There are a couple of tax items that your agreement will deal with. The first is the Canada Child Benefit. Typically, the primary parent would be the recipient of the Canada Child Benefit. In the case of a shared parenting arrangement, the Canada Revenue Agency requires these benefits to be shared between the parents in a shared eligibility situation.

What that means is that each parent's entitlement to the benefits and credits is determined based on their respective incomes and they'll each receive one half of their annual entitlement paid out on a monthly basis.

The online calculators will automatically assign these benefits between the parties in calculating support and Divii will insert the correct tax clauses depending on the specified arrangement.

There's also the eligible dependent credit. The primary parent will be able to claim the eligible dependent credit for the child residing primarily with them. In a shared arrangement, the CRA has indicated that where the child resides with both parents throughout the year and where both parties are paying support, the parties can agree on an allocation of eligible dependent credits.

Where there's one child, the parties typically alternate years that they claim the credit. Divii will insert this clause into the agreement for you unless you decide to do something different. In that case, you should add that in the add a clause section. You can also amend it in the editor.

If you have more than one child, each party may claim one child each year. And you should choose the youngest two of your children to claim. Once the older child reaches 19 years of age, Divii will set the parties to alternate years that they can claim the younger child until that child turns 19 years too.

With respect to the eligible dependent credit, the default setting in the online calculators tends to allocate the credit to the primary parent or the parent who receives the set off child support payment. So, if you have a shared parenting arrangement, you'll want to make sure that one of the parents claims one child and the other claims the other child. And if you have one child, you'll want to make sure that as you do your annual reviews, you alternate and manually change it in the calculator.

With respect to child care expenses, a primary parent of the child can deduct their child care expenses for tax purposes up to an allowed maximum deduction so long as the child care was incurred to enable the party to work or attend school. So, you'll want to make sure that the primary parent is claiming that deduction in the support calculator.

In shared parenting situations where both parties have support obligations, they can each claim the maximum deduction for when they pay the child care provider directly. If one parent pays the entire cost of the child care and is then reimbursed for a portion of the cost from the other parent, a receipt should be issued by the first parent to the other parent for the amount reimbursed so that each party can claim his or her respective applicable child care costs.

Most people find that it's easiest to pay the childcare provider directly and that way you'll get your tax receipt from your childcare provider so that you can claim it for taxes.

Unlike spousal support, child support is non-taxable to the recipient and it's not tax-deductible to the payer. This means that the recipient of child support does not have to include the payments as income for tax purposes and there are no taxes payable on the income. The payer of child support is also not entitled to deduct child support payments from their income for tax purposes.

It's important that you recognize that this tax treatment is different than spousal support payments. So, you'll want to make sure that you think about tax for spousal support. This will be discussed in further detail in the Spousal Support section.