Providing for a Lifetime, Winter 2022

When a relationship ends, there are usually many things that need to be divided- and one of those things can be tax benefits and credits. In this article, we will discuss the options that couples have when they separate and are supporting a dependent with a disability. Disability Tax Credit The first tax credit we will look at is the Disability Tax Credit, a federal non-refundable tax credit which was designed to recognize that Canadians living with a disability can face higher costs of living. The credit itself is formally attached to the SIN number of the individual with the disability but can then be transferred to another person, providing that person is providing regular and consistent support to the disabled individual. In most cases where there are two parents, the parent with the higher taxable income would claim the credit, as it would provide the greatest reduction in tax payable. When a couple separates, it would still make the most sense, from solely a tax perspective, for the higher income earner to continue to claim the credit. However, this is not always possible, nor agreeable. Options for Allocating the Disability Tax Credit: • One parent can continue to claim the full credit amount • Parents can elect to split the credit if caregiving responsibilities are shared • Parents can elect to claim the credit in alternating years • If a parent is required by a court order or written agreement to pay child support for the child with the disability, that parent is not permitted to claim the Disability Tax Credit. Therefore, the parent receiving the child support payments must be the one to claim the credit. Child Disability Benefit The Child Disability Benefit payment is a tax-free monthly supplement which qualifying families receive in addition to the regular Canada Child Benefit payment. When looking at the Child Disability Benefit, the rules are quite different.