Finances and Taxation

Child support is generally calculated using the Quebec child support calculation model. Based on both parents’ income and the number of children, the tables determine an annual budget for the children’s basic needs.

This budget is then divided between the parents based on their respective incomes and the time each parent spends caring for the children. The budget must follow the children. So if the children are in the exclusive custody of one parent, the total amount of the budget must be available to that parent. This is what requires a transfer from one parent to the other and creates the support obligation. In shared custody, the budget must be split 50-50 between both parents. When the parents’ incomes are unequal, the proportion of the budget held by each parent is not 50%. Child support therefore serves to rebalance the budget.

Consult our brochure “Understanding Child Support” to learn more.

For further information on the expenses included in child support, please feel free to contact us.

Annuity Recipient: A person who is entitled to receive payments from an RRSP or a RRIF.

Transferee: A person who issues the plan, annuity, or fund to which the property is transferred.

Transferor: A person who issues the plan, annuity, or fund from which the property is transferred.

RRSP issuer: A person described in subsection 146(1) of the Income Tax Act with whom the annuitant has entered into a contract or arrangement that is an RRSP.

Generally, taxes are due on all amounts withdrawn from an RRSP or a RRIF, as these amounts are considered income for the recipient. However, when spouses separate, they can transfer funds from their non-matured RRSPs or RRIFs to each other without incurring any tax consequences. Taxes will be payable only when the recipient withdraws the money from their own account.

For the transfer to be tax-free, it must be made directly—that is, from one institution to another—and must be made pursuant to a separation agreement or a court order stipulating that the division of funds is in settlement of rights arising from the dissolution of a marriage or common-law partnership.

If you are the recipient of a fund transfer, you must be 71 years of age or younger at the end of the year of the transfer.

A payment from a non-matured RRSP can be transferred only to your RRSP or RRIF. It cannot be transferred to a RPP or Annuity.

Do not include any amount in your tax return for the transferred amount, and do not claim any deduction for it. Generally, the transfer has no tax impact on RRSP contribution limits.

The form to complete is Form T2220. This form must be submitted to the financial institutions of each party so that they can process the transfer correctly.

Note that the law does not specify a precise timeframe for transferring an RRSP; however, it is expected that the transfer be completed within a reasonable period of time (approximately one year) following the separation. In most cases, however, the parties agree to complete the transfer within 30 days of the divorce decree.

SECTION 1: The annuitant requesting the transfer must complete and sign Section 1.
SECTION 2: The transferee must complete and sign Section II, and the annuitant’s former spouse must countersign it. Otherwise, a letter signed by the former spouse and attached to the application serves as a countersignature.
SECTION 3: The transferor completes and signs Section III.
SECTION 4: The transferee completes and signs Section IV.

Form T2220 is available at the following address: http://www.cra-arc.gc.ca/F/pbg/tf/t2220/
Guide T4040 is available at the following address: http://www.cra-arc.gc.ca/F/pub/tg/t4040/t4040-14f.pdf

We present an interesting article about the division of RRSPs in the event of divorce. We invite you to read it by clicking on the following link: http://affaires.lapresse.ca/finances-personnelles/train-de-vie/201308/14/01-4679828-divorce-comment-partager-lepargne-retraite.php

If you have any questions, you can contact Revenu Québec at 1-800-387-1194.

REFERENCE :

Section 73(1) of the Income Tax Act
Section 454 of the Tax Act
When ownership of a vehicle is transferred between common-law partners or between spouses, this does not result in any immediate tax consequences. These consequences are also deferred when the transfer results from an order, a judgment, or the provisions of a specific law.

