Overview: When a Child-Support Obligation Can Block the Eligible Dependant Tax Credit
A taxpayer who otherwise qualifies for the eligible dependant tax credit may still be prevented from claiming it if the taxpayer is legally required to pay child support for that dependant. Subsection 118(5) of the Income Tax Act can deny the credit where the statutory conditions are satisfied, and the existence of the legal support obligation can be more important than whether the taxpayer actually makes the payments or informally changes the support arrangement.
That issue was central in Alexey A.Z. Zalesskiy v. The King, 2026 TCC 159. Following the breakdown of his marriage, Mr. Zalesskiy was subject to a 2022 Consent Order requiring him to pay $1,113 per month in child support and spousal support to his former spouse. By May 2024, his former spouse and their son had returned to Canada and were living under the same roof as Mr. Zalesskiy, although the former spouses continued to live separately and apart. Mr. Zalesskiy claimed $15,705 as an amount for an eligible dependant for his son on his 2024 income tax return.
Mr. Zalesskiy argued that he and his former spouse had reached a new oral agreement under which he would provide for her and their son through “support in kind” instead of making the child-support and spousal-support payments required by the Consent Order. He maintained that the practical circumstances had changed and that the support provisions of the earlier court order had effectively become obsolete. The Tax Court of Canada rejected that argument. Even assuming that such an oral agreement existed, it did not eliminate the legal obligations imposed by the existing Consent Order. Unless and until that order was varied by the Supreme Court of British Columbia, Mr. Zalesskiy remained legally “required to pay a support amount” for purposes of subsection 118(5).
The Tax Court therefore dismissed his appeal and upheld the denial of the eligible dependant amount. The Court emphasized that the phrase “required to pay” refers to a legal obligation to pay, and examined the use of that language elsewhere in the Income Tax Act to confirm that meaning. The case illustrates an important distinction for separated and divorced parents: a change in living arrangements, actual payment practices, or an informal understanding between the parents does not necessarily change the taxpayer’s position under the Income Tax Act if the underlying legal support obligation remains in force.
“For tax purposes, parents should not assume that an informal change in their child-support arrangements also changes their entitlement to the eligible dependant tax credit. Where an existing court order continues to impose a legal obligation to pay support, that obligation can determine the tax result until the order is properly varied,” says David J. Rotfleisch, a Certified Specialist in Taxation and an experienced Canadian tax lawyer.
Zalesskiy is particularly relevant to separated and divorced parents whose parenting arrangements have changed without a corresponding amendment to their court order or written support agreement. It also highlights the importance of distinguishing between what the parents are actually doing and what they remain legally required to do. The tax consequences can also differ where both parents are legally required to pay support, because subsection 118(5.1) contains an important exception to the restriction in subsection 118(5).
The decision was rendered under the Tax Court’s Informal Procedure and therefore should not be treated as binding precedent for other cases. Nevertheless, it provides a recent illustration of how the Tax Court may analyze the interaction between an existing child-support obligation and the eligible dependant credit. The Court also noted that, depending on its wording, a later variation order may have retroactive effect, making the legal effect and timing of any support-order variation particularly important. If your parenting arrangements or child-support obligations have changed, consulting a top Canadian tax lawyer can help determine whether an existing court order or written agreement affects your entitlement to the eligible dependant tax credit and whether a later variation may alter the tax consequences.
Background: Can You Still Claim the Eligible Dependant Tax Credit After Your Child-Support Arrangements Change?
The dispute in Zalesskiy arose after a significant change in the taxpayer’s family circumstances without a corresponding change to the court order governing his support obligations. Alexey Zalesskiy and his former spouse, Elena Lobanova, separated toward the end of 2022. They had a son, born in 2019. Following the breakdown of the marriage, Elena moved from the family home in Surrey, British Columbia, to Russia with their son.
On December 22, 2022, the Supreme Court of British Columbia issued a Consent Order. Based on Mr. Zalesskiy’s Guideline income of $120,000, Elena’s Guideline income of $0, and the child primarily residing with Elena, the order required Mr. Zalesskiy to pay $1,113 per month in child support and $2,632 per month in spousal support, beginning November 1, 2022 and continuing until a further agreement or court order. The distinction between the tax treatment of spousal and child support can be important when determining the tax consequences arising from a separation or divorce.
