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: Where an individual's entire income is exempt under paragraph 81(1)(a) of the Act which spouse or common law partner should report the UCCB?
Position: The person with the lower net income as otherwise determined excluding such exempt income.
Reasons: Income that is exempt under paragraph 81(1)(a) is not included in net income under the Act.
XXXXXXXXXX 2009-031875
Michael Cooke, CA
May 8, 2009
Dear XXXXXXXXXX :
Re: Universal Child Care Benefit ("UCCB")
This is in response to your electronic correspondence of April 21, 2009, wherein you asked for our comments in respect of reporting the UCCB in accordance with subsection 56(6) of the Income Tax Act (the "Act") in circumstances in which one spouse is a status Indian earning exempt income.
Where an individual has a spouse or common-law partner at the end of a taxation year, subsection 56(6) of the Act requires the parent with the lower net income to include the UCCB in his or her income. Where one of those individuals is a status Indian earning income exempt from tax pursuant to paragraph 81(1)(a) of the Act, that individual's income for the purpose of determining which parent has the lower net income (before any income inclusion required by subsection 56(6) of the Act) would be determined without reference to such exempt income.
Therefore, where a status Indian earns only exempt income in a year, that individual's net income would be $nil prior to the application of subsection 56(6) of the Act. This individual's net income should then be compared to the net income of their spouse or common-law partner for purposes of determining the UCCB reporting obligations under subsection 56(6) of the Act.
We trust that these comments will be of assistance.
Yours truly,
Renée Shields
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy & Regulatory Affairs Branch
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