Ever wonder how the eligible dependent credit (usually referred to as ‘claiming the kid’ on the tax return), Canada child benefit and child support work after parents split? I thought I’d offer some clarity about how it goes, because there are very clear rules about all those things.
There are two types of scenarios. One is where there is one primary parent. The other scenario is a shared parenting arrangement. One parent is generally considered to be the primary parent if the child spends more than 60% of the time with that parent. (More notes on coming up with a parenting arrangement here https://www.justice.gc.ca/eng/fl-df/parent/mp-fdp/p5.html )
The decision about schedules and child sharing arrangements are supposed to be made completely with the best interest of the child in mind, NOT for the purpose of changing the subsequent financial costs or benefits. Once the parenting arrangement is decided, these are the natural by-products of the decided arrangement.
If there is one primary parent:
- the primary parent gets child support from the other parent (The amount is set based on the paying parent’s income only and the number of children. This is the calculator https://www.justice.gc.ca/…/child-enfant/cst-orpe.html )
- the primary parent gets to claim the child as eligible dependent on their tax return every year. (details here https://www.canada.ca/…/line-30400-amount-eligible… )
- the primary parent gets full Canada child benefit based on their income alone. (more info here https://www.canada.ca/…/canada-child-benefit-before-you… )
In a shared parenting arrangement:
- child support is calculated by putting each person’s income into that online calculator. The difference between the two amounts is what is paid to the lower income parent.
- if there is one child, the parents alternate years when claiming the child as eligible dependent. If there are two or more children, the parents can claim a child each. Who claims which child, or who gets to claim even vs odd years is the only detail that needs to be hashed out between the parents here.
- Canada child benefit gets split. Each parent will receive one half of what an annual entitlement would be based on their individual income.
All these things have clear rules about them and they can only fall into those two camps. Anything more one-sided than 60/40 is considered to be one primary parent, and one not. If it’s an 80/20 time share or a 100/0, it doesn’t matter. It is treated exactly the same, for these three main items.
I wish more people understood this going into separation negotiations. My lawyer didn’t seem to have a proper understanding of the eligible dependent rules. My ex went in asking to claim it, when he didn’t meet the CRA requirements to be able to. I was the primary parent, so I got to claim it. It was not something that needed any discussion between lawyers. Paying $200 an hour to tell my own lawyer the CRA rules around this was pretty ridiculous.
I’ve seen these things being used as bargaining chips in financial negotiations with other people too. ‘I’ll offer you $500 in child support, if I get to claim the kid each year on my taxes’ type offers. It breaks my heart to think of how many people accept those kinds of deals because they don’t know that they are entitled to BOTH more child support than offered AND to claim the child on their tax returns. So many people concede because they aren’t sure what they are entitled to or they want to avoid court. Knowledge is power when it comes to these things and court can be really beneficial for a lot of people.
It’s fine to do some give and take on these things so that it feels more equitable to both parties. There are lots of separations that are completely civil and equitable. A parent can give on any of these things they want to. My hope is that no one gives up things they’re entitled to simply because they don’t know what they’re entitled to or because they were bullied out of it.
Sometimes it’s even best to not ask for some of these things at all, even when fully entitled to it. Unfortunately many unfit, uninterested, manipulative, or abusive parents will seek out 50/50 parent time for the sole purpose of saving money. My ex didn’t ask for 50/50 time until 9 months post-separation. Not coincidentally the same day he got child support numbers from my lawyer. 50/50 time with him was extremely damaging to my children and he’s since lost access completely. It’s easy to see now that I might have been better off not asking, or at least not asking yet. Hindsight is 20/20. Not all separations are equal in terms of the two people involved. Unfortunately, lawyers tend to give out pretty generalized advice that can be really harmful to people with ex’s like this.
No matter the level of cooperation or civility, no matter if negotiations are done between partners, or using lawyers or using court – Knowing the facts of how these amounts are calculated is hugely beneficial to everyone separating!
PS. I offer one hour sessions where we can deep dive on these topics, or other financial topics around separation! I had a client today tell me that she got more helpful information from me in an hour than she got from her lawyer in almost two years.
Share this post with anyone you know in the middle of separation negotiations! Save them a whole lot of stress and money 
Tax Wise 
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