‘Shared parenting’ is defined in both the Federal and Provincial Child Support Guidelines as “each spouse exercises not less than 40% of parenting time with a child over the course of a year”.
The Income Tax Act (ITA) defines ‘shared parenting’ in a similar, but less quantitative manner, as parenting “on an equal or near equal basis”1.
The disparity between the two definitions causes uncertainty as ‘shared parenting’ has a different meaning depending on whether it is being discussed in the context of the Guidelines or the ITA. This becomes especially problematic for the Canada Child Benefit (CCB), a government program introduced in 2016 and administered by the Canada Revenue Agency (CRA), that provides low- and middle-income Canadian families with tax-free monthly payments to help with the cost of raising children. The CCB provides support for over 6 million Canadian children ever year, and qualifying families during the 2019-20 benefit year received an average of around $7,000 in relief.2
Having status as a ‘shared parent’ for the purposes of the CCB is significant as it means that both parents are entitled to 50% of the benefit payments, as opposed to one party having a 100% entitlement when there is a primary parenting arrangement. The resulting difference is potentially thousands of dollars per year depending on whether or not the parties qualify as ‘shared parents’.
For the purposes of CCB determinations, the CRA has traditionally interpreted ‘shared parenting’ in a matter consistent with the Guidelines: as an arrangement where a child lives with the parent between 40% and 60% of the time.3
However, in the more recent decisions of Lavrinenko v. Canada4 and Morrisey v. Canada5the Federal Court of Appeal went with a narrower reading of ‘shared parenting’ by interpreting parenting on a ‘near equal basis’ as residing with the child between 45% and 55% of the time. This caused concern among many separated and divorced parents who risk losing some or all of their CCB payments.6
Following these decisions, Canada’s Minister of Finance announced a proposed legislative amendment to the ITA meant to clarify and broaden the definition of ‘shared parenting’ to ensure consistency with the Guidelines’ 40% to 60% arrangement and ensure that the CRA’s current interpretation is supported in law. This amendment would provide some much-needed clarity and ensure that benefits being paid to families in shared parenting arrangements can continue uninterrupted.
Lawyers at BOYNECLARKE LLP can help you navigate the legal issues of family law and tax law. If you are seeking legal advice, please call 902-469-9500 to schedule your consultation with a member of our Family Law team.
1 Income Tax Act, RSC 1952 c. 148, s. 122.6.
2 Department of Finance Canada (2019, August 29). Ensuring the Availability of the Canada Child Benefit to Families in Shared Parenting Time Arrangements. Government of Canada. https://www.canada.ca/en/department-finance/news/2019/09/ensuring-the-availability-of-the-canada-child-benefit-to-families-in-shared-parenting-time-arrangements.html
4 Lavrinenko v. Canada, 2019 FCA 51
5 Morrisey v. Canada, 2019 FCA 56
6 Golombek, J (2019, September 6). New legislation could clarify definition of ‘shared-custody parent’ – with thousands in benefits at stake. Financial Post. https://financialpost.com/personal-finance/taxes/new-legislation-could-clarify-definition-of-shared-custody-parent-with-thousands-in-benefits-at-stake#:~:text=have%20shared%20custody.-,Under%20the%20Income%20Tax%20Act%2C%20a%20parent%20is%20considered%20to,days%20with%20the%20other%20or