The family circumstances later changed. By the end of May 2024, Elena and their son had returned to Surrey and were living under the same roof as Mr. Zalesskiy. Mr. Zalesskiy and Elena nevertheless continued to live separate and apart following the breakdown of their marriage.
Mr. Zalesskiy testified that he and Elena had reached an oral agreement under which he would stop making the child support and spousal support payments required by the Consent Order. Instead, he said that he would provide for their material needs directly through what he described as “support in kind.” According to Mr. Zalesskiy, this new arrangement replaced the earlier support arrangement because Elena and their son were living in his home again. Elena was not called as a witness at the Tax Court hearing.
On his 2024 income tax return, Mr. Zalesskiy claimed $15,705 as an amount for an eligible dependant in respect of his son. The Tax Court accepted that he otherwise satisfied the conditions in paragraph 118(1)(b). The problem was subsection 118(5): if he remained legally required to pay a support amount for his son, that provision could prevent him from claiming the credit.
Mr. Zalesskiy argued that the Consent Order had effectively become obsolete because of the new living arrangement and the alleged oral agreement. The CRA took the opposite position. Because the Consent Order had never been formally varied, Mr. Zalesskiy remained legally required to pay child support throughout 2024.
Key Issues and Findings: How Does Child Support Affect the Eligible Dependant Tax Credit? The Statutory Rule
Paragraph 118(1)(b) of the Income Tax Act provides the eligible dependant tax credit where the taxpayer satisfies the statutory conditions, including maintaining a home in which the taxpayer supports a qualifying dependant. However, subsection 118(5) can override that entitlement where the taxpayer is legally required to pay support to the same person.
Subsection 118(5) provides that the credit is not available where the taxpayer is required to pay a support amount, as defined in subsection 56.1(4), to a spouse, common-law partner, former spouse or former common-law partner in respect of the dependant, and either:
- the taxpayer lives separate and apart from that person throughout the year because of the breakdown of the relationship; or
- the taxpayer claims a deduction under section 60 for a support amount paid to that person.
The definition of a “support amount” in subsection 56.1(4) contains its own statutory requirements, including requirements concerning the nature of the payment and the legal arrangement under which it is payable. Accordingly, not every payment or contribution made for a former spouse or child necessarily constitutes a “support amount” for purposes of subsection 118(5).
The tax treatment of spousal and child support differs under the Income Tax Act, making the nature of the particular support obligation important to the analysis. The important statutory language is “required to pay.” The provision focuses on the existence of a legal obligation to pay support, rather than simply on whether the taxpayer actually made the payments during the year. That distinction became decisive in Zalesskiy, where an existing Consent Order continued to require the taxpayer to pay child support despite his allegation that the parties had informally changed how support would be provided.
There is an important exception. Subsection 118(5.1) can make subsection 118(5) inapplicable where, solely because of subsection 118(5), no individual would otherwise be entitled to claim the relevant amount in respect of the child. This provision can become particularly important in shared-parenting arrangements where both parents are legally required to pay support. However, shared parenting or a mathematical set-off between support calculations does not, by itself, establish that both parents are legally required to pay support amounts for purposes of subsection 118(5.1).
The statutory framework therefore distinguishes between how support is provided in practice and the legal obligation governing that support. A change in living arrangements or payment practices does not necessarily change the tax result if a court order or written agreement continues to impose a legally enforceable support obligation.
Key Issues and Findings: Why Did the Tax Court Reject the Informal Child-Support Arrangement in Zalesskiy?
The Tax Court’s analysis in Zalesskiy focused on the meaning of the words “required to pay a support amount” in subsection 118(5) of the Income Tax Act. The Court began with the statutory text and concluded that the word “required” points to a legal obligation to pay. The Court then considered the use of similar language elsewhere in the Income Tax Act, where “required to pay” consistently refers to an obligation arising under law or contract.
That distinction was decisive. Mr. Zalesskiy argued that his former spouse’s return to Canada and their alleged oral arrangement had effectively replaced the child-support payments required under the 2022 Consent Order with “support in kind.” The Tax Court held that, even if such an oral agreement existed, it did not eliminate the legal obligation imposed by the court order. The Consent Order remained in force throughout 2024 because it had not been varied by the Supreme Court of British Columbia. Mr. Zalesskiy was therefore still legally required to pay child support for his son, and subsection 118(5) prevented him from claiming the eligible dependant amount.
