Posted on July 22, 2015 · Posted in Blog

Canada Revenue Agency & Divorce

Divorcing? If so, changing your marital status can have significant tax implications, and failure to report those changes could negatively affect you!

CCTB tax cra

Kelowna Divorce Mediation Services receives many inquiries regarding Canada Revenue Agency’s (CRA’s) rules for divorcing couples. Often these calls come after CRA has already started to claw back and/or have stopped the benefits. The result can be much time, effort and cost spent to rectify the problem and to prove one’s case to CRA.

Certain tax credits, such as the CCTB (Canada Child Tax Benefit,) are calculated based on total household income, and separation and divorce changes that. The Child Tax Benefit is a tax-free, monthly benefit payable to eligible parents for each child who is under the age of 18. It is designed to help families with the cost of raising their children. Here is what the Canada Revenue Agency has to say about it:

“If you or your new spouse or common-law partner have children who are residing with you, the CRA will move all the children to the female parent’s account. If you are married or living common-law with a person of the same sex one of you will receive the CCTB for all the children. To continue receiving the CCTB, you have to file a tax return every year, even if you have not received income in the year. If you have a spouse or common-law partner, they also have to file a tax return each year.” http://www.cra-arc.gc.ca/bnfts/mrtl/menu-eng.html

There is a lot more to it than what is quoted above. At best, it’s complicated and the rules change from time to time. In fact the Canadian Bar Association has produced a pamphlet called the “Tax Matters Toolkit” (updated March 2014) in order to help both lawyers and their clients understand how divorce affects taxation and taxable benefits. You can download a pdf of the pamphlet by clicking HERE.

As of 2017, CRA is also changing the rules regarding shared child support! You now have to actually give each other the cash and have proof that there was a monthly transaction. Click HERE to see our article on this arduous rule.

FancyLine

On the Doorstep of Divorce?
Give us a call at 250.707.0928, or request a consultation.

divorce mediation kelownaAbout Kelowna Divorce Mediation Services

We are not expensive lawyers; we are family divorce mediators and rebuilding coaches.  Our boutique divorce mediation firm has become Kelowna’s first choice when dealing with separation and divorce, and beyond. It is possible to reduce stress, time and conflict. Our mediation and rebuilding models educate and empower our clients, so that when you leave you have a document that will stand the test of time.

Request a Consultation

email