The Canada Child Benefit is a tax-free monthly benefit provided to Canadian low and middle-income families which the Government of Canada introduced in 2016 (the “CCB”).
The CCB is determined based on your household income and the number of children. If you are separated from the other guardian of your child, CRA will take into consideration the custody arrangement.
CRA and the Income Tax Act uses the term “shared custody” to mean if the child resides with both parents on a “more or less equal basis.”
If you are in a primary custody arrangement regarding your child, this means the child resides with you the majority of the time (more than 60% of the time) and you have the primary responsibility for the care and upbringing of the child, then CRA will determine that you are entitled to receive the full amount of CCB based on your household income.
If you are in a shared custody arrangement with your child, which means for CCB purposes:
- You are one of two parents (or guardians) who are not living in the same residence or as common law spouses of each other;
- Your child resides with you and the other parent sharing equal or near equal time between households; and
- When your child lives with you, you fulfill the responsibility for the care and upbringing of the child.
Therefore, if you have your child living with you close to half the time (40-60% of the time) then you and the other parent of your child should be reporting to CRA accurately that you are in a shared custody arrangement. If your household qualifies on a household income basis, CCB will then be apportioned between the households.
This division of CCB does not mean that you and the other parent will necessarily receive the same amount of CCB as the amount is determined according to each household income.
Problems and disputes often arise between separated parents if:
- If they are not in agreement on whether the parenting arrangement is a primary custody or shared custody arrangement;
- when one party does not report accurately to CRA; or
- when there is a delay in the reporting to CRA in the event of a change in the custody arrangement.
It these circumstances, unfortunately sometimes the person who has been receiving the full CCB for some time will be required to repay a certain amount to CRA and the party who should have been receiving a portion of the CCB (sometimes for quite some time) could receive retroactive payment. This can then be a source of dispute between the parents.
It is important to consider this benefit when you separate and to be on the same page with the other parent on your reporting to CRA to ensure that there are no unexpected surprises that occur on either side. This is one of the many reasons why it is important to have clarity and a written agreement on the parenting arrangement to avoid any confusion or disputes on this issue.
If you have any further questions, we recommend that you have a discussion with your family lawyer and your tax accountant. Please be advised that this information is subject to change as the CRA changes their benefits and qualification requirements. This article is for informational purposes and is not specific legal advice, tax or accounting advice of any kind.
