Report on Federal Tax Expenditures - Concepts, Estimates and Evaluations 2025: part 9

Spouse or Common-Law Partner Credit and Eligible Dependant Credit: A Profile of Claimants and Beneficiaries^{Footnote 1}

1. Introduction

The Spouse or Common-Law Partner Credit (SCPC) and the Eligible Dependant Credit (EDC) are non-refundable tax credits that provide tax relief to individuals who are supporting family members with little or no income. The objective of both tax measures is to promote horizontal equity by recognizing that individuals who are supporting a low-income partner or family member have a reduced ability to pay taxes relative to individuals who are not supporting a low-income dependant. Effectively, the SCPC and EDC enable different types of households to earn the same amount of taxable income before paying taxes. For example, in two-earner couples, both tax filers can claim the Basic Personal Amount (BPA), which allows them to earn up to $32,258 in combined taxable income in 2025 before paying taxes. The SCPC allows a tax filer in a couple where they are the main income provider to claim both the BPA and the SCPC. Similarly, the EDC allows a tax filer who does not have a partner or who is not living with, being supported by, nor supporting a partner to claim both the BPA and the EDC on behalf of a family member who is dependent on them for support. Like for two-earner couples, both combinations of credits allow these households to earn up to $32,258 in combined taxable income in 2025 before paying taxes. In 2021,^{Footnote 2} approximately 1.9 million individuals claimed the SCPC and 1.0 million individuals claimed the EDC, with the SCPC's cost estimated at $1.8 billion and the EDC's cost estimated at $1.3 billion.^{Footnote 3}

Section 2 presents some background information on the SCPC and EDC, including details on the process of claiming the tax credits and eligibility rules. Section 3 outlines the key datasets and variables used in the analysis. Section 4 presents a trend analysis looking at the number of SCPC and EDC claimants and amounts claimed from 2007 to 2021. Section 5 looks at a cross-sectional analysis of both credits for the 2021 tax year, highlighting claim and benefit patterns for households with different sociodemographic characteristics. This section also discusses interactions among SCPC claimants or EDC claimants and claimants of related tax expenditures. Section 6 summarizes the main findings of the paper.

2. Background

2.1 Implementation and Recent History

The SCPC and EDC were both introduced as part of the 1987 Tax Reform and replaced previous tax exemptions. As of 2007, the credit amounts were tied to the BPA (see further details in subsection 2.4) and the net income thresholds for dependants were removed. With these changes, the allowable SCPC or EDC amount for a tax filer is reduced by the total amount of their dependant's net income. In 2019, new income-tested supplements to the SCPC and EDC were introduced, such that the maximum amount for each credit gradually increased along with the BPA from 2020 to 2023 until it reached a maximum of $15,000 in 2023. The amount of each credit is indexed to inflation for tax years after 2023.

2.2 Spouse or Common-Law Partner Credit (SCPC)

The SCPC is a non-refundable tax credit that individuals can claim if they support a partner who does not earn any income or whose net income is below the BPA of the claimant (i.e., maximum of $16,129 in 2025). Only one partner per couple can claim the SCPC in the same tax year.^{Footnote 4}

The SCPC is indexed to inflation and is calculated using three components: a base amount, an additional amount for a partner with an impairment in physical or mental functions, and the net income of the partner. The base amount is equal to the BPA of the individual claiming the credit, which is determined using their net income. An additional amount of $2,687 in 2025 can be added if the individual is supporting a dependant with an impairment and is eligible for the Canada Caregiver Credit. Finally, the net income of the partner is subtracted from the total base amount and additional amount (if applicable) to determine the final SCPC amount. For example, if a tax filer has a base amount of $16,129 (based on a net income of $50,000), supports a partner with an impairment, and the partner has a net income of $5,000, the tax filer's SCPC amount would be $13,816 in 2025 (i.e., sum of the $16,129 and $2,687 amounts minus $5,000 in net income of the partner). Alternatively, if the tax filer is supporting a partner who does not have an impairment, their SCPC amount would be $11,129 in 2025 (i.e., $16,129 base amount minus $5,000 in net income of the partner). The SCPC is multiplied by 15% (i.e., the percentage corresponding to the marginal tax rate of the lowest tax bracket in 2025) to determine the amount of taxes that individuals can save by claiming the credit.

