Date: 20030109
Docket: 2002-1058-IT-I
BETWEEN:
ELLIS L.G. BAREFOOT,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Lamarre, J.T.C.C.
[1] This is an appeal under the informal procedure from an assessment made under the Income Tax Act ("Act") by the Minister of National Revenue ("Minister") for the 2000 taxation year.
[2] In computing his non-refundable tax credits for the 2000 taxation year, the appellant included an equivalent-to-spouse amount in respect of Samuel, one of his children. In assessing the appellant, the Minister denied the equivalent-to-spouse amount for that year.
[3] The facts may be summarized as follows. The appellant and his former spouse were separated on August 1, 2000. There were two children from the marriage: Samuel, born August 21, 1996, and Maria Annette, born November 13, 1999. After the separation, the appellant's former wife kept the matrimonial home and the children lived primarily with their mother. The mother started to work, two days on, two days off. When she was at work, the children would be in day care and the appellant would pick them up, bring them back to the matrimonial home, feed them and take care of them until the mother returned from work. I understand from the appellant's testimony that when the mother worked on weekends, the children would come to the appellant's apartment and stay over.
[4] Without entering into a formal agreement, the appellant agreed to pay $857 per month in support for the children from the first day of separation to the end of October 2000. The support payments were increased to $887 per month beginning November 1, 2000. The appellant also paid $400 monthly in support for his former spouse from the date of separation onwards.
[5] In filing his tax return for 2000, the appellant relied on the General Income Tax and Benefit Guide 2000 to claim an equivalent-to-spouse amount. That guide contains the following:
Line 305 - Equivalent-to-spouse amount
You may be able to claim an equivalent-to-spouse amount if, at any time in the year, you met all of the following conditions:
· you were single, divorced, separated, or widowed;
· you supported a dependant; and
· you lived with the dependant (in most cases, in Canada) in a home that you maintained.
To qualify, at the time you met the above conditions, the dependant also must have been either:
· your parent or grandparent, by blood, marriage, or adoption (legal or in fact); or
· your child, grandchild, brother, or sister, by blood, marriage, or adoption (legal or in fact) and either under 18, or mentally or physically infirm.
. . .
Even if all of the preceding conditions have been met, you cannot claim this amount if any of the following applies:
· The dependant's net income (line 236 of his or her return, or the amount that it would be if he or she filed a return) is $6,754 or more.
· You are claiming a spousal amount (see line 303).
· The person for whom you want to claim this amount is your common-law spouse. However, you may be able to claim the spousal amount on line 303.
· Someone else in your household is making this claim. Each household is allowed only one claim for the equivalent-to-spouse amount, even if there is more than one dependant in the household.
· The claim is for a child for whom you were required to make support payments. However, if you were separated for only part of 2000, due to a breakdown in your relationship, you have a choice. You can claim, for that child, either the equivalent-to-spouse amount (plus any allowable amounts on lines 306, 315, and 318) or the support amounts paid for the year (if they are deductible) whichever is better for you.
[6] At the hearing, the appellant testified that his former spouse did not claim the equivalent-to-spouse amount in 2000. He also said that since the support he paid in 2000 was not paid pursuant to a court order or written agreement and therefore was not deductible as support in accordance with section 60 of the Act, it was clearly in his best interests to claim the equivalent-to-spouse amount in accordance with the Canada Customs and Revenue Agency ("CCRA") guide referred to above.
[7] The respondent denied the equivalent-to-spouse amount on the basis that the appellant did not support either of his children in the home in which he resided after his separation, a condition required by paragraph 118(1)(b) of the Act in order for there to be entitlement to the equivalent-to-spouse amount.
[8] The relevant part of paragraph 118(1)(b) read as follows for the taxation year at issue:
SECTION 118: Personal credits.
(1) For the purpose of computing the tax payable under this Part by an individual for a taxation year, there may be deducted an amount determined by the formula
A X B
where
A is the appropriate percentage for the year, and
B is the total of,
(a) Married status
. . .