If you wish to transfer a vehicle without tax implications:

If you live at the same address when you submit your application to the SAAQ, you must:

• Complete Form VD-80.1 – Declaration of Transaction Between Related Individuals Concerning a Road Vehicle Registered in Quebec. The form includes two copies: one to be submitted to the SAAQ (the SAAQ will forward a copy to Revenu Québec) and one to be given to the purchaser;
• Provide proof of family relationship for a transaction between spouses (marriage contract, copy of marriage certificate, civil union certificate, driver’s license showing the same address for both, lease agreement with both names);
• Provide proof of the family relationship for a transaction between a parent and child or other individuals, excluding spouses (birth certificate, copy of birth certificate, marriage contract or certificate, civil union certificate or copy of civil union certificate, or driver’s license)

If any information is missing, Revenu Québec will notify taxpayers before taxing the sale. In this case, Revenu Québec may request additional information and/or documents (vehicle purchase contract, financing contract, confirmation of service received from the SAAQ, etc.).

You can find Form VD-80.1 – Declaration of Transaction Between Related Parties Concerning a Road Vehicle Registered in Quebec at the following address: http://www.revenuquebec.ca/fr/sepf/formulaires/vd/vd-80_1.aspx

If you no longer live at the same address, this change has been registered with the authorities, and you are in the process of getting a divorce:

**Before visiting the SAAQ, you must obtain a tax exemption certificate from Revenu Québec.

You must go to an SAAQ service center with the following documents:

• Tax exemption certificate
• A copy of your mediation agreement or the draft agreement to be filed with the court
• A copy of your marriage certificate
• The original purchase contract for the vehicle for which you wish to obtain a tax exemption certificate
• The registration certificate for said vehicle
• A letter signed by both spouses explaining the situation and requesting a tax exemption certificate

Revenu Québec will then issue the tax exemption certificate, and you can take this certificate to the SAAQ.

If you have any questions, you can contact Revenu Québec at 514 864-6299 or the Société de l’assurance automobile du Québec at 1 800 361-7620.

Provincial Child Support
The provincial child support program is administered by Retraite Québec and provides tax-free financial assistance to families with dependent children under the age of 18 living with them.

You do not need to apply for child support payments if your child was born in Québec, since as soon as the birth is reported to the Registrar of Civil Status, the Registrar will forward the necessary information to Retraite Québec to register your child.

The amount of the payment varies depending on the number of children under 18 living with the recipient, the number of children in shared custody, the family’s income, and the parent’s marital status—that is, whether they are living with a spouse or not. Generally, the payment is made to only one person per family.

In the event of a separation, the provincial child support payment is paid in full to the parent with full custody of the child.

In cases of shared custody, both parents may receive the benefit if the child lives with each parent alternately for 40% to 60% of the time each month.

If you are receiving child support payments and your marital status changes:
You must notify Retraite Québec of your change in status so that it can calculate the new amounts to which you are entitled. You can do so at the following address: http://www.rrq.gouv.qc.ca/fr/services/services_en_ligne/soutien_aux_enfants/Pages/demande_paiement_sae.aspx

All these credits are income-based. It is therefore important to file a tax return in order to receive them.

The Family Supplement for Children with Disabilities
In addition, the provincial child support program offers a supplement to families to help them cover the costs of care, support, and education for their children with physical or mental disabilities that significantly limit their ability to perform daily activities for a foreseeable period of at least one year. The amount granted is the same regardless of the disability or the family’s annual income.

However, the supplement for a child with a disability must be requested from Retraite Québec, as it is not granted automatically.

IMPORTANT: Be sure to notify Retraite Québec of any changes to a child’s custody arrangements or your marital status so that payments are made to the person or persons responsible for the child within a reasonable time. Otherwise, Retraite Québec may recover any overpayments made to the parent who was the beneficiary prior to the change.

You can complete this application if the change in circumstances occurred during the previous year or the current year. If your change relates to another year and your marital status was different from what was reported at that time on your tax return, you must contact Revenu Québec. This department will then forward the information to you, and your file will be updated.

For more information, visit the following website: http://www.rrq.gouv.qc.ca/fr/programmes/soutien_enfants/Pages/soutien_enfants.aspx

If you have any questions, you can contact the Régie des rentes du Québec at 1 800 667-9625.

Le soutien fédéral pour les enfants
Il existe deux types de prestations dont peuvent bénéficier les familles afin de les aider à subvenir aux besoins de leurs enfants, soit la prestation fiscale canadienne pour enfants (PFCE) ainsi que la prestation universelle pour la garde d’enfants (PUGE).

Federal Support for Children
There are two types of benefits available to families to help them provide for their children: the Canada Child Tax Benefit (CCTB) and the Universal Child Care Benefit (UCCB).

The Canada Child Tax Benefit (CCTB) is a monthly, tax-free payment made to eligible families to help them provide for their children under the age of 18.

The Universal Child Care Benefit (UCCB) is a taxable benefit paid monthly to families for children under 6 years of age to help meet their child care needs. Families receive $100 per month for each eligible child. If you are eligible for the CCTB for a child under 6 years of age, you will also be eligible for the UCCB.

The following eligibility criteria must be met to receive benefits:

1. The child must live with you;
2. The child must be under 18 years of age for the PFCE, and under 6 years of age for the PUGE;
3. You must be primarily responsible for the child’s care and upbringing; In this capacity, you are primarily responsible if you are in charge of overseeing the child’s daily activities and needs, obtaining medical care for the child when necessary, and finding someone to care for the child when needed. This person may be the mother, father, a grandparent, or a guardian. If the child does not live with you all the time, you must refer to shared eligibility;
4. You must be a resident of Canada;
5. You or your spouse or common-law partner must be a Canadian citizen, a permanent resident, a protected person, or a temporary resident who has lived in Canada for the past 18 months and holds a valid permit in the 19th month;

How do I apply for these benefits?
We recommend that you apply for these benefits as soon as possible so that you can receive the maximum amount. You can apply as soon as a child is born, when a child starts living with you, or as soon as you become a resident of Canada.

We also recommend that you apply for the benefits even if you do not believe you are eligible based on your net family income. The CCTB is calculated in July of each year based on the previous year’s income.

The UCCB will be paid automatically if you receive the CCTB. You must report the UCCB on your tax return on lines 117 and 213.

You can apply for the CCTB online using the “Apply for Child Benefits” service in My Account at or by completing Form RC66, Application for Canada Child Benefits, available at the following address: http://www.cra-arc.gc.ca/F/pbg/tf/rc66/

In cases of separation or divorce, both parents may share the care and upbringing of the child roughly equally due to shared custody. In this case, you must refer to the shared eligibility program for the division of the benefit.

The Disability Child Benefit
The Disability Child Benefit is a non-taxable benefit for families supporting a child under the age of 18 who has a severe and long-term impairment of physical or mental functions. An impairment is considered long-term if it lasts for 12 months or is expected to last for at least 12 consecutive months.

After separation or divorce, the parent with custody of the child receives the benefit. When both parents share custody, the benefit may be split equally between them.

The form for the Disabled Children’s Benefit is available at the following address: http://www.cra-arc.gc.ca/F/pbg/tf/t2201/LISEZ-MOI.html

If you have any questions, you can contact the Canada Revenue Agency at 1-800-387-1194.

Single-Person Household
You are eligible for a tax credit if, for an entire year, you lived alone, solely with one or more minors, or solely with your adult child(ren) who are enrolled full-time in vocational training at a high school or in postsecondary studies.

For more information, see the instructions for line 367 in the Income Tax Guide:

If you receive the tax credit for a person living alone, you may claim an additional non-taxable tax credit if, at any time during the year, you lived with an adult child in post-secondary education who can transfer an amount to you as a parental contribution and you were not eligible to receive child support payments.

For more information, see the instructions regarding the amount transferred by an adult child in post-secondary education (Part B of Schedule A) on line 367 of the Income Tax Guide.

You can access the Income Tax Guide via the following link: http://www.revenuquebec.ca/fr/sepf/formulaires/tp/tp-1

Minor Child in Postsecondary Education
You may claim an amount that will reduce your tax liability if, during a given year, you had a dependent child who was under 18 years of age throughout that year and was pursuing full-time vocational training in high school or postsecondary studies.

Adult Child in Postsecondary Education
If, as of December 31 of the year in question, you were the parent of a child aged 18 or older, your adult child may transfer an amount to you as a parental contribution if they were enrolled full-time in vocational training at a high school or in post-secondary studies and completed at least one semester of study during the year in question.

Other Dependents
You may be eligible for a tax credit for one or more dependents, other than a child in full-time post-secondary education, if you meet the eligibility criteria.

For more information, see the instructions for line 367 (Part C of Schedule A) in the Income Tax Return Guide (TP-1.G).

Child Care Expenses
This credit allows you to reduce the tax payable on your family income by reimbursing you for expenses paid to provide for your children. The child care tax credit is based on family income, that is, your income and that of your spouse.

To qualify for this credit, you must meet the eligibility requirements set forth in the law, file your income tax return, and complete Schedule C.

For more information, visit the following website: http://www.revenuquebec.ca/fr/citoyen/situation/separation_divorce/credit_enfant/default.aspx

If you have any questions, you can contact Revenu Québec at 1-800-387-1194.

Eligible Dependent Credit
After a relationship ends, a parent may be eligible to claim the Eligible Dependent Credit for one of their children if, at any time during the year:

• the child is under 18 years of age or, if older, has a medical or physical disability;
• the child lives with the parent for most of the year (but may be absent, for example, to attend school);
• the parent neither receives nor pays spousal support;
• the parent does not pay child support;
• no one else is claiming the credit for the child or for another person in the family (only one eligible dependent credit is allowed per family).

It is important to note that parents in shared custody situations may, under certain conditions, claim the eligible dependent credit even if they contribute to child support.

When both parents are eligible to claim the credit, they must decide which parent will file the claim. If they cannot agree, neither parent will receive the credit.

When parents have joint custody of two or more children, one parent may claim the credit for one of the children, and the other parent may claim it for another child. A parent is entitled to only one credit per eligible dependent per year, regardless of how many children live with them.

Joint custody and the amount for an eligible person: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/spprtpymnts/shrdcstdy-fra.html

Tuition Credit, Education Amount, and Textbook Amount
If you are a student at a university or another eligible post-secondary institution, you can claim a tuition credit, an education amount, and a textbook amount.

In certain circumstances, you can carry over part of the credit to other years or transfer it to one of your parents. You must designate on the form the parent to whom you are transferring the credit.

The parent claiming the credit must submit Form T2202A, Certificate for Tuition Fees, Education Amount, and Textbook Amount, to the CRA upon request.

Form T2202A, Certificate for Tuition, Education, and Textbook Expenses: http://www.cra-arc.gc.ca/F/pbg/tf/t2202a/

If you have any questions, you can contact the Canada Revenue Agency at 1-800-387-1194.

The GST/HST Credit
The GST/HST Credit is a non-taxable payment from the Canada Revenue Agency that helps low- and moderate-income individuals and families recover all or part of the Goods and Services Tax (GST) and Harmonized Sales Tax (HST) they pay. You can claim this credit for yourself or for your children.

You no longer need to apply to the CRA to receive the credit, as it is processed automatically when you file your tax return.

If you have a spouse or common-law partner, the return of the person who is assessed first will receive the credit amount claimed on both of your returns.

For more information, visit the following link: http://www.cra-arc.gc.ca/bnfts/gsthst/fq_qlfyng-fra.html

If you have any questions, you can contact the Canada Revenue Agency at 1-800-387-1194.

You may be eligible for this amount if you have a dependent, that is, someone who lives with you and whom you support.

To be eligible for this credit, you must have met all of the following criteria at some point during the year:

• You did not have a spouse or common-law partner, or, if you did, you did not live with them, did not support them, and were not their dependent;
• You supported a dependent during the year of your tax return;
• You lived with this dependent (in most cases in Canada) in a dwelling you occupied. You cannot claim this amount for a person who was merely visiting you.

In addition, at the time you met all these conditions, the dependent had to meet one of the following conditions:

• They were one of your parents or grandparents by blood, marriage, common-law relationship, or adoption;
• They were your child, grandchild, brother, or sister by blood, marriage, common-law relationship, or adoption, and they were either under 18 years of age or had a mental or physical disability if they were older.

Please note that if your dependent usually lives with you but was not living with you because of their studies, the CRA will consider them to have been living with you for the purposes of this amount.

In the case of your child, they do not need to have resided in Canada, provided they lived with you.

You are not eligible for the amount if you are in one of the following situations:

1. You are claiming the amount for your spouse or common-law partner;
2. The person for whom you want to claim this amount is your common-law partner; however, you may be eligible for the spousal or common-law partner amount for that person (line 303);
3. Another person in your household is claiming this amount (only one claim can be made per household, even if there is more than one dependent in the household);
4. You are claiming this amount for a child for whom you are required to pay child support for the tax year of your return. However, if you were separated from your spouse or common-law partner for only part of the tax year of your return due to the breakdown of your relationship, you may claim this amount for that child on line 305 (plus the eligible amounts on lines 306, 315, and 318), only if you did not claim on line 220 an amount paid to your spouse or common-law partner.

*****For more information about the CCTB and the GSPB, please refer to publication T4114(F) – Canada Child Benefits (including similar federal, provincial, and territorial programs) at the following address: http://www.cra-arc.gc.ca/F/pub/tg/t4114

If you have any questions, you can contact the Canada Revenue Agency at 1-800-387-1194.

The child care expense deduction usually allows you to claim a refund for the costs of child care for your children.

After the relationship ends, if you lived apart from your common-law partner or spouse for the entire year, you and your common-law partner or spouse can claim the child care expenses you paid.

For the year of the separation, if you or your former spouse or former common-law partner were living apart at the end of the year and either you had been separated for at least 90 days prior to the end of the year or you obtained a divorce decree before the end of the year, the one of you with the higher income may claim the child care expenses incurred during the year.

The total amount of eligible child care expenses is subject to limits based on the child’s situation, such as the child’s age, a mental or physical disability, and eligibility for the disability tax credit.

Expenses paid must be supported by receipts, which must be provided upon request.

For more information on the child care expense deduction: http://www.cra-arc.gc.ca/tx/tchncl/ncmtx/fls/s1/f3/s1-f3-c1-fra.html

If you have any questions, you can contact the Canada Revenue Agency at 1-800-387-1194.

In the event of a divorce or separation, one spouse may pay the other spousal support for a limited or indefinite period, solely to help the other spouse meet their needs.

Generally, for spousal support to be paid, the spouses must be living apart as a result of a breakdown of the marriage at the time of payment, and the terms of the support must be specified in a written agreement or by a court order. Payments must be made at regular intervals and be intended to support the recipient. The use of the spousal support must be left entirely to the recipient’s discretion.

Sometimes, other forms of payment are considered spousal support payments:

• When payments were made or received before the date of the written agreement or court order providing for spousal support.
• When payments were made to the spouse or a third party for specific expenses, such as payment for childcare, rent, or insurance.
• Certain lump-sum payments, that is, a payment made in a single installment, such as a payment for overdue spousal support.

The person receiving spousal support
The person receiving spousal support must include it in their income. They will therefore be taxed on this income even if the person paying it does not claim the deduction.

The person paying spousal support
The person paying spousal support may deduct it from their income. This deduction will allow them to benefit from a tax savings on their income. If they pay support for both a spouse and children, they may claim the spousal support deduction only if the child support payments for the year, as well as all arrears from previous years, have been paid in full.

If you receive income subject to withholding tax, you can ask the person paying you (your employer or payer) to take into account the deductions and tax credits to which you are entitled when calculating your withholding tax.

