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

Canadian Tax Focus
Volume 9, Number 3, August 2019
©2019, Canadian Tax Foundation