(b) Wholly dependent person - in the case of an individual who does not claim a deduction for the year because of paragraph (a) and who, at any time in the year,
(i) is an unmarried person or a married person who neither supported nor lived with the married person's spouse and is not supported by the spouse, and
(ii) whether alone or jointly with one or more other persons, maintains a self-contained domestic establishment (in which the individual lives) and actually supports in that establishment a person who, at that time, is
(A) except in the case of a child of the individual, resident in Canada,
(B) wholly dependent for support on the individual, or the individual and the other person or persons, as the case may be,
(C) related to the individual, and
(D) except in the case of a parent or grandparent of the individual, either under 18 years of age or so dependent by reason of mental or physical infirmity,
an amount equal to the total of . . . .
[9] The French version states the following:
ARTICLE 118: Crédits d'impôt personnels.
(1) Le produit de la multiplication du total des montants visés aux alinéas a) à e) par le taux de base pour l'année est déductible dans le calcul de l'impôt payable par un particulier en vertu de la présente partie pour une année d'imposition;
a) Crédit de personne mariée ou vivant en union de fait
[. . .]
b) Crédit équivalent pour personne entièrement à charge - la somme de
[. . .]
si le particulier ne demande pas de déduction pour l'année par l'effet de l'alinéa a) et si, à un moment de l'année :
(i) d'une part, il n'est pas marié ou, s'il l'est, ne vit pas avec son conjoint ni ne subvient aux besoins de celui-ci, pas plus que son conjoint ne subvient à ses besoins,
(ii) d'autre part, il tient, seul ou avec une ou plusieurs autres personnes, et habite un établissement domestique autonome où il subvient réellement aux besoins d'une personne qui, à ce moment, remplit les conditions suivantes :
(A) elle réside au Canada, sauf s'il s'agit d'un enfant du particulier,
(B) elle est entièrement à la charge soit du particulier, soit du particulier et d'une ou plusieurs de ces autres personnes,
(C) elle est liée au particulier,
(D) sauf s'il s'agit du père, de la mère, du grand-père ou de la grand-mère du particulier, elle est soit âgée de moins de 18 ans, soit à charge en raison d'une infirmité mentale ou physique.
[10] The appellant argued first of all that the conditions required by paragraph 118(1)(b) of the Act need not be met simultaneously, provided that each condition is met at some time in the year. If the appellant finds the English version ambiguous, there is definitely no ambiguity in the French version. It says that to be entitled to claim the credit for a wholly dependent person, the taxpayer at some time in the year must, first, be an unmarried person or, if married, not be supporting or living with their spouse and, second, maintain a self-contained domestic establishment and actually support in that establishment a person who, at that time (meaning at the same point in time as that at which all the other conditions are met), is wholly dependent for support on the taxpayer.
[11] I do not find any ambiguity in the wording of paragraph 118(1)(b) with respect to the fact that all the conditions must be met at the same time in the course of the year.
[12] Furthermore, it is also clear that only one individual may claim the equivalent-to-spouse amount in respect of a particular dependant. Indeed, paragraph 118(4)(b) states:
(4) Limitations re s. (1). For the purposes of subsection (1), the following rules apply:
. . .
(b) not more than one individual is entitled to a deduction under subsection (1) because of paragraph (b) of the description of B in subsection (1) for a taxation year in respect of the same person or the same domestic establishment and where two or more individuals otherwise entitled to such a deduction fail to agree as to the individual by whom the deduction may be made, no such deduction for the year shall be allowed to either or any of them.
[13] Here, the evidence showed that only the appellant made a claim for that amount. The question to be resolved, therefore, is whether at any time in the year 2000 the appellant was simultaneously:
(1) an unmarried person or, if married, not supporting or living with his spouse (the respondent did not dispute the fact that the appellant met this condition);
(2) maintaining a self-contained domestic establishment in which he was living (the respondent did not dispute the fact that the appellant met this condition);
(3) and actually supporting in that establishment a person who at that time was wholly dependent on him for support.