The continuing effect of a court order is particularly important because the tax treatment of child support payments made under a court order or written agreement depends on the legal character of the obligation, rather than simply on how the parties choose to deal with the payments in practice. Tax Deduction of Child Support Payments
“A change in a family’s day-to-day arrangements does not necessarily change the tax consequences of an existing child-support order. Taxpayers need to distinguish between what they have informally agreed to do and what they remain legally required to do under the governing order or agreement,” says David J. Rotfleisch.
The result is consistent with the Federal Court of Appeal’s decision in Szuch v. Canada, 2006 FCA 383, 2006 CarswellNat 3982. In Szuch, the taxpayer similarly argued that an existing child-support order was outdated. The Federal Court of Appeal rejected that position because the interim order continued to require child support unless varied by the court, and there was no evidence that it had been varied. The Court therefore upheld the application of subsection 118(5). Szuch is particularly important because it confirms at the appellate level that a taxpayer cannot simply disregard an existing support order because the parties’ circumstances have subsequently changed.
Other tax cases reinforce the distinction between being legally required to pay support and actually making the payments. In Whitty v. R., 2009 CarswellNat 1773, the taxpayer’s obligation to pay child-support arrears was sufficient to engage subsection 118(5), regardless of whether the arrears were actually paid. Similarly, Pelletier c. R., 2006 CarswellNat 1344 recognized that a taxpayer may be prevented from claiming the relevant subsection 118(1) credit because of an existing support obligation even where the required support payment was not actually made. The focus of subsection 118(5) is therefore the continuing legal obligation, rather than the taxpayer’s payment practices.
Key Issues and Findings: Can a Later Court Order Change the Tax Result Retroactively?
Zalesskiy also contains an important qualification. The Tax Court noted that, depending on its wording, a later variation order may have retroactive effect, referring to Abiola v. The Queen, 2013 TCC 115. The point is significant because a later court order may do more than change support obligations prospectively. In appropriate circumstances, its terms may legally alter the obligation for an earlier period.
The jurisprudence shows, however, that retroactive effect should not simply be assumed. In Leinweber v. R., 2016 TCC 253, the Tax Court found that a later variation order did not affect earlier taxation years because nothing in its wording made the order retroactive. By contrast, in Cook v. The Queen, 2017 TCC 188, the Tax Court recognized the tax effect of a subsequent court order that expressly operated retroactively to the date on which the parties’ support obligation had changed. The precise wording and legal effect of the later order can therefore be critical.
A variation of a support order can also raise separate tax issues beyond the eligible dependant credit. For example, the tax treatment of legal fees incurred in family litigation involving support obligations can depend on whether the fees relate to establishing, enforcing, defending, or varying an existing support right. Deduction of Legal Fees in Family Litigation
Key Issues and Findings: What About Shared Parenting and Set-Off Child Support?
The result can also differ where both parents are legally required to pay child support. Subsection 118(5.1) may relieve against the subsection 118(5) restriction where its statutory conditions are satisfied. However, the Federal Court of Appeal in Verones v. The Queen, 2013 FCA 69 confirmed that merely using both parents’ incomes to calculate a net child-support payment under the Federal Child Support Guidelines does not necessarily mean that both parents are legally required to pay a support amount. The governing court order or written agreement must establish the relevant legal obligations.
Taken together, these authorities reinforce the central reasoning in Zalesskiy: the tax consequences turn on the taxpayer’s legally enforceable support obligation, not simply on where the child lives, how the parents provide support in practice, or whether they have informally agreed to change their arrangement. Where circumstances have changed but an existing support order remains in force, an experienced Canadian tax lawyer can review both the governing support documents and the applicable tax rules before the taxpayer claims the eligible dependant amount.
