Among the non-refundable credits individuals can claim on their personal tax return is the “amount for an eligible dependant,” formerly known as the “equivalent-to-spouse” amount. The credit is available to a taxpayer who does not have a spouse or partner, but who lives with a dependent parent or grandparent, child, grandchild, brother or sister who is either under the age of 18 or is wholly dependent on the taxpayer due to a physical or mental disability.
For 2026, the dependant amount is $16,452, which at the federal 14 per cent non-refundable tax credit rate is worth $2,303. A parallel provincial credit is also available and its value depends on which province you live in. The credit amount is reduced dollar-for-dollar by the net income of the dependant, and may only be claimed once per household each year, by one individual. About one million taxpayers claimed this credit in 2021, the last year for which statistics are publicly available.
For parents who are separated or divorced and still have minor children living at home, the entitlement to the credit can be complex, as it will depend on whether child support is being paid and to whom. Under the Income Tax Act, the credit cannot be claimed by a taxpayer who pays child support to their former spouse or partner. A recent case decided by the Tax Court in late August dealt specifically with this issue.
A British Columbia couple had a son who was born in 2019. In 2022, their marriage broke down and they got a divorce, at which point the mother moved from the family home to Russia, along with her son. By May 2024, however, both the mother and her son had returned to Canada, and were back living “separate and apart” in the father’s home.
According to a 2022 consent order issued by the Supreme Court of British Columbia, the father had agreed to pay child support and spousal support to his ex-wife. Based on his income of $120,000 and her income of zero, and on the basis that their son primarily resided with the mother, the father was required to pay child support of $1,113, and spousal support of $2,632, each month from November 1, 2022, onwards, with no set end date.
On the father’s 2024 tax return, he claimed $15,705 (the 2024 amount) as an amount for an eligible dependant. This was denied by the Canada Revenue Agency since, under the Income Tax Act, no credit is available to a parent who is required to pay support to the other parent.
The father testified in court and claimed that in consideration for his ex-wife and their son returning to Canada, he would provide them with their material needs “in kind” and would, therefore, stop paying the child support and spousal support as required by the consent order.
According to the father, this new arrangement “superseded and replaced his obligation to pay child support and spousal support as set out in the Consent Order.” He argued that one of the stated premises underlying the support provisions of the order, namely that the child was primarily residing with his mother, no longer held true as of mid-2024. Although technically still in effect, the support provisions of the order were therefore “obsolete and irrelevant by mid-2024,” and thus the court should conclude that he was no longer “required to pay a support amount” to his ex-wife in respect of the child.
The judge was surprised by this agreement, calling it “hard to believe.” As the judge wrote: “Why would a young mother surrender her legal right to receive child support and spousal support based solely on a promise from her estranged husband that he would provide for all their material needs?” The mother was not called as a witness at the trial.
The CRA took the position that, absent any variation of the court order, it continued in effect throughout 2024. As a result, the taxpayer continued to be “required to pay a support amount” to his ex-wife for their son in that year even if he no longer felt obligated to do so.
The judge did a deep dive into the phrase “required to pay a support amount” and concluded that, based on several other tax provisions, the word “required” must mean a legal obligation to pay an amount. Even if the judge had found that the couple did indeed have an oral agreement that the taxpayer would be relieved of his obligations to pay child support and spousal support, such an agreement would have no effect on his legal obligation to pay child support and spousal support pursuant to the order, absent a variation by the court itself.
As a result, the judge concluded that the taxpayer’s obligation to pay support remained in effect in 2024, and thus the Tax Act precludes him from claiming the dependant credit.
Nearly twenty years ago, a similar case was brought to the Tax Court, in which a taxpayer tried to argue that Canada’s tax law discriminates against divorced dads like him, who share custody of their children and pay child support to their former spouses. As part of his divorce settlement, he and his ex-wife had agreed that each would claim the dependant credit for one of their two daughters for whom they shared joint custody. But the CRA denied his claim as he was the sole parent paying child support.
The judge in that case explained that the amount that the taxpayer was required to pay as child support under the guidelines already takes into account the fact that, as someone who pays support, he would not be entitled to claim the dependant credit and as a result his child support payment was less than it would have been if he were entitled to claim the credit.