If tax filers are claiming an additional amount for a partner with an impairment and the partner's net income reduces the SCPC below $8,601 (i.e., the maximum Canada Caregiver Credit in 2025), they can claim an additional amount through the Canada Caregiver Credit. The combined total of the SCPC and the Canada Caregiver Credit cannot exceed $8,601, such that tax filers benefit from the same tax savings that they would receive by claiming only the Canada Caregiver Credit.

Details about the eligibility criteria and calculation of the SCPC are set out in paragraph 118(1)(a) of the Income Tax Act.

2.3 Eligible Dependant Credit (EDC)

Similarly to the SCPC, the EDC is a non-refundable tax credit that individuals can claim if they support a family member other than a partner who does not earn any income or whose net income is below the BPA of the claimant (i.e., maximum of $16,129 in 2025) plus an extra amount ($2,687 in 2025) if the family member has an impairment. Eligible dependants as part of the EDC include the claimant's or their partner's parent, grandparent or another dependant under 18 years old who is a child, grandchild, brother, or sister. In addition, tax filers can claim the EDC if they support a child, grandchild, brother, or sister aged 18 and older with an impairment. The EDC is indexed to inflation and is calculated using the same components as the SCPC. Moreover, if tax filers support a dependant with an impairment and the dependant's net income reduces the allowable EDC amount below $8,601, tax filers can also claim an additional amount through the Canada Caregiver Credit up to a combined maximum of $8,601 in 2025 between the two tax credits.

Individuals can claim the EDC if they are not married nor in a common-law relationship or if they do not live with a partner, support a partner nor are being supported by a partner. Individuals also need to live with the dependant and the dependant must be a Canadian resident to be eligible for the credit. Exceptions are made when a child is attending school abroad but normally lives with the individual or when the individual is a deemed resident of Canada living in another country with the child. There can be only one SCPC or EDC claim in a household. Tax filers cannot claim the EDC for more than one dependant, and conversely multiple tax filers cannot claim the EDC for the same dependant. If two or more individuals are eligible for the EDC for the same dependant, they must agree on who will claim the EDC for that dependant,^{Footnote 5} or no one may claim the credit.

Details about the eligibility criteria and calculation of the EDC are set out in paragraph 118(1)(b) of the Income Tax Act.

2.4 Related Tax Expenditures

These are the main federal tax expenditures related to the SCPC and the EDC:

• The BPA is a non-refundable tax credit that all tax filers can claim and that allows them to earn up to $16,129 in taxable income in 2025 before paying taxes. The base SCPC and EDC amounts (excluding the additional amount for dependants with an impairment) are set equal to the BPA every year.
• The Canada Caregiver Credit is a non-refundable tax credit that provides tax relief to individuals who are supporting a partner or family member with an impairment. Eligible tax filers who support a partner or a dependant with an impairment can claim the SCPC or EDC and the Canada Caregiver Credit.
• The Disability Tax Credit is a non-refundable tax credit that provides tax relief to individuals with disabilities as well as the family members that support them. Eligible tax filers who support a partner or a dependant with a severe and prolonged disability can claim the SCPC or EDC and the Disability Tax Credit.

Subsection 5.2 discusses the interactions and overlap among SCPC claimants or EDC claimants and claimants of these tax expenditures. Other tax expenditures such as the Medical Expense Tax Credit and the Disability Supports Deduction are also related to the support of dependants with an impairment or disability, but this analysis will focus on directly related tax expenditures. Further, provinces and territories offer similar individual tax credits to the SCPC and EDC, but many of these provincial and territorial credits have slightly different eligibility criteria and amounts than the federal SCPC and EDC. These provincial and territorial credits are outside of the scope of this paper. For additional information, individuals can consult various sources provided by the Canada Revenue Agency or the Government of Quebec.^{Footnote 6}

3. Data and Variables Used in the Study

This study uses data from the T1 Income Tax and Benefit Return (T1) from 2007 to 2021. In particular, the trend analysis looks at the 2007 to 2021 tax years and the cross-sectional analysis focuses on the 2021 tax year. The unit of analysis in this paper is the individual tax filer. Although tax savings could be shared within a household, the claimant who is supporting a partner or dependant is the only person who could benefit directly from the SCPC or EDC from a tax perspective. The partner or dependant the claimant is supporting does not have sufficient taxable income to pay taxes and therefore cannot directly benefit from non-refundable tax credits.

The variables in the analysis come from the T1 as well as Schedule 5 – Amounts for Spouse or Common-Law Partner and Dependants.^{Footnote 7}Other schedules are also used to explore tax filer and dependant characteristics throughout the analysis as well as discuss the interactions among SCPC claimants or EDC claimants and claimants of related tax expenditures. Observed characteristics in the tax data include a partner or dependant's level of income, presence of an impairment, education, receipt of Employment Insurance benefits, and the presence of children in the household, among others.