Practical Implications: What Zalesskiy Means for Parents Whose Living Arrangements Have Changed
For a paying parent in a similar position, Zalesskiy points to several concrete steps. First, the wording of the governing court order or written agreement controls, not the parents’ current living arrangements: if that document still imposes a support obligation, it continues to do so regardless of who is living where. Second, an oral or informal understanding between former spouses cannot be relied on in place of a formal variation — it carries little weight against an existing order for tax purposes. Third, taxpayers who are separated but living under the same roof face their own distinct set of tax considerations, and formally varying the support order is a more reliable way to align the legal obligation with what is actually happening day to day than simply changing how support is provided informally. Finally, before claiming the eligible dependant amount in these circumstances, a taxpayer should gather and keep the governing court order or agreement, any variation order, and records showing the actual living and support arrangements, since the CRA may request this evidence on review.
Practical Takeaways: What Separated Parents Should Learn from Zalesskiy
Zalesskiy shows that the tax consequences of child support depend heavily on the taxpayer’s legal obligations, not simply on how the parents are arranging support in practice. A parent whose circumstances have changed should therefore review the governing court order or written agreement before claiming the eligible dependant amount.
An informal agreement between former spouses may not be enough to change the tax result. If an existing court order continues to require child support, the taxpayer may remain “required to pay a support amount” for purposes of subsection 118(5), even if the parents have stopped following the original payment arrangement or the child’s living arrangements have changed.
Actual payment is also different from the legal obligation to pay. A taxpayer should not assume that stopping payments, providing support directly, or paying household expenses instead will remove the subsection 118(5) restriction. The relevant question is whether the legal support obligation continues to exist.
Where family circumstances have materially changed, taxpayers should consider whether the underlying support order or agreement needs to be formally varied. A later variation may affect the tax consequences, and in some circumstances it may operate retroactively, but retroactive effect depends on the wording and legal effect of the particular order and should not be assumed.
Shared-parenting arrangements require separate attention. Where both parents are legally required to pay support, subsection 118(5.1) may permit a result that would otherwise be prevented by subsection 118(5). However, shared parenting or a mathematical set-off of Guideline amounts does not necessarily establish reciprocal legal support obligations. The precise wording of the court order or written agreement remains important.
Taxpayers should also confirm that the payment in question actually constitutes a “support amount” within the statutory definition in subsection 56.1(4). Not every contribution toward a child’s or former spouse’s expenses necessarily has that character for purposes of subsection 118(5).
The practical lesson from Zalesskiy is that changes in family circumstances should not automatically be treated as changes in tax entitlement. Before claiming the eligible dependant amount after a change in custody, residence, or support arrangements, an experienced Canadian tax lawyer can review the governing documents and determine how subsections 118(5) and 118(5.1) apply to the taxpayer’s circumstances.
Pro Tax Tips: Review the Legal Support Obligation Before Claiming the Eligible Dependant Amount
Before claiming the eligible dependant amount, separated or divorced parents should review the actual wording of the court order or written support agreement that applies during the taxation year. A change in where the child lives, how expenses are shared, or how support is provided does not necessarily change the taxpayer’s legal obligation for purposes of subsection 118(5).
Taxpayers should also avoid assuming that an informal agreement with a former spouse is sufficient to change the tax result. Zalesskiy shows that even where the parties have changed their practical arrangements, an existing court order may continue to determine whether the taxpayer is legally “required to pay a support amount.”
Where circumstances have changed significantly, consider whether the support order or written agreement should be formally varied. If a later order is intended to affect an earlier period, its wording is particularly important because retroactive tax consequences should not be assumed merely because the underlying family circumstances changed.
Shared-parenting arrangements require additional care. A set-off calculation under the Federal Child Support Guidelines does not necessarily mean that both parents are legally required to pay support amounts for purposes of subsection 118(5.1). The legal obligations created by the governing order or agreement must be examined.
“The tax return should reflect the taxpayer’s legal support obligations, not simply the family’s informal understanding of how support is being provided. Where those two things no longer match, the support documents should be reviewed before the eligible dependant amount is claimed,” says David J. Rotfleisch.
If the CRA has denied an eligible dependant claim, or if your parenting or support arrangements have changed, consulting an experienced Canadian tax lawyer can help determine whether the existing support obligation, subsection 118(5), or the subsection 118(5.1) exception applies to your circumstances.
Frequently Asked Questions About Child Support and the Eligible Dependant Tax Credit
Can I claim the eligible dependant tax credit if I pay child support?
