1 April 1996 Internal T.I. 9607716 - TRANSFER FROM PARENT TO CHILD, MEANING OF SUPPORT

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

transfer of disability tax credit from parent to child where parent doesn't reside with child

Position:

allowable provided that child has assumed responsibility for the support of the parent -also discusses what criteria can be used to support a finding that the parent is dependant upon child for support

Reasons:

prior corres e9233127

								April 1, 1996

J. M. Legault, Director			Headquarters
	Individual Returns and			A. Humenuk
	Payment Processing Directorate 	957-8953
	Attention: J. Pembroke, Chief

	Electronic Filing Section
								960771

Transfer of Disability Tax Credit

We are replying to your memorandum of February 27, 1996 concerning the transfer of the disability tax credit from a disabled parent to an adult child.

In a letter to the Surrey Taxation Centre dated February 22, 1993, we stated that the unused portion of a disability tax credit could be transferred from a parent to a child who supports that parent provided that the child could have claimed an amount for that parent under 118(1)(d) of the Act if the parent had had no income and the child had not been married. We further stated that this was consistent with the Department of Finance's social policy initiative of encouraging adult children to take care of their aged parents and grandparents.

Since paragraph 118(1)(d) of the Act does not expressly require that the dependant live in the same dwelling as the individual providing the support, it is our view that the unused portion of the credit could be transferred from a parent to a child even though the parent does not reside with the child; however, the facts must show that the parent is dependant upon that child for support by reason of the parent's mental or physical infirmity.

Citing the 1987 Tax Reform Supplementary Information released by the Department of Finance, you asked us whether the transfer of the credit was intended to be limited to the situation where a parent is being supported in the child's own home. If that is not the case, you would like further clarification as to what constitutes "support" of a dependant. In particular, you ask whether a parent or child in receipt of social assistance could be considered to be dependant on another family member for support.

We have informally consulted with Legislative Policy Division and have been advised that it is within the social policy to permit the transfer of the credit to a child who supports the parent outside the child's home. While it is reasonable to assume that the support of aged and infirm parents by an adult child typically takes the form of shared residence, circumstances, such as the needs of the infirm parent, may prevent the parent from residing with the child even though the child has assumed responsibility for the support of that parent.

The issue of what constitutes support or more specifically, what criteria must exist in order to make a finding that a particular individual is dependant upon another for support is a question of fact to be determined in each case. Consideration should be given to whether or not the actions or contributions of a particular individual are of such a nature and degree that they could be said to constitute "support" of another person and that a relationship of factual dependency could be said to exist, i.e., reliance on that support. The type of support upon which an individual may be dependant is regular and consistent as opposed to a single incident or sporadic incidents of assistance. In regard to the support of an aged parent, the comments in paragraphs 6, 33, 36 and 37 of Interpretation Bulletin IT-513 are applicable.

While the individual in respect of whom a claim under paragraph 118(1)(d) of the Act is made need not be exclusively reliant upon one individual or entity in order to make a claim under paragraph 118(1)(d) of the Act, the availability and quantum of other forms of support will be relevant in determining whether an individual in fact relies on that support. Thus, where the dependant is in receipt of social assistance or any other type of support, one must assess whether such other assistance is sufficient to fully meet the individual's personal needs and to what degree the individual also relies on the support provided by the person making the claim.

Bryan W. Dath
Director
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch