Sharing the CCB/GST Credit: "Equal or Near Equal"
For separated or divorced parents who share custody of a child, it is
possible to share entitlement to the Canada child benefit (CCB) on a
50/50 basis, provided that the child resides with the parents on an
"equal or near equal basis" (see the definition of "shared-custody
parent" in section 122.6). Until recently, this expression was
uncertain, with many taxpayers contending that "near equal" could
encompass parenting arrangements as unequal as 60/40 (that is, where a
child resides 60 percent of the time with one parent and 40 percent of
the time with the other) or that qualitative factors could be
considered. In a pair of recent decisions, however, the FCA clarified
the law and provided a definite cutoff for what qualifies as "equal or
near equal."
In
Lavrinenko v. Canada (
2019 FCA 51),
two parents who maintained a 60/40 parenting arrangement sought to
share the Canada child tax benefit (the predecessor to the CCB) and the
GST/HST credit. In determining whether the parents were "shared-custody
parents," the court performed a textual, contextual, and purposive
analysis of the phrase "equal or near equal." The court determined that
this phrase refers to time in a quantitative sense only, and not to any
qualitative factors (such as those listed in regulation 6302). The court
concluded that the words "near equal" were not intended to modify the
concept of "equal," but were merely intended to relieve parents from
what would otherwise be an onerous burden of "maintain[ing] detailed
records of every hour that a child resides with each parent."
The court held that "any percentage of time that cannot be rounded off
to 50% [does] not qualify as near equal." However, in setting out the
rules for rounding, the court provided some leniency, stating that "any
rounding of percentages should not be restricted to rounding to the
nearest percentage point but rather to the nearest whole number that is a
multiple of 10 and another whole number. For example, 48% would be
rounded to 50% and 44% would be rounded to 40%." Accordingly, it appears
that the most unequal parenting arrangement that can qualify as "equal
or near equal" is a 55/45 arrangement (assuming that the court would
round 45 percent up to 50 percent; see
Brady v. The Queen,
2012 TCC 240). The parents in
Lavrinenko did not meet this threshold, so they were not "shared-custody parents."
The reasons in
Lavrinenko were adopted in the companion case of
Morrissey v. Canada (
2019 FCA 56), overturning the lower court's decision (
2016 TCC 178) that a 58/42 shared-custody arrangement qualified as "near equal."
It is notable that in
Lavrinenko, the court held that the term "shared-custody parent" under the ITA was to be interpreted
without reference to the definition of "shared custody" under the
Federal Child Support Guidelines.
This is significant, since the latter definition is likely responsible,
at least in part, for the misconception that parents who maintain a
60/40 arrangement are "shared-custody parents" under the ITA. This is an
important reminder that definitions cannot simply be transplanted from
one statutory context to another.
A final note: the equal entitlement of two shared-custody parents to the
CCB relates to the amounts before the income-based phaseouts are
applied. The two shared-custody parents will have different adjusted
incomes; hence, the CCB payment to the higher-income parent may be much
less than the CCB payment to the lower-income parent (see "The Canada
Child Benefit and Child Custody,"
Canadian Tax Focus, August 2016).
Lane Zabolotney
Cuelenaere LLP, Saskatoon
lzabolotney@cuelenaere.com