Separated Parents - Tax Receipt

I have a couple that separated while their child was attending my centre (not quite sure when they separated - dad didn't do much pick up/drop off and I can't recall when he completely dropped out of the picture). Mom was always the one to pay child care fees in the office. At the beginning of the year, I issued a tax receipt for the entire 2016 year in Mom's name (Dad was not in the picture at this time - Mom stated he had left the country).

Mom obtained sole custody earlier this year, however, the divorce is still pending.

Dad has requested a tax receipt be issued for the first 6 months of 2016 in his name as that was when they were together and he alleges that payments were being made out of the joint account. Apparently he claimed these expenses on his 2016 income and is now being audited by the CRA.

I do not believe I need to issue this tax receipt. I have already issued a tax receipt in mom's name for the 2016 year and she has done her taxes. If I issue ANOTHER receipt in dad's name, I would consider that fraudulent. I can't force mom to give me back the original tax receipt, so I would essentially be receipting double. And it wouldn't be considered a "duplicate" receipt because it would be in his name and for a different amount. Does this make sense? I believe this is an issue the parents need to figure out with their lawyers.

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Originally Posted by atsunshine

I have a couple that separated while their child was attending my centre (not quite sure when they separated - dad didn't do much pick up/drop off and I can't recall when he completely dropped out of the picture). Mom was always the one to pay child care fees in the office. At the beginning of the year, I issued a tax receipt for the entire 2016 year in Mom's name (Dad was not in the picture at this time - Mom stated he had left the country).

Mom obtained sole custody earlier this year, however, the divorce is still pending.

Dad has requested a tax receipt be issued for the first 6 months of 2016 in his name as that was when they were together and he alleges that payments were being made out of the joint account. Apparently he claimed these expenses on his 2016 income and is now being audited by the CRA.

I do not believe I need to issue this tax receipt. I have already issued a tax receipt in mom's name for the 2016 year and she has done her taxes. If I issue ANOTHER receipt in dad's name, I would consider that fraudulent. I can't force mom to give me back the original tax receipt, so I would essentially be receipting double. And it wouldn't be considered a "duplicate" receipt because it would be in his name and for a different amount. Does this make sense? I believe this is an issue the parents need to figure out with their lawyers.

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Who do you have the signed agreement with? Is it both parents or just one of them? If just one, then I would issue it to that parent. Unfortunately, this father shouldn't have submitted a claim for the expense without a receipt in the first place, that is the fraudulent activity.

I think I would tell the dad you need to be in contact with CRA to figure out how to move forward since you have already issued a receipt for the full fees and therefore can only issue a duplicate receipt (marked duplicate).

I don't believe you can issue a new receipt but at the same time technically you likely had to issue him a receipt for the time he was in the picture (a joint receipt in the least) and since you didn't you will need to figure out from CRA what to do.

It was on both the parents to deal with this on their end. Separation or not they both needed to know who was claiming what and make sure they didn't double claim.

I'd check with your accountant or CRA. You can't reissue another receipt, as it has already been claimed. Don't do anything until you receive professional advice.

Thanks for your input everyone. I spoke to my accountant who advised not to issue a tax receipt. He said I would essentially be issuing a completely different receipt which would artificially create more income for myself, and could trigger an audit for me.

Also, according to the CRA rules regarding child care expenses and separation, I don't think dad would be eligible to claim the expenses anyway. I took this snippet off the CRA website: "If, in the year of separation, reconciliation does not occur within 60 days after the end of the year, there will not be a supporting person for the year. In this case, child care expenses will be allowed only to the individual who resided with the eligible child and only to the extent that the expenses were paid by that individual to enable the individual to engage in one of the activities listed in ¶1.9"

yes your accountant is right as it would mix up your income saying you had more income if you did write the extra receipe for him. The fact that he being audited because he claimed these expenses on his 2016 income means that he walked into this trouble by himself- DON'T LET HIM DRAG YOU INTO IT TOO

Do not issue another receipt. If you do, unless it's an exact copy of the original, CRA will consider it to be two separate incomes and you'll be taxes on both receipts even though it's only one fee.

Explain to Dad that all you can do is issue an exact replica which was in the Mom's name. Explain to him that their financial agreements with regards to who is claiming what, isn't anything to do with you and you cannot get involved.

But also, until they are officially divorced, and any firm arrangement is made, only the parent with whom the child lives, can claim child care expenses. In this case, that would be the Mom, who has the receipt for 2016.

However, do let him know that once the divorce is finalized, you are happy to write receipts totally the full amount of fees paid, to which ever parent wants those fees. i.e. if they agree to a 60/40 split, then you are happy to write 2 receipts one for 60% and one for 40% as long as the total isn't greater than the fees paid. I'm not sure who can claim what after divorce but you need to be clear that isn't your concern, that you'll write receipts to both, or to one IN FUTURE but you cannot divide the 2016 receipt this late in the game.

His tax fraud in claiming when he doesn't have a receipt, isn't your concern. It isn't your responsibility to create paperwork that supports his fraud.