Background
Trena Reiser and her former spouse shared custody of their child, JS, equally. JS qualified for the disability tax credit for 2022, but the father claimed both the eligible dependant credit and the full unused disability tax credit transferred from JS. Reiser, who had remarried, sought to claim half of the transferred disability tax credit.
The Canada Revenue Agency refused Reiser’s adjustment request because another person had already claimed the full amount, and the Minister confirmed the 2022 assessment. Reiser attempted to appeal assessments for 2017 through 2024, but the Tax Court quashed the appeals for 2017 to 2021, 2023, and 2024, leaving only 2022 properly before it.
The Crown also argued that the Tax Court lacked jurisdiction because the dispute concerned a discretionary apportionment by the Minister under subsection 118.3(3) of the Income Tax Act, which could be challenged only through judicial review in Federal Court.
The Court’s Holding
The Tax Court held that Reiser was not entitled to any transferred disability tax credit for 2022. She had not claimed the eligible dependant credit and could not claim the Canada caregiver credit because JS was under 18. Although subsection 118.3(2)(a)(ii) relaxes certain age, income, and marital-status requirements, it does not override subsection 118(4). Because the father claimed the eligible dependant credit, the statutory limitations prevented Reiser from using either gateway to claim the transferred disability tax credit.
The Court rejected the Crown’s jurisdictional argument. Subsection 118.3(3) permits the Minister to apportion the credit only when more than one individual is already entitled to claim it under subsection 118.3(2). Because Reiser lacked that underlying entitlement, there was no apportionment decision to review; the dispute instead concerned the correctness of her assessment, which fell within the Tax Court’s jurisdiction.
The Court dismissed the appeal for 2022, quashed the appeals for 2017 to 2021, 2023, and 2024, and awarded no costs.
Key Takeaways
- A supporting individual may claim an unused disability tax credit transferred from a dependant only by satisfying one of the statutory gateways in subsection 118.3(2).
- The relieving assumptions in subsection 118.3(2)(a)(ii) do not displace the one-claimant and credit-interaction limits in subsection 118(4).
- The Minister’s apportionment power under subsection 118.3(3) applies only after multiple individuals have independently established entitlement under subsection 118.3(2).
Why It Matters
Equal custody and equal receipt of the monthly child disability benefit do not automatically entitle parents to divide the transferred disability tax credit. The two benefits operate under different statutory schemes, and entitlement to the tax-credit transfer depends on the eligible-dependant and caregiver-credit rules.
The decision also distinguishes an appeal about the legal correctness of a tax assessment, which the Tax Court may decide, from judicial review of a genuine discretionary apportionment decision by the Minister.