allow each parent to claim the eligible dependant credit for one child.”

Someone with Haines’ extra sensible youngster help setup, nonetheless, can’t declare the credit score.

WATCH: Here’s what you need to do along with your tax refund

Not an remoted downside

Haines’ case is simply an instance of how straightforward it’s for single and separated mother and father to stumble when navigating Canada’s tax system. Another widespread downside is proving eligibility for the Canada Child Benefit (CCB), a difficulty that comes up for a lot of single adults with youngsters round this time of yr.

The CCB is a tax-free profit paid to just about all mother and father. Because the quantity of the CCB relies on household earnings, the CRA resets the profit yearly in July based mostly on the earnings declared for the earlier yr. And typically, as with all profit and tax break, the company will ask mother and father to supply additional paperwork to again up their claims.

READ MORE: Here are the Canadians most certainly to get a tax audit 

Single and separated mother and father, although, seem to have a more durable time than most in proving their eligibility.

“That is the single most common problem of ordinary people coming into our office,” mentioned David Rotfleisch of Toronto tax regulation agency Rotfleisch and Samulovitch.

The Taxpayers Ombudsman, a authorities watchdog that addresses service complaints in opposition to the CRA, flagged mother and father’ difficulties in demonstrating their eligibility for the CCB as a scientific situation in its annual report earlier than Parliament final yr.

READ MORE: CRA points? The Taxpayers’ Ombudsman may have the ability to assist — totally free

The main points for folks are usually proving that they’re really separated and that they’ve custody of the kids, Rotfleisch mentioned. Submitting separation and custody agreements typically doesn’t minimize it, he famous, including that taxpayers typically have to indicate issues like faculty letters testifying that the mother or father in query walks the youngsters to highschool and attends parent-teacher interviews.

The CRA desires to make it possible for taxpayers aren’t faking a separation in an effort to dodge taxes, Rotfleisch mentioned. But that additionally means a separated mother or father who has been completely vetted as soon as isn’t exempt from future tax critiques, because the taxman checks in to verify the events are nonetheless separated.

The elementary downside, based on Rotfleisch, is that “the CRA is geared to collect money, not give money out.”

Asking the federal tax company to be in command of distributing advantages, “is almost like having a fox guarding the henhouse.”

READ MORE: three of the tax errors you’re most certainly to make, based on the CRA

For its half, the CRA informed Global News it’s “wholeheartedly committed to ensuring that vulnerable Canadians, among them women and children facing abusive situations, get the benefits and credits they are entitled to.”

The company mentioned it has rolled out an “enhanced process” to have “subject matter experts reach out to CCB benefit recipients by telephone if they fail to respond to requests for information before adjusting their benefits to provide them with assistance.”

So far, although, the share of CBB-related complaints acquired by the Ombudsman has solely elevated, going from eight per cent in fiscal yr 2017 to 13 per cent in fiscal 2018.

WATCH: These are three tax deductions Canadians typically overlook to say

As for the eligible dependant tax credit score, Johnston mentioned a authorized framework that forces mother and father with shared custody to pay one another youngster help presents “major problems.”

“Sometimes, one parent is responsible and good at paying and the other is not, so while the kids are actually living in each house 50 per cent of the time, one responsible parent is paying support to the irresponsible parent who may be chronically late with payments, or not paying at all,” she mentioned by way of electronic mail.

And typically, she added, the accountable mother or father doesn’t have the choice of merely stopping her or his personal funds.

The Canadian Bar Association not too long ago wrote a letter to Finance Minister Bill Morneau on this situation.

Whether Ottawa will step in to untangle the tax internet that entraps so many mother and father stays to be seen.

© 2018 Global News, a division of Corus Entertainment Inc.

Note: “Previously Published on: 2018-05-05 06:00:15, as ‘This Ontario dad hasn’t been capable of declare the kid tax credit score in years — and he’s not alone – National

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