5 February 2009 External T.I. 2008-0298881E5 - Wholly dependent person credit

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: Whether or not the taxpayer is entitled to claim the wholly dependent person credit under paragraph 118(1)(b) of the Act.

Position: No

Reasons: Subsection 118(5) provides that no amount may be claimed under subsection (1) where a support amount was required to be paid in respect of the child.

XXXXXXXXXX 	2008-029888
		Anne Dagenais
February 5, 2009

Dear XXXXXXXXXX :

Re: Wholly Dependent Person Credit

This is in response to your letter dated October 30, 2008 concerning the above-noted subject. We understand that you have joint custody of your two children and recently began paying child support. You have asked whether you are entitled to claim the Wholly Dependent Person Credit (the "Credit") under paragraph 118(1)(b) of the Income Tax Act (the "Act") in respect of one of your children.

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of a request for an advance income tax ruling submitted in the manner set out in Information Circular 70-6R5, "Advanced Income Tax Rulings", dated May 17, 2002. This Information Circular and other Canada Revenue Agency ("CRA") publications can be accessed on the internet at http://www.cra-arc.gc.ca. Where the particular transactions are complete, the inquiry should be addressed to the relevant tax services office, a list of which is available on the "Contact Us" page of the CRA website. Although we cannot comment on your specific situation, we are prepared to provide the following comments in respect of the issues that you raised. Please note, however, that these comments are of a general nature only and are not binding on the CRA.

For purposes of this reply, we have assumed that the child support payments that you are required to make qualify as a "support amount" as defined in subsection 56.1(4) of the Act (see paragraph 4 of Interpretation Bulletin IT-530 "Support Payments").

In general, where an individual does not claim a spousal tax credit under paragraph 118(1)(a) of the Act, and subject to certain other requirements set out in paragraph 118(1)(b) of the Act, an individual may claim a tax credit in respect of a wholly dependent person. Subsections 118(4) and 118(5) of the Act contain further restrictions with respect to an individual's entitlement to the Credit. Of particular relevance to your inquiry is paragraph 118(5)(a) of the Act, which denies the Credit in respect of a child if the taxpayer was required to pay child support in the year for that child. Since you are now required to make child support payments in respect of your children, it is our view that you will not be entitled to claim the Credit for any year in which you make such payments.

We note that the role of the CRA is to administer and enforce the Act as passed by Parliament. The tax policy concerns you have with respect to being able to claim the Credit, and any request for amendments to the Act, are the responsibility of the Department of Finance. Should you wish to pursue such concerns further, you may contact the Tax Policy Branch of the Department of Finance by writing to L'Esplanade Laurier, 140 O'Connor Street, Ottawa Ontario K1A 0G5.

We trust that our comments are of assistance to you.

Yours truly,

Renée Shields
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch