CRA Denied This B.C. Dad's $13,808 Credit Because He Paid Child Support
The man had his three children 50% of the time, paid for their hockey equipment and tutors, and covered half of every medical bill. But when the Canada Revenue Agency reviewed his 2020 and 2021 tax returns, it clawed back $13,808 in Eligible Dependant credits. The reason: his divorce agreement required him to pay $200 per month in child support. That single line in the separation agreement overrode everything else.
Under the Income Tax Act, a parent who is "required to pay" child support for a child cannot claim the Amount for an Eligible Dependant (AED) for that same child. The law draws a hard line between "payor" and "recipient." Once you are designated the payor, the credit belongs to the other parent, regardless of physical custody time or who actually funds what.
Why the $200 Triggered the Denial
In shared custody arrangements where parents split time roughly evenly, the Federal Child Support Guidelines allow a "set-off" calculation. Each parent calculates their table amount based on their income. The higher earner pays the difference to the lower earner. In this case, the father's table amount exceeded the mother's by $200 per month. The court order named him as the payor of that net difference.
The CRA treats "set-off" support the same as any other support obligation. If the legal document says you pay, you're the payor. The Tax Court in Harder v. The King (2023) ruled that the specific wording in separation agreements matters more than the parenting schedule or who writes cheques for extracurriculars. The father in that case argued he was effectively a "recipient" because the mother's imputed support obligation (had it been paid directly) would have exceeded his. The court disagreed. The agreement said he paid $200. That made him ineligible.
What the Credit Is Worth
The Eligible Dependant credit is based on the Basic Personal Amount, indexed annually. For 2026, that figure sits at $15,705. The federal non-refundable credit rate is 15%, yielding a maximum federal tax reduction of roughly $2,355 per year. Provincial credits add another $800 to $1,500 depending on the province. Over two years, the combined federal-provincial loss lands in the $6,500 to $8,000 range for most filers. The $13,808 figure in this case likely includes provincial amounts and possibly interest or penalties on the reassessment.
Only one parent can claim the AED in a given year, and only one AED can be claimed per household regardless of how many children live there. The credit is designed to recognize that a single parent supporting a child in their home faces costs similar to those of a married couple.
The Drafting Trap Most Lawyers Miss
Shared custody agreements that use set-off language create an accidental disqualification. If the order says "Parent A shall pay Parent B $X per month," Parent A loses the credit even if Parent A has the children 182 nights a year and Parent B has them 183.
The fix requires precise wording upfront. The separation agreement must state that both parents are required to pay support to each other, that those obligations offset, and that the parents will alternate who claims the AED each year. Without that mutual-obligation language, the CRA defaults to the "payor loses" rule.
Some parents negotiate a $0 net support obligation by writing both table amounts into the order and explicitly cancelling them. Others avoid the support section entirely and handle costs through a separate parenting expense schedule. Both strategies work, but only if the document is drafted that way before the tax year in question. Retroactive amendments do not fix a denied credit.
The Six-Year Blind Spot
The CRA can reassess up to three years back under normal review, but extends to six years if it believes a filing was careless or involved misrepresentation. Parents who claimed the AED while paying support often face multi-year clawbacks plus interest. The typical reassessment letter arrives 18 to 30 months after filing, long after the separation agreement has been signed and the custody routine is entrenched.
A $200 monthly obligation is a binding legal designation. It costs the payor roughly $2,300 per year in federal tax alone.
The man had his three children 50% of the time, paid for their hockey equipment and tutors, and covered half of every medical bill. But when the Canada Revenue Agency reviewed his 2020 and 2021 tax returns, it clawed back $13,808 in Eligible Dependant credits. The reason: his divorce agreement required him to pay $200 per month in child support. That single line in the separation agreement overrode everything else.
Under the Income Tax Act, a parent who is "required to pay" child support for a child cannot claim the Amount for an Eligible Dependant (AED) for that same child. The law draws a hard line between "payor" and "recipient." Once you are designated the payor, the credit belongs to the other parent, regardless of physical custody time or who actually funds what.
Why the $200 Triggered the Denial
In shared custody arrangements where parents split time roughly evenly, the Federal Child Support Guidelines allow a "set-off" calculation. Each parent calculates their table amount based on their income. The higher earner pays the difference to the lower earner. In this case, the father's table amount exceeded the mother's by $200 per month. The court order named him as the payor of that net difference.
The CRA treats "set-off" support the same as any other support obligation. If the legal document says you pay, you're the payor. The Tax Court in Harder v. The King (2023) ruled that the specific wording in separation agreements matters more than the parenting schedule or who writes cheques for extracurriculars. The father in that case argued he was effectively a "recipient" because the mother's imputed support obligation (had it been paid directly) would have exceeded his. The court disagreed. The agreement said he paid $200. That made him ineligible.
What the Credit Is Worth
The Eligible Dependant credit is based on the Basic Personal Amount, indexed annually. For 2026, that figure sits at $15,705. The federal non-refundable credit rate is 15%, yielding a maximum federal tax reduction of roughly $2,355 per year. Provincial credits add another $800 to $1,500 depending on the province. Over two years, the combined federal-provincial loss lands in the $6,500 to $8,000 range for most filers. The $13,808 figure in this case likely includes provincial amounts and possibly interest or penalties on the reassessment.
Only one parent can claim the AED in a given year, and only one AED can be claimed per household regardless of how many children live there. The credit is designed to recognize that a single parent supporting a child in their home faces costs similar to those of a married couple.
The Drafting Trap Most Lawyers Miss
Shared custody agreements that use set-off language create an accidental disqualification. If the order says "Parent A shall pay Parent B $X per month," Parent A loses the credit even if Parent A has the children 182 nights a year and Parent B has them 183.
The fix requires precise wording upfront. The separation agreement must state that both parents are required to pay support to each other, that those obligations offset, and that the parents will alternate who claims the AED each year. Without that mutual-obligation language, the CRA defaults to the "payor loses" rule.
Some parents negotiate a $0 net support obligation by writing both table amounts into the order and explicitly cancelling them. Others avoid the support section entirely and handle costs through a separate parenting expense schedule. Both strategies work, but only if the document is drafted that way before the tax year in question. Retroactive amendments do not fix a denied credit.
The Six-Year Blind Spot
The CRA can reassess up to three years back under normal review, but extends to six years if it believes a filing was careless or involved misrepresentation. Parents who claimed the AED while paying support often face multi-year clawbacks plus interest. The typical reassessment letter arrives 18 to 30 months after filing, long after the separation agreement has been signed and the custody routine is entrenched.
A $200 monthly obligation is a binding legal designation. It costs the payor roughly $2,300 per year in federal tax alone.
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