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Canada Child Tax Benefit Shared Custody

Canada Child Tax Benefit Shared Custody

The Canada Child Benefit (CCB) is a program that gives low income and middle income families money every month. This tax-free benefit is meant to help with the cost of raising children. It replaces the Universal Child Care Benefit (UCCB) taxable lump-sum payments, which used to be available to all eligible individuals. The CCB is means-tested, and may not apply to all parents.  

Normally, getting this benefit means you have to live with the child and be the parent who primarily fulfills the responsibility for the care and upbringing of the child. That is, you and the child’s parent have to be together, or you need sole physical custody of the child, though not necessarily sole legal custody of the child. 

Yet it is possible to claim this benefit in a scenario where the other parent is with the child at least 45% of the time; that is, in a shared physical custody agreement. 

Here’s what you need to know, along with answers to other questions we get about the ways in which divorce impacts certain benefits available to the parents of minor children in Canada.

Who gets the child benefit in shared custody cases?

Usually, each parent receives ½ of the benefit so long as the child lives with each parent on a near equal basis. 

This calculation is less straightforward than it seems. For example, in the 2019 case Morrissey v. The Queen, it was determined that each parent must reside with a parent some percentage of a time that can be rounded off to 50%. 

That means if you spend 44% of your time with the child you might not be eligible for the benefit, even though the standard for whether a parent has joint physical custody of a child is generally that each parent is spending at least 40% of their time with the child.

What happens if two parents claim the same child on their taxes?

While the CCB is separate from your taxes this is an important question to ask.

If both of you try to claim your child as a dependent the CRA will deny the credit to both parents. It is imperative for you and your co-parent to come to some kind of an agreement about who will get to claim the dependent.

This is a negotiable point and is one of the issues that can be decided in your divorce settlement. Once it is codified in a decree and backed by court order it’s clear, unambiguous, inarguable, and easy to follow.

Make sure you work with a lawyer who is experienced enough with tax issues to include these sorts of provisions in your agreement.

How do you claim shared custody on your taxes?

There’s no line on your CRA tax form where you would claim joint custody. One of you claims the child as a dependent and one of you doesn’t. 

There are some benefits that both parents can claim as long as the total claimed amount does not exceed the limit. This was true of the fitness and arts amounts that existed up until 2016. It may be true for other tax benefits in the future. When in doubt you should speak to a certified accountant to avoid mistakes that can create problems with your taxes.

You must apply for the Canada Child Benefit separately. When you apply, you will disclose your joint custody status and provide a copy of your court order. This will alert the government to the fact that they will need to provide your spouse with the other half of the benefit. 

What about the Alberta Child and Family benefit?

Again, this benefit is separate from the CCB, but it is similar. It is a non-taxable means-tested amount paid to families with children under 18 years of age. Payments are made on a quarterly basis.

As with the CCB, this amount may be split in half when parents have joint custody over the children. 

When you file your annual tax return you are automatically considered for the Alberta Child and Family Benefit and do not need to take further action. However, if you are not the parent who will be claiming your child as a dependent then you may need to apply for the CCB first, to alert Alberta that you need to be considered for the ACFB as well.

Don’t Leave Taxes and Benefits to Chance

Many of our clients simply won’t qualify for many of these benefits because they will fail the means test. Yet claiming a dependent on a tax form offers a significant tax savings regardless of the income either parent earns.

We can’t stress this enough: bring up these issues with your divorce lawyer. Make sure they’re included in your divorce settlement. Don’t put yourself in a position where you’re going to find yourself on the phone with your ex, arguing about who should get the credit. Even judges sometimes forget to include this key notation in divorce decrees.

In general, it’s usually reasonable to assume that the lower income parent would claim the credit, but as with many issues that will be involved in your divorce settlement, this point is negotiable. Make sure you know what you’re getting and what you’re getting up before agreeing to the terms of any agreement.

Need help with your divorce settlement?

It’s imperative to get your divorce settlement the first time. This is even more true when you’ve got minor children to care for.

Don’t get tripped up by tricky financial issues that you may not even be considering on your own yet. Reach out to our lawyers. We have decades of experience handling some of Alberta’s toughest divorces, and we can help you bring your divorce to a workable conclusion.

We’re empathetic, responsive, and ready to answer your questions. Call (587) 689-3333 to set up your first appointment today.