Usually, a taxpayer who is legally required to pay child support for a child cannot claim the eligible dependant amount for that same child. However, there are important exceptions, including circumstances where both parents are legally required to pay support and subsection 118(5.1) applies. Special rules can also arise in the year of separation. Eligibility therefore depends on the legal support obligations and the taxpayer’s circumstances during the particular taxation year, not simply on whether money changed hands.
My child now lives with me, but an old court order still requires me to pay child support. Can I claim the credit?
Not necessarily. Zalesskiy shows that a change in the child’s living arrangements does not automatically eliminate an existing legal obligation to pay child support. If the court order remains legally effective, subsection 118(5) may continue to prevent the support payer from claiming the eligible dependant amount even though the child has moved into the payer’s home.
My former spouse and I agreed verbally that I no longer have to pay child support. Does that change my tax position?
A verbal or informal arrangement should not be assumed to override an existing court order. In Zalesskiy, the taxpayer alleged that he and his former spouse had replaced the ordered support payments with “support in kind.” The Tax Court held that, even if the oral agreement existed, the existing Consent Order continued to impose the legal support obligation because it had not been varied by the court.
What if I stopped making the child-support payments during the year?
Stopping the payments does not necessarily make you eligible for the credit. Subsection 118(5) focuses on whether the taxpayer is required to pay a support amount. An outstanding legal obligation can therefore remain relevant even where the taxpayer did not actually make the required payments. The distinction between the legal obligation and actual payment was central to the reasoning in Zalesskiy.
We have 50/50 shared custody. Can either parent claim the eligible dependant amount?
Shared custody by itself does not determine who can claim the credit. The CRA looks at whether one or both parents have a clearly established legal obligation under a court order or written agreement to pay child support. If only one parent is legally required to pay support, that payer will ordinarily be prevented from claiming the eligible dependant amount for the child, even where parenting time is divided equally.
What happens if both parents are legally required to pay child support?
Where both parents have clearly established legal obligations to pay support for the child, subsection 118(5.1) may allow one parent to claim the eligible dependant amount despite subsection 118(5). The parents must agree on who will make the claim. If both are otherwise eligible but cannot agree, neither can claim the amount for that child.
Does a set-off child-support calculation mean that both parents are legally paying support?
No. The fact that both parents’ incomes are used under the Federal Child Support Guidelines to calculate a net or set-off amount does not necessarily mean that both parents are legally required to make support payments for income-tax purposes. The court order or written agreement must clearly establish the relevant reciprocal payment obligations.
If my court order says that I am entitled to claim the child for tax purposes, does that guarantee the eligible dependant credit?
No. A family-law order or separation agreement cannot override the requirements of the Income Tax Act. The wording of the document can be highly relevant, particularly in determining who is legally required to pay support, but the taxpayer must still independently satisfy the statutory requirements for the eligible dependant amount.
Can a later court order retroactively change whether I was entitled to the credit?
Potentially. Zalesskiy expressly notes that, depending on its wording, a later variation order may have retroactive effect. However, retroactivity should not be assumed simply because the parents’ practical arrangements changed earlier. The wording and legal effect of the later order must be examined to determine whether it actually changes the taxpayer’s support obligation for an earlier taxation year.
What if my spouse and I separated partway through the year?
Different rules can apply in the year of separation. The CRA currently recognizes that a taxpayer who was separated for only part of the year may, if the applicable conditions are satisfied, have a choice between claiming the eligible dependant amount and claiming deductible support payments. The result is therefore different from assuming that every person who paid support at some point during the year is automatically barred from the eligible dependant claim.
What should I do if the CRA denies my eligible dependant claim?
First, determine why the CRA denied the claim. Relevant evidence may include the court order or written support agreement, any later variation order, proof of the child’s residence or custody arrangements, and documentation showing who was legally required to pay support during the taxation year. The CRA may specifically request evidence of custody when reviewing an eligible dependant claim.
If the dispute concerns the legal effect of a support order, reciprocal support obligations, a retroactive variation, or the application of subsections 118(5) and 118(5.1), an experienced Canadian tax lawyer can determine whether the CRA’s position is correct and whether a tax adjustment, Notice of Objection, or other dispute procedure is appropriate.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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