4. Trend Analysis

This section discusses trends in the number of claimants and amounts claimed for the SCPC and EDC from 2007 to 2021. It also presents trends using various data sources from Statistics Canada to provide additional context for the findings. Both the SCPC and EDC underwent changes after Budget 2007,^{Footnote 8} making 2007 an ideal starting point for the trend analysis. The 2021 tax year is the most recent year for which data is available to study SCPC and EDC claims.

Chart 1 shows that the number of SCPC claimants decreased slightly from 1,956,000 in 2007 to 1,939,000 by 2021, but for most of the period there were just over 2,000,000 yearly claimants. Overall, the SCPC claimants remained relatively steady between 2007 and 2021, with a temporary decline in 2015 and in 2020, the latter coinciding with the beginning of the COVID-19 pandemic. Many income support programs were implemented in response to the pandemic, including the Canada Emergency Response Benefit (CERB) and the Canada Recovery Benefit (CRB). For certain low-income partners, these income supports have increased their net income above their partner's BPA, making the main income earner ineligible to claim the SCPC. Moreover, for two low-income tax filers in a couple, if the main income earner lost their job and the COVID-19 income support benefits they received did not make up for lost earnings, their yearly taxable income may not have been sufficient to claim and benefit from the SCPC. The number of EDC claimants increased slowly but steadily during the entire period from 954,000 in 2007 to 1,022,000 in 2021. The total value of SCPC claims increased from $15,891 million to $18,367 million and the total value of EDC claims increased from $11,104 million to $13,432 million from 2007 to 2021 (in 2021 dollars).^{Footnote 9}

As with the number of SCPC claimants, the total value of SCPC claims also declined in 2015 and 2020. The decline in 2015 could be in part due to the lower average SCPC claims stemming from the enhancement of the Universal Child Care Benefit (UCCB) in 2015 (discussed further in Chart 4). In 2021, the total value of SCPC claims increased not only due to an increase in the number of the SCPC claimants but also likely due to the additional income-tested supplement introduced in December 2019.^{Footnote 10},^{Footnote 11} The total value of EDC claims also increased in 2020 and 2021. Most EDC claimants are in one-parent families with minor children who earn little or no income (discussed further in Chart 8), which means that EDC claimants were not as impacted by fluctuations in their dependants' net income due to the COVID-19 support programs introduced in 2020. Further, the increase in total EDC claims relative to the number of claimants in 2020 and 2021 likely reflects the new EDC supplement and the fact that most minor children do not earn any income, such that the parent can claim the maximum EDC amount.

Chart 2 depicts that the proportion of SCPC claimants among all tax filers decreased from 7.9% in 2007 to 6.6% in 2021. However, the proportion of EDC claimants among all tax filers only decreased slightly over the same period from 3.9% in 2007 to 3.5% in 2021. Some reasons for a declining trend in the proportion of SCPC claimants could include that many SCPC claimants are men (discussed in Chart 5) and that the median contribution of women to family income has increased from 2007 to 2021. For example, their median contribution to household income was about $35,600 in 2007 and rose to $42,600 in 2021^{Footnote 12} (in 2021 dollars). In cisgender, different-gender couples, women are usually the lower-income partners. Accordingly, an increase in women's contribution to family income decreases the allowable SCPC amount for the tax filers claiming the credit and prevents other tax filers from claiming the credit altogether when the lower-income partner's net income is too high.

To further explain the declining trend in SCPC claimants, Chart 3 shows that the proportion of couple-led families in which the wife^{Footnote 13} contributes 76% to 99% of family income has risen from 2007 to 2021. While the proportion of families in which the husband contributes 100% of family income has increased, the proportion of families in which the husband contributes 76% to 99% of family income has decreased over the period.

