Last updated: June 05 2014

Switching Claims for Adult Dependants Possible

In Ullah v. The Queen, (2013) TCC 387, the Honourable Mr. Justice Paris had to decide whether the appellant was entitled to the wholly dependent person credit (the amount for an eligible dependant) for her 2006-2009 taxation years.

The appellant lived with and supported her parents during this period and wanted to deduct a wholly dependent person credit for her mother. CRA disagreed because her father deducted a spousal credit in respect of her mother for the same years.

The father, himself disabled and had little income, conceded that he did claim the spousal credit when he filed his tax returns for the years in issue, but that in February 2011 he attempted to have the Minister adjust his returns for those years to delete his claim for the spousal credit in order to permit his daughter to claim it.

Despite the fact that a deleted spousal credit would not have resulted in any tax payable by the father, CRA refused to accept his adjustment request because he declared bankruptcy in August 2010, and the claim was not made by his trustee-in-bankruptcy. Yet, Justice Paris accepted evidence that in fact the trustee did send the request to the CRA. The Justice explained:

 “In my view, where a person claims a spousal credit on his or her tax return, but that claim does not in fact reduce or affect tax payable in any way, it cannot be said that there has been any deduction of an amount in computing tax payable. The credit would have to have an impact on tax otherwise payable in order to say the credit has been deducted in computing tax.” [Emphasis in original]

Therefore, he allowed the appellant to deduct the wholly dependent person credit for the years in issue because no deduction of the spousal credit was allowed to the appellant’s father for those same years. Interestingly, the Justice Paris stated that he was also of the view that it would not be necessary for the Minister to reassess the appellant’s father in order to delete the spousal credit claim, since it had no effect on his tax payable.

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