Background
After Thelma Hardy and her former husband separated in November 2022, their two youngest children, JH and CH, remained in the family home with their father. The Minister of National Revenue determined that Hardy was not eligible for the Canada Child Benefit, the Goods and Services Tax/Harmonized Sales Tax credit, or related Newfoundland and Labrador benefits for payment periods from November 2022 through June 2024 because she was not a “shared-custody parent.”
Hardy, representing herself, described her extensive involvement in her children’s care, the time they spent with her, and the expenses she paid. The Crown accepted that JH physically lived with her approximately 40% of the time from February through October 2023, but maintained that the evidence did not establish the required residence during other months or for CH. The Court permitted Hardy to expand the appeal through June 30, 2024, and to include her eldest child, JAH, but could not consider later periods for which no ministerial determination was under appeal.
The Court’s Holding
The Tax Court allowed the federal-benefit appeals to the limited extent conceded by the Crown, holding that Hardy was a shared-custody parent of JH for the payment periods from February 1 through October 31, 2023. The Income Tax Act requires a shared-custody parent to reside with the child at least 40% of the time in a month or on an approximately equal basis over a longer period. In this context, residing with a child means living together on a settled and usual basis.
Hardy did not qualify for the remaining periods or children. CH continued to live with the father, while JAH lived away from both parents; daytime care, regular visits, occasional overnight stays, financial support, and substantial involvement in a child’s upbringing did not satisfy the threshold residence requirement. The Court also quashed the appeals concerning the Newfoundland and Labrador Child Benefit and Income Supplement because the Tax Court of Canada lacks jurisdiction over benefits conferred by provincial legislation; appeals under the provincial statute lie in the Supreme Court of Newfoundland and Labrador. No costs were awarded.
Key Takeaways
- A parent claiming shared-custody treatment for the Canada Child Benefit or the child-related GST/HST credit must actually reside with the child for the statutorily required proportion of time.
- Extensive caregiving, daytime contact, occasional overnight stays, and payment of expenses cannot replace the threshold residence requirement.
- Federal administration of a provincial benefit does not give the Tax Court jurisdiction where the provincial statute directs appeals to a provincial court.
Why It Matters
The decision draws a firm distinction between parental involvement and statutory residence. Even a devoted parent who provides care and financial support may be ineligible for federal child-related benefits unless the child lives with that parent on a settled and usual basis for the required amount of time.
It also highlights a procedural complication for taxpayers challenging combined federal and provincial benefit determinations: despite administration by the same federal agency and use of similar eligibility criteria, the resulting appeals may have to be brought in different courts.