Chart 4 shows that the average values of both the SCPC and EDC claims are consistently lower than the median values from 2007 to 2021, indicating a negative skew. This suggests that many tax filers are claiming amounts below the maximum credit amounts. Interestingly, SCPC average claim values are significantly lower than the maximum allowable credit^{Footnote 14} while EDC average claim values are only slightly lower than median values over this time period. The average SCPC claim remained relatively steady over the period apart from 2015, where a drop in the average claim value is observed. The decline in the average value of SCPC claims in 2015 can be attributed to a higher net income earned by the spouses or common-law partners in that year as compared to the previous years (not shown).^{Footnote 15} The UCCB, a component of the previous child benefit system, was enhanced in 2015. The UCCB had to be reported in the income of the lower-income partner, which increased their net income and therefore reduced the SCPC claim of the tax filer claiming the credit. Overall, the average SCPC claim ranged between $8,126 and $9,474 whereas the average EDC claim ranged from $11,635 to $13,146 from 2007 to 2021. This difference is due to the SCPC being claimed for spouses or common-law partners who are more likely to have a positive net income than EDC eligible dependants, many of whom are minor children. On average, 16.6% of eligible dependants of EDC claimants had positive net incomes, compared to 70.1% of partners of SCPC claimants between 2007 to 2021.^{Footnote 16} That being said, the income-tested supplements introduced in December 2019 would be expected to increase average and median SCPC and EDC claims overall starting in 2020.

5. Cross-sectional Analysis

This section presents a profile of claimants and beneficiaries of the SCPC and EDC in 2021. It uses 2021 tax data given that it is the latest available data allowing for a detailed analysis of claimants and beneficiaries in different socioeconomic groups.

5.1 Profile of Claimants

About 29,448,500 individuals filed a T1 income tax and benefit return in 2021. Overall, 1,878,100, or 6.4% of all tax filers, claimed the SCPC while 1,019,500, or 3.5% of all tax filers, claimed the EDC.^{Footnote 17}

Chart 5 illustrates contrasting patterns with respect to sex among SCPC and EDC claimants, especially considering the relatively equal share of men (48.4%) and women (51.4%) among all tax filers aged 18 and older. Among SCPC claimants, men make up the majority of claimants (75.7%) and total claims (76.4%). In cisgender, different-gender couples with one main income earner, men are generally the higher-income partner.^{Footnote 18} Conversely, women make up the majority of EDC claimants (81.8%) and total claims (82.1%). In a study by Statistics Canada looking at an intersectional analysis of one-parent families in the 2021 Census, the author finds that most parents in one-parent families with minor children are women.^{Footnote 19} Given that the EDC is claimed by many parents in one-parent families with children aged 0 to 17 (discussed in Chart 8), the finding that a high share of EDC claimants are women is aligned with this Statistics Canada analysis.

Chart 6 reveals different age distributions for SCPC and EDC claimants. First, the shares of SCPC claimants under 35 and those aged 35 to 44 represent 17.1% and 23.3% of SCPC claimants, compared to 26.5% and 16.5%, respectively, among all tax filers aged 18 and older. This is likely due to individuals in their mid to late thirties and forties having a higher probability of being married or in a common-law relationship compared to younger individuals. Next, although SCPC claimants aged 65 and older make up similar shares of claimants (20.5%) and all tax filers (24.9%), they account for only 12.5% of total SCPC claims. As will be discussed in the profile of beneficiaries, these claimants are often supporting partners in a similar age range who receive age and retirement related benefits such as Old Age Security and the Canada Pension Plan or Québec Pension Plan. These benefits increase the partners' net income and therefore reduce the allowable SCPC amount for those claiming the credit.

Turning to EDC claimants, those aged 35 to 44 represent the highest share of claimants (40.9%) and total claims (41.8%). Similarly to the breakdown by sex, this result is consistent with many EDC claimants supporting a child aged 0 to 17 since many parents of minor children are in this age group. In contrast, claimants in the last two age groups are the least likely to claim the EDC (5.1% and 1.4%) and account for a small portion of total claims (4.5% and 1.0%). This could be due to a combination of factors, such as older individuals being less likely to live with and support minor children or adult dependants. Correspondingly, caregivers aged 35 to 44 as well as those aged 45 to 54 are the most likely to be "sandwiched" between caregiving responsibilities for young children and care-dependant adults in the latest data on caregiving from the Canadian Social Survey.^{Footnote 20}

Chart 7 shows that claimants in a couple without children and whose partner's net income is positive make up the largest share of SCPC claimants (39.7%). Looking at intersecting identity factors (not shown), we find that many claimants in this family situation are aged 65 and older (46.0%) and 55 to 64 (29.3%), who are less likely to be living with minor children and more likely to receive age and retirement related benefits. In addition, there is a diverging pattern among all subgroups in which higher shares of claimants are associated with lower shares of total claims, and vice versa. This can be explained by partners' positive net income reducing the allowable SCPC amount that individuals can claim. Therefore, SCPC claimants whose partners have a positive net income will claim smaller amounts and likely account for smaller shares of total claims in aggregate. Conversely, SCPC claimants whose partners have a zero net income will claim higher amounts and likely account for higher shares of total claims.

