Changes to the Eligible Dependent Tax Credit with Shared Custody in Nova Scotia.
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In Nova Scotia shared custody arrangements child support is often calculated using the simple set off approach. This is a straightforward way of calculating child support and involves the following:
· Parent A’s income corresponds with a child support payment of $500.
· Parent B’s income corresponds with a child support payment of $100.
Under the set off method Parent A would simply pay Parent B $400 for child support.
The Tax Court of Canada decided in Harder v the Queen, 2016 TCC 197 that the set off approach didn’t comply with sections of the Income Tax Act. The Income Tax Act disallows a support paying person from claiming a tax deduction or benefit with respect to that dependent. According to the decision in Harder v the Queen the correct thing to do is for each shared custody parent to actually pay the full table amount to each other. The decision in Harder v the Queen disallowed the husband from claiming $15,000 in non-refundable tax credits.
Beyond the tax implications Harder v the Queen may further complicate a shared custody arrangement. If you feel you need to re-structure your custody arrangement because of this change be sure to contact a family lawyer for advice.
You can read more on these changes here:
https://www.cba.org/CMSPages/GetFile.aspx?guid=6d204fc9-64a7-4d08-93ee-90696c978246
If you have any questions about this subject, you can call us at (902) 826-3070 or email us at info@highlanderlaw.ca to set up a meeting with one of our lawyers at our Tantallon law firm. You can also schedule a no commitment Issue Review Consult for $250+HST where you have the opportunity to explain your situation to a lawyer and get basic advice before deciding whether or not you'd like to retain us.
By: Mitch Broughton J.D – Associate Lawyer
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