Two different forms can be completed to make this request:

• Declaration for Withholding Tax (TP-1015.3)
• Request for Reduction of Withholding Tax (TP-1016)

In fact, Revenu Québec allows you to ask your employer to automatically deduct the amount of tax payable on spousal support payments from each paycheck. This will allow you to budget based on the net cost of the support.

TP 1015.3: The employer does not need authorization from Revenu Québec to take into account the information provided on this form. It must therefore be submitted directly to the employer. This form addresses specific situations, including spousal support.

TP 1016: In this case, the employer must have authorization from Revenu Québec to take into account the information provided on this form. This form must therefore be submitted to Revenu Québec.

If you have any questions, you can contact Revenu Québec at 514 864-6299.

Form TD1 – Personal Tax Credit Return must be completed to ask the person who pays your wages (employer or payer) to take into account the deductions and tax credits to which you are entitled when calculating your withholding tax.

The TD-WS worksheet – Worksheet for Reporting Personal Tax Credits must be completed if you want to claim a partial amount from Form TD1 based on age, for caregivers, or for dependents aged 18 or older with a disability. Do not give this worksheet to your employer.

For non-refundable deductions or tax credits not listed on Form TD1, use Form T1213-14 – Application to Reduce Pay-As-You-Earn Withholdings for the year(s) at the following address: https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/t1213.html

You must complete Form T1158 – Registration of Family Support Payments if your court order or written agreement specifies an amount of support payable to your spouse or common-law partner.

If you have any questions, you can contact the Canada Revenue Agency at  1-800-387-1194.

The CRA will recalculate your benefit based on the number of children in your care and their ages, your province or territory of residence, and your net family income.

If, after your change, there are children living with you, the CRA will list all the children on the mother’s account since she is presumed to be the responsible parent. If you are married or in a common-law relationship with a person of the same sex as you, one of you will receive the CCTB for all the children.

As a general rule, for any given child, only one parent is eligible to receive the benefits.

To report your change, you must contact the CRA directly or send a letter to your tax center indicating the date of the change, your name and Social Insurance Number, and those of your spouse or common-law partner, or complete Form RC 65 Change in Marital Status, available online at the following address: https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/rc65.html

The CRA will recalculate your benefit in the same manner described above.

If you are going through a separation, you must wait until you have been separated for a period of 90 consecutive days before notifying the CRA. To do so, you must follow the same procedure as in the previous section.

Regarding your claim for the GST/HST credit, if you did not claim it on your tax return, you can file the claim by contacting your tax centre directly or by sending them a letter.

It is possible for two parents to share custody of a child more or less equally. Examples include situations where the child lives one week with one parent and one week with the other, or where the child lives 3 days with one parent and 4 days with the other. Each parent is therefore responsible for the child’s care and upbringing during the time the child lives with them.

Since July 2011, if parents share custody, they are considered eligible to receive the Canada Child Benefit (CCB). Thus, they will receive the benefit in equal shares on a monthly basis.

It is important to remember that it is entirely possible that one or both parents may receive no benefit due to a family income that is too high.

If you are starting or ending a shared custody arrangement, you must notify the CRA by contacting them directly or by completing Form RC66, Canada Child Benefit Application, available online at the following address: https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/rc66.html

If you are already receiving the PFCE, you can contact the CRA directly or send a letter to your local tax centre explaining the arrangements you have made regarding shared custody. You can find your nearest tax centre at the following address: https://www.canada.ca/fr/agence-revenu/services/prestations-enfants-familles/adresse-centre-fiscal-envoyer-vos-formulaires.html

**To get an idea of the amount of benefits you are entitled to, a child and family benefits calculator is available at the following address: https://www.canada.ca/en/revenue-agency/services/child-family-benefits/child-family-benefits-calculator.html

If you have any questions, you can contact the Canada Revenue Agency at 1-800-387-1194.