Chart 8 highlights that one-parent families with minor children are the main claimants of the EDC (77.5%) and account for most claims (81.1%). This finding explains many of the results for EDC claimants disaggregated by other sociodemographic characteristics (particularly by sex and age), reflecting common features of one-parent families with minor children in Canada. Among EDC claimants who support adult dependants,^{Footnote 21} those who are unpartnered without children and whose dependants have a net income of zero account for the highest share of claimants (9.5%) and total claims (10.0%). For example, these include claimants supporting a parent or an adult family member with an impairment who does not earn an income.

Chart 9 illustrates that the proportions of SCPC claimants and total claims increase overall with personal pre-tax income. Claimants in the lowest income quintile represent 14.6% of all claimants and as expected account for a small share of total claims (16.1%). Conversely, those in the highest income quintile represent 25.0% of all claimants and account for a larger share of total claims (26.6%). This could be explained by higher-income individuals being in a better position to support a low-income partner relative to individuals in other income groups. Moreover, some tax filers in lower income groups may not claim the SCPC if they do not have a sufficiently high taxable income to benefit from the credit. In contrast, we observe lower shares of EDC claimants and total claims in the lowest and highest income groups, respectively, and a higher share of claimants and total claims in the middle of the income distribution. Most tax filers in one-parent families claimed the EDC in 2021, with the highest shares of one-parent families being part of the third income quintile and the second income quintile among tax filers aged 18 and older.^{Footnote 22}

Chart 10 shows that SCPC and EDC claiming patterns differ significantly when we disaggregate results by adjusted family pre-tax income instead of personal pre-tax income. The adjusted family pre-tax income is obtained by dividing a tax filer's total pre-tax family income by the square root of the number of family members in the household. Among both SCPC and EDC claimants, proportions of claimants and total claims decrease with family pre-tax income. Among SCPC claimants, households are comprised of one main income earner and a lower-income partner whose combined income is generally lower than households in which both partners earn similar levels of income. This translates into many of these claimants being concentrated in the lower and middle family income quintiles. Notably, this pattern is more pronounced among EDC claimants, with claimants in the lowest quintile representing a higher share of claimants and total claims while those in the highest quintile represent smaller shares of claimants and total claims. One-parent families in Canada have consistently lower family incomes compared to other family types, especially compared to couple families.^{Footnote 23} This is expected given that these families are supported by one income earner instead of two in many couple families. Moreover, family income in this study is adjusted for the presence of a partner as well as the number of children in a household, meaning that EDC claimants in one-parent families with multiple children will generally have a lower adjusted family income. These results align with previous Gender-based Analysis Plus (GBA Plus)^{Footnote 24} findings wherein these tax expenditures tend to benefit lower-income households in the first three family income quintiles.

Finally, Chart 11 illustrates that shares of SCPC and EDC claimants across provinces and territories are largely consistent with geographic shares of all tax filers aged 18 and older. Looking at larger provinces, SCPC claimants are slightly overrepresented in Ontario (39.4% of claimants and 40.8% of total claims compared to 38.2% of tax filers) and Alberta (12.4% of claimants and 13.1% of total claims compared to 10.9% of all tax filers). However, they are slightly underrepresented in Quebec (19.2% of claimants and 16.9% of total claims compared to 23.0% of tax filers). This could reflect the higher percentage of dual-earner couples in Quebec in 2021.^{Footnote 25} EDC claimants are somewhat underrepresented in British Columbia with 10.6% of claimants and 10.7% of total claims compared to 13.8% of all tax filers. This could be due to the lower share of one-parent families in British Columbia in 2021 relative to other provinces.^{Footnote 26}

Table A6 (Annex) shows that average and median SCPC claims are $9,514 and $12,225 in 2021 while average and median EDC claims are higher at $13,176 and $13,808, respectively. As discussed in the trend analysis, this can be largely attributed to a greater proportion of SCPC claimants supporting a dependant with a positive net income, which reduces their allowable SCPC amount. Conversely, most EDC claimants support dependants with no income, allowing many of them to claim the maximum amount.^{Footnote 27} Looking at adjusted family income in particular, SCPC claimants in the second income quintile have lower average and median claims compared to other income quintiles. This can be attributed to partners' net incomes being higher on average for SCPC claimants in this family income group in 2021.^{Footnote 28} Average and median EDC claims are equal or relatively close to the $13,808 maximum amount across family income groups.

