Section 122.61 — Income Tax Act: Deemed overpayment

If a person and, if the Minister so demands, the person’s cohabiting spouse or common-law partner at the end of a taxation year have filed a return of income for the year, an overpayment on account of the person’s liability under this Part for the year is deemed to have arisen during a month in relation to which the year is the base taxation year, equal to the amount determined by the formula (A + M)/12 where A is the amount determined by the formula E − Q where E is the total of the product obtained by multiplying $6,400 by the number of qualified dependants in respect of whom the person was an eligible individual at the beginning of the month who have not reached the age of six years at the beginning of the month, and the product obtained by multiplying $5,400 by the number of qualified dependants, other than those qualified dependants referred to in paragraph (a), in respect of whom the person was an eligible individual at the beginning of the month, and Q is if the person’s adjusted income for the year is less than or equal to $30,000, nil, if the person’s adjusted income for the year is greater than $30,000 but less than or equal to $65,000, and if the person is, at the beginning of the month, an eligible individual in respect of only one qualified dependant, 7% of the person’s adjusted income for the year in excess of $30,000, only two qualified dependants, 13.5% of the person’s adjusted income for the year in excess of $30,000, only three qualified dependants, 19% of the person’s adjusted income for the year in excess of $30,000, or more than three qualified dependants, 23% of the person’s adjusted income for the year in excess of $30,000, and if the person’s adjusted income for the year is greater than $65,000, and if the person is, at the beginning of the month, an eligible individual in respect of only one qualified dependant, the total of $2,450 and 3.2% of the person’s adjusted income for the year in excess of $65,000, only two qualified dependants, the total of $4,725 and 5.7% of the person’s adjusted income for the year in excess of $65,000, only three qualified dependants, the total of $6,650 and 8% of the person’s adjusted income for the year in excess of $65,000, or more than three qualified dependants, the total of $8,050 and 9.5% of the person’s adjusted income for the year in excess of $65,000, M is the amount determined by the formula N – O where N is the product obtained by multiplying $2,730 by the number of qualified dependants in respect of whom both an amount may be deducted under section 118.3 for the taxation year that includes the month, and the person is an eligible individual at the beginning of the month, and O is if the person’s adjusted income for the year is less than or equal to $65,000, nil, and if the person’s adjusted income for the year is greater than $65,000, where the person is an eligible individual in respect of only one qualified dependant described in N, 3.2% of the person’s adjusted income for the year in excess of $65,000, and where the person is an eligible individual in respect of two or more qualified dependants described in N, 5.7% of the person’s adjusted income for the year in excess of $65,000. If the month referred to in subsection (1) is May 2020, each amount expressed in dollars referred to in paragraphs (a) and (b) of the description of E in subsection (1) is deemed, for that month, to be equal to that amount (as adjusted under subsection (5)) plus an additional amount of $3,600. For greater certainty, the adjustment in subsection (5) shall not take into account this additional amount. Notwithstanding subsection (1), if an eligible individual is a shared-custody parent in respect of one or more qualified dependants at the beginning of a month, the overpayment deemed by subsection (1) to have arisen during the month is equal to the amount determined by the formula 1/2 × (A + B) where A is the amount determined by the formula in subsection (1), calculated without reference to this subsection, and B is the amount determined by the formula in subsection (1), calculated without reference to this subsection and subparagraph (b)(ii) of the definition eligible individual in section 122.6. If the Minister determines before 2024 that an overpayment (for greater certainty, in an amount greater than nil) on account of a person’s liability under this Part for a taxation year is deemed to have arisen during a month under subsection (1), or would be so deemed if this section were read without reference to subsection (2), then an overpayment on account of the person’s liability under this Part for the year is deemed to have arisen during the month, equal to the total of all amounts each of which is an amount in respect of a qualified dependant —

in respect of whom the person was an eligible individual at the beginning of the month who has not reached the age of six years at the beginning of the month — determined by the formula A × B where A is 0.5, if the person is a shared-custody parent in respect of the qualified dependant, and 1, in any other case; and B is if the month is January 2021 or April 2021, $300, if the person’s adjusted income for 2019 is less than or equal to $120,000, and $150 in any other case, if the month is July 2021 or October 2021, $300, if the person’s adjusted income for 2020 is less than or equal to $120,000, and $150 in any other case, and in any other case, nil. Notwithstanding subsection (1), if a particular month is the first month during which an overpayment that is less than $20 (or such other amount as is prescribed) is deemed under that subsection to have arisen on account of a person’s liability under this Part for the base taxation year in relation to the particular month, any such overpayment that would, but for this subsection, reasonably be expected at the end of the particular month to arise during another month in relation to which the year is the base taxation year is deemed to arise under that subsection during the particular month and not during the other month. For the purposes of this section, if a person was non-resident at any time in a taxation year, the person’s income for the year is, for greater certainty, deemed to be the amount that would have been the person’s income for the year had the person been resident in Canada throughout the year. For the purposes of this Subdivision, where in a taxation year an individual becomes bankrupt, the individual’s income for the year shall include the individual’s income for the taxation year that begins on January 1 of the calendar year that includes the date of bankruptcy; and the total of all amounts deducted under section 63 in computing the individual’s income for the year shall include the amount deducted under that section for the individual’s taxation year that begins on January 1 of the calendar year that includes the date of bankruptcy. [Repealed, 1998, c. 21, s. 94] A refund of an amount deemed by this section to be an overpayment on account of a person’s liability under this Part for a taxation year shall not be subject to the operation of any law relating to bankruptcy or insolvency; cannot be assigned, charged, attached or given as security; does not qualify as a refund of tax for the purposes of the Tax Rebate Discounting Act ; cannot be retained by way of deduction or set-off under the Financial Administration Act ;

and is not garnishable moneys for the purposes of the Family Orders and Agreements Enforcement Assistance Act . Each amount expressed in dollars in subsection (1) shall be adjusted so that, where the base taxation year in relation to a particular month is after 2016, the amount to be used under that subsection for the month is the total of the amount that would, but for subsection (7), be the relevant amount used under subsection (1) for the month that is one year before the particular month, and the product obtained by multiplying the amount referred to in paragraph (a) by the amount, adjusted in such manner as is prescribed and rounded to the nearest one-thousandth or, where the result obtained is equidistant from 2 such consecutive one-thousandths, to the higher thereof, that is determined by the formula (A/B) − 1 where A is the Consumer Price Index (within the meaning assigned by subsection 117.1(4)) for the 12-month period that ended on September 30 of the base taxation year, and B is the Consumer Price Index for the 12 month period preceding the period referred to in the description of A. [Repealed, 1998, c. 21, s. 93] Each amount referred to in the description of F in subsection (1) that is to be used for the purpose of determining the amount deemed to be an overpayment arising during months that are after June 2005 and before July 2006, is to be replaced with the amount that is the total of $185 and the amount otherwise determined under subsection (5) for those months; and after June 2006 and before July 2007, is to be replaced with the amount that is the total of $185 and the amount otherwise determined, for those months, by applying subsection (5) to the amount determined under paragraph (a). Notwithstanding subsection (5), for the purposes of any agreement referred to in section 122.63 with respect to overpayments deemed to arise during months that are after June 2001 and before July 2002, the amount determined under subparagraph (5)(b)(ii) for a month referred to in paragraph (6)(b) is deemed to be 0.012. If an amount referred to in subsection (1), when adjusted as provided in subsection (5), is not a multiple of one dollar, it shall be rounded to the nearest multiple of one dollar or, where it is equidistant from 2 such consecutive multiples, to the higher thereof.