Can a Canadian Resident Claim a Deduction for Payments to a Non-resident Spouse and/or claim the Personal Credit for a Dependent Non-resident Spouse?
VanGhent v The Queen, 2012 TCC 245
The most interesting aspect of this decision is that Justice Woods expressed dismay at the failure of CRA to address the taxpayer’s fairness argument, and stated that “[t]he fair administration of justice in informal procedure cases is compromised when arguments that are clearly expressed in a notice of appeal are ignored by the Crown in its reply. Unfortunately, this situation is not at all unusual.”
This case involved two issues:
- Can a Canadian resident spouse claim a dependent tax credit for a non-resident spouse?
- Can a Canadian resident spouse claim deductions for payments made to a non-resident spouse?
The first issue appears to be resolved in the affirmative give that in this case the CRA did not deny the claim of the credit, but only the deduction of payments made for support.
FACTS
The taxpayer was a Canadian resident, while her spouse was a resident of Columbia. The only reason the two live apart is because the spouse has been denied a visa to enter Canada.
The spouse’s income in Columbia is low, so the Canadian resident is required to provide support and regularly sends cheques for this purpose.
The taxpayer claimed a deduction for these support payments, and the personal tax credit for a dependent spouse. In claiming the deduction she relied on the 2009 General Income Tax and Benefit Guide published by the Canada Revenue Agency (CRA), at a passage found on page 31 which reads: ” You may be able to claim an amount for certain dependants who live outside Canada if they depended on you for support.”.
The MNR reassessed disallowing the deduction in computing the income.
ANALYSIS
The taxpayer argued that it would be discriminatory to allow a deduction for those required to pay support on marriage breakdown, but deny it in her circumstances when the living apart is involuntary but beyond her control.
The Court noted that although the taxpayer’s circumstances are sympathetic, no provision in the ITA allows a deduction for her circumstances., and that even if the guide is misleading a court cannot provide relief or mistaken information provided by the CRA.
– Sas Ansari, BSc BEd PC JD LLM PhD (exp) CPA In-Depth Tax 1, 2 &3
Sas Ansari, BSc BEd PC JD LLM PhD (exp) CPA In-Depth Tax 1, 2 &3
If you like this website, please share it with others.
Back To Top OR Home
In claiming a married or common-law partner credit for non-residnet conjugal partners – Paragraph 118(1)(a) of the ITA seems fairly clear. The CRA in the above captioned case allowed the deduction – in my opinion, quite correctly so.
Paragraph 118(1)(a) the relevant limitations and requirements are: (1) the credit is only available to individuals, (2) who were married or in a common-law relationship at anytime in the taxation year the credit is claimed for; (3) where the individual was supporting his/her spouse or common-law partner, and (4) the parties are not living separate and apart by reason of a breakdown of their partnership. Thus, there is nothing in the paragraph itself that requires the taxpayer’s spouse to be a Canadian resident or be living with the taxpayer (so long as the separate living arrangement is not due to breakdown of the relationship).
In relation to the support payments (more detail available by following the link), the taxpayer was making voluntary support payments to her spouse. The court held that there is nothing in the ITA that allows for a deduction for support payments made voluntarily, and that she had filed claiming a deduction under the provision allowing for deductions for court ordered support and maintenance payments. It is implied that if the payments were of the kind that would properly be deductible under paragraph 60(c.2). This would require the payment to be under a decree, order or judgement of a tribunal of competent jurisdiction as a payment included in income pursuant to paragraphs 56(1)(b) or (c) or (c.1), to the extent not deducted in a preceding year.