5.2 Interactions with Other Tax Expenditures Related to the SCPC and EDC

This subsection explores the overlap among SCPC or EDC claimants and claimants of related tax expenditures. These tax expenditures are the Canada Caregiver Credit (CCC) and the Disability Tax Credit (DTC). Specifically, this subsection will discuss interactions with the three components of the CCC^{Footnote 29} and the two components of the DTC.^{Footnote 30} Chart 12 presents an Upset plot of interactions among SCPC claimants and claimants of these tax expenditure components. This chart is equivalent to a Venn diagram with five intersecting sets. An Upset plot is used to illustrate the overlap among different groups when there are more than three groups, which would make a traditional Venn diagram difficult to interpret visually. In this context, the five groups represent SCPC claimants who claim one of the three CCC components or the two DTC components (e.g., the first group represents all those who claim line 30425 of the CCC among SCPC claimants). Importantly, this Upset plot shows only SCPC claimants who claim at least one of these components. In 2021, the majority of SCPC claimants do not claim any of the five components. However, it is important to note that given that the focus of this paper is on SCPC and EDC claimants, we are observing only a small subset of the claimants of these related tax expenditures. Many CCC and DTC claimants do not claim the SCPC or EDC. Overall, a small percentage of SCPC and EDC claimants are supporting a partner or a dependant with an impairment.

In the bottom left corner, Chart 12 shows that these five groups range in size (in descending order) from 56,000 individuals who claim the CCC on behalf of their partner (line 30425) to 22,100 individuals who claim the CCC on behalf of another dependant aged 18 and older among SCPC claimants (line 30425). The largest group represents individuals who support a low-income partner with an impairment and a positive net income. Accordingly, these filers are claiming both the SCPC and the complementary amount on line 30425 to obtain the same amount of tax relief that they would have received by claiming only the CCC (i.e., $7,348 in 2021). In contrast, those claiming the CCC on behalf of another dependant aged 18 and older on line 30450 form a smaller interaction; this is likely due to fewer individuals supporting both a partner and another adult family member with an impairment (including extended family such as an aunt, uncle, niece or nephew as part of this component of the CCC). The main part of Chart 12 emphasizes the unique overlap combinations of SCPC claimants who claim the CCC or DTC. In descending order, the largest combination (50,700) is comprised of those who claim only the CCC on behalf of a partner (line 30425) and the smallest combination is comprised of those who claim only the CCC for a minor child (line 30500). Notably, the second largest combination (27,100) is a group of SCPC claimants who also claim the DTC for self (line 31600). This means that these individuals have a severe and prolonged disability and support a low-income partner. Similarly, the third largest combination (22,200) represents SCPC claimants who claim the CCC for one or more minor children as well as the portion of the DTC transferred from a dependant (line 31800). These filers are supporting a low-income partner as well as one or more children with a severe and prolonged disability.

Chart 13 illustrates the same interactions among EDC claimants. Looking at groups overall in the bottom left corner, the largest interaction (61,900) represents EDC claimants who also claim the DTC transferred from a dependant. This result is somewhat expected given that the EDC may be claimed in respect of certain adult dependants if the dependant has an impairment. Although the eligibility criteria are different for the CCC and DTC, there is overlap in the disability and health impacts that are recognized under both credits. Moreover, those who qualify for the DTC do not need additional medical documentation to qualify for the CCC. Many of these dependants with low taxable incomes would likely transfer their portion of the DTC to a parent or caregiver. Similarly to the SCPC, the smallest group (6,800) represents those who claim the CCC on behalf of another dependant aged 18 and older, including extended family members. Looking at the unique combinations of overlap, the largest combination (30,700) is comprised of EDC claimants who claim both the DTC transferred from a dependant and the CCC for a minor child while the smallest combination includes filers who claim three CCC or DTC components. This result is in line with previous findings showing that most EDC claimants are supporting a minor child. In contrast to the SCPC, the overlap with the DTC is more focused on the portion transferred from a dependant rather than the portion for self; in 2021, EDC claimants are slightly more likely to be supporting a dependant with an impairment without having a severe and prolonged disability themselves in comparison to SCPC claimants.

5.3 Profile of Beneficiaries

In this study, the tax benefits from claiming the SCPC are determined by subtracting the net federal tax to pay in the current personal income tax (PIT) system (i.e., including the SCPC) from the net federal tax to pay in a hypothetical scenario where the SCPC is removed from the PIT system. The difference between these two amounts is the amount of taxes that tax filers save by claiming the SCPC. The tax benefits from claiming the EDC are calculated in the same way.

