Tax & Accounting September 05, 2019

Government proposes to amend child benefits rules

The government has released a legislative proposal to amend the definition of a “share custody parent” under section 122.6 of the Income Tax Act in response to Federal Court of Appeal decisions in Lavrinenko v. Canada (2019 DTC 5038) and Morrissey v. Canada (2019 DTC 5039). The Canada Child Benefit is split between shared custody parents. Regulation 6301(1) requires that the child resides with each parent on an equal or near equal basis, which the CRA generally interprets this as between 40% and 60% of the time. However, in Morrissey, the court found that any percentage of time that cannot be rounded off to 50% would not qualify as "equal or near equal". Based on this interpretation, many parents with joint custody may no longer qualify for child benefits.

In response, the government proposes to amend the definition of a shared custody parent. Among other existing conditions, the child will only be required to reside with the parent for at least 40% of the time in a given month, or on an approximately equal basis.

Cameron Mancell
CFP®, Senior Technical Writer at Wolters Kluwer Canada
Cameron Mancell, CFP®, is a Senior Technical Writer at the Wolters Kluwer office in Toronto. Cameron contributes to Canadian Tax Reporter, Preparing Your Income Tax Returns, and Preparing Your Corporate Income Tax Returns, among several others.
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