As non-refundable credits, the SCPC and the EDC recognize that individuals who are supporting a low-income partner or family member have a reduced ability to pay taxes. This means that some claimants may not benefit from these credits due to having an insufficient taxable income and/or due to not having additional tax to pay after accounting for all other non-refundable tax credits.^{Footnote 31}

As described in subsection 5.1, Table 1 shows that there are 1,878,100 SCPC claimants and 1,019,500 EDC claimants aged 18 and older in 2021. Of these claimants, there are 1,325,700 SCPC beneficiaries and 760,800 EDC beneficiaries, representing 70.6% of SCPC claimants and 74.6% of EDC claimants, respectively. Total SCPC benefits represent about 10.2% of total claims and total EDC benefits represent about 9.9% of total claims.

Chart 14, Chart 15, and Chart 16 present results for select sociodemographic groups where the beneficiary population differs from the claimant population. For gender, family situation, and region of residence, the proportions of beneficiaries and total benefits are similar to the proportions of SCPC and EDC claimants across subgroups. Moreover, disaggregated benefit rates for these characteristics are largely similar across subgroups and in line with the overall results presented in Table 1.

Chart 14 highlights that for both SCPC and EDC claimants, shares of beneficiaries and total benefits among those aged 35 to 44 are higher than their respective shares of claimants. For example, EDC claimants aged 35 to 44 make up 40.9% of claimants, 43.3% of beneficiaries, and 44.7% of total benefits. As mentioned in the profile of claimants, many one-parent families are in this age group and would often claim the maximum EDC amount since their minor children do not generally earn income. This would increase their tax benefit. Similarly, many couples eligible to claim the SCPC are in their mid-thirties and forties, particularly those raising children where one partner earns less income to focus on managing the household.

In contrast, SCPC and EDC claimants aged 65 and older are less likely to benefit from these measures than claimants in other age groups. When looking at the distributions of taxable income within each age group among SCPC and EDC claimants, we observe that claimants aged 65 and older generally have lower taxable incomes. This limits their ability to benefit from these two non-refundable tax credits. In addition, many tax filers aged 65 and older can access age and retirement related tax credits such as the age amount and the pension income amount; claimants must have sufficient tax to pay after accounting for these credits and others to be beneficiaries of the SCPC or EDC. Pension income splitting may also play a role in the lower benefit rates among claimants aged 65 and older; for those in lower income groups, electing to split pension income may reduce their net income and, in turn, their taxable income below the threshold to benefit from the SCPC or EDC.

Chart 15 illustrates a similar pattern with respect to income whereby SCPC and EDC claimants in lower personal income quintiles do not benefit as much from these tax expenditures compared to claimants in higher personal income quintiles. Looking at SCPC claimants and beneficiaries, while individuals in the first quintile make up 14.6% of claimants, they represent only 1.5% of beneficiaries and 0.2% of total benefits. Conversely, individuals in the fifth quintile represent 25.0% of SCPC claimants and represent a higher share of beneficiaries (34.5%) and total benefits (38.5%). EDC claimants and beneficiaries also exhibit this pattern. Benefit rates echo these findings, with fewer lower-income claimants benefiting from the SCPC and EDC compared to higher-income claimants.

Chart 16 shows that although we observe a similar pattern for SCPC and EDC claimants with the lowest and highest family incomes, claimants in the second family income quintile generally have a higher probability of benefiting from these measures relative to their respective shares of claimants. Moreover, claimants in lower family income groups benefit from the SCPC and EDC at higher rates relative to those in lower personal income groups. These results align with those discussed in the profile of claimants as well as previous GBA Plus findings;^{Footnote 32} these tax expenditures tend to benefit lower-income households overall when looking at adjusted family income.

Table A7 (Annex) shows that SCPC beneficiaries' average benefit is $1,377 and their median benefit is $1,610, while EDC beneficiaries' average benefit is $1,751 and their median benefit is $2,071. Average and median benefits from claiming the EDC are consistently higher than average and median benefits from claiming the SCPC, mirroring the findings showing that EDC claimants largely claim higher amounts than SCPC claimants. Notably, when we disaggregate median EDC benefits by sociodemographic characteristic, many subgroups of EDC beneficiaries are receiving the maximum benefit of $2,071, which represents 15% of the maximum $13,808 claim amount in 2021 (not including the additional $2,295 for those supporting a dependant with an impairment). Interestingly, SCPC and EDC beneficiaries who support a dependant with an impairment receive higher average and median benefits than those who do not support a dependant with an impairment. Many of them save additional taxes from claiming the extra CCC^{Footnote 33} amount (up to a maximum claim of $16,103 in 2021).

Chart 17 provides additional context surrounding the economic circumstances of the partners of SCPC beneficiaries, using a selection of characteristics available in the 2021 tax data. Overall, 602,200 SCPC beneficiaries (45.4%) are supporting a low-income partner and minor children (not shown); these families represent a typical situation for a SCPC claim in which one parent takes on more of the household management tasks while the children are young. Chart 17 sheds some light on additional life circumstances in which tax filers may be likely to claim the SCPC. First, about 205,100 SCPC beneficiaries (15.5%) are supporting partners who are either retired or receiving certain types of retirement income (e.g., receiving split-pension income). About 30.8% of SCPC beneficiaries are aged 55 and older, coinciding with retirement or near retirement for many individuals. Many of these beneficiaries are supporting their lower-income partner while both being in retirement. Further, in line with the lower benefit amounts in Table A7 among beneficiaries aged 65 and older, the partners they are supporting in the same age range would be expected to receive new sources of retirement income between the ages of 60 and 70. These include Old Age Security, including the Guaranteed Income Supplement or Spousal Allowance for low-income individuals, as well as the Canada Pension Plan or Québec Pension Plan.

Next, about 77,700 SCPC beneficiaries (5.9%) are supporting partners who are post-secondary students or students attending an occupational skills program. This result can be explained by many students earning little or no income while they focus on completing their studies. Similarly, 33,500 SCPC beneficiaries (2.5%) are supporting a partner in the labour force who earns income within the eligibility thresholds of the Canada Workers Benefit (CWB) and/or the Refundable Medical Expense Supplement (RMES). The CWB and RMES are refundable tax credits providing additional support to low-income employed or self-employed tax filers. Finally, some beneficiaries are supporting partners who receive various types of Employment Insurance (EI) benefits, EI maternity or parental benefits, and workers' compensation benefits. These filers are supporting partners who have not been working for all or part of the year for various reasons, including job loss, maternity or parental leave, illness, injury or disability.

Due to data limitations,^{Footnote 34} a similar chart cannot be presented to show the economic circumstances of EDC beneficiaries' dependants. However, the majority of EDC beneficiaries (76.2%) are supporting minor children aged 0 to 17, and most of these children would not have filed a tax return in 2021 given their age and/or limited income. In addition, the economic circumstances discussed above largely pertain to adults, such as post-secondary education, labour force participation, and retirement. Despite the data limitations, among the EDC beneficiaries supporting adult dependants for which information is available, we find that 67,900 of them are supporting dependants who are retired and/or receiving retirement income. This implies that among the smaller share of EDC beneficiaries who are supporting adults, many of them are supporting an older family member in retirement. Together with the share of SCPC beneficiaries supporting a partner in retirement or receiving retirement income, these findings could also be due in part to a tax filing effect. Older individuals may be more likely to file a tax return to access new retirement benefits and to elect to split pension income.^{Footnote 35}

6. Conclusion

The SCPC and EDC provide tax relief to individuals who are supporting a low-income partner or an eligible dependant. These tax credits allow households with one primary income earner to receive comparable tax relief to that received by households with two income earners.

The proportion of SCPC claimants and EDC claimants among all tax filers decreased from 2007 to 2021. Average claims for the SCPC and EDC were consistently lower than median claims over this period, indicating that claims were negatively skewed overall. SCPC claimants' amounts are consistently lower due to many of them supporting a partner with a positive net income compared to EDC claimants who mostly support minor children without an income.

In 2021, SCPC claimants are most likely to be men, aged 35 to 44, in a couple without children in which the partner's net income is positive, and in lower family income quintiles. EDC claimants are most likely to be women, aged 35 to 44, in a one-parent family with children aged 0 to 17, and in lower family income quintiles. For both SCPC and EDC claimants, their geographic representation largely reflects shares of all tax filers across provinces and territories, and small shares of them claim the CCC because they support a partner or an eligible dependant with an impairment.

Many SCPC and EDC beneficiaries, particularly in older age groups, are supporting a dependant who is retired or receiving retirement income. Smaller shares of SCPC beneficiaries are also supporting post-secondary students, low-income workers as well as partners receiving various types of EI benefits or workers' compensation benefits.

Annex