[14] The respondent took issue with the appellant regarding the fulfilment of this last condition. Counsel for the respondent referred to Jankowska-Kamac v. Canada, [2001] T.C.J. No. 281 (Q.L.), and St-Jacques v. Canada, [1995] T.C.J. No. 1496 (Q.L.), in submitting that the appellant's son, Samuel, did not live in the establishment maintained by the appellant and that the appellant did not wholly support his son in that establishment at any time in the year.
[15] In Jankowska-Kamac, Judge Hershfield of this Court referred to Narsing et al. v. The Queen, 98 DTC 6176, a case in which the Federal Court of Appeal found that for a supported person to be "wholly dependent" on a supporting taxpayer, the supported person and the supporting taxpayer both must live in the same establishment. This is surely true, but one must keep in mind that this requirement can be met at any time in the year (in French, "à un moment de l'année"). In Jankowska-Kamac, the taxpayer immigrated to Canada and her child was living outside Canada in the year for which the taxpayer claimed the credit. In St-Jacques, the taxpayer lived in Australia and had no residence in Canada, and his son, with respect to whom the credit was claimed, lived in Canada with his mother. In neither case did the child live at any time in the year in the same establishment as the supporting person claiming the credit.
[16] Here, counsel for the respondent argued that the fact that the appellant's children stayed with the appellant in his apartment on weekends was not sufficient to allow one to say that the appellant supported his children in the establishment maintained by him. She referred to Badger v. Canada, [2001] T.C.J. No. 446 (Q.L.), in which it was determined that it could not be said that the mother was supporting her child on mere bi-weekly visits by the child when the father was making all the decisions respecting the child's upbringing and was the one who financially supported the child. It should also be noted that, in Badger, the Court was faced with the problem that both parents had claimed the equivalent-to-spouse amount.
[17] In Isaac v. Canada, [1994] T.C.J. No. 952 (Q.L.), this Court decided that the phrase "at any time in the year" in paragraph 118(1)(b) of the Act could mean intermittent periods during the year and that the phrase "wholly dependent" could relate to those intermittent periods. In Isaac, the mother did not claim the equivalent-to-married credit, and the taxpayer (the father) had wholly supported his daughter for 145 days in the year in question. For the balance of the year, the child lived with her mother. The mother's contribution amounted to 20 per cent of the overall calculation of all support given to the child. The Court concluded:
¶ 11 I conclude from the case law and from a reading of the paragraph that the phrase 'at any time in the year' can be intermittent periods during the year, and that the phrase 'wholly dependent' can relate to those intermittent periods. Thus in any period during the year where a person is wholly dependent on the taxpayer and the other paragraph 118(1)(b) elements and other requirements are present, the taxpayer is entitled to the 'equivalent-to-married' credit.
[18] In my view, the situation in the case before me is not significantly different from that in Isaac.
[19] During the weekends when the children were living with their father in his apartment, they were wholly dependent on him and the appellant supported them in the establishment maintained by him.
[20] Furthermore, the appellant was contributing significantly to the upbringing of his children in 2000. His former spouse did not claim the credit.
[21] I am therefore of the view that the appellant met the conditions of paragraph 118(1)(b) of the Act at some time in the year (or, to use the phrase found in the French version of that provision, "à un moment de l'année"). He is therefore entitled to the credit pursuant to paragraphs 118(1)(b) and 118(4)(b) of the Act.
[22] The restriction in subsection 118(5) does not apply here since, for 2000, the taxation year at issue, the appellant was not required to pay a support amount within the meaning of subsection 56.1(4) to his former spouse in respect of the children and he did not live separate and apart from her throughout the year. Subsections 56.1(4) and 118(5) read as follows in the taxation year at issue:
► 56.1(4)◄
(4) Definitions. The definitions in this subsection apply in this section and section 56.
. . .
"support amount" - "support amount" means an amount payable or receivable as an allowance on a periodic basis for the maintenance of the recipient, children of the recipient or both the recipient and children of the recipient, if the recipient has discretion as to the use of the amount, and
(a) the recipient is the spouse or former spouse of the payer, the recipient and payer are living separate and apart because of the breakdown of their marriage and the amount is receivable under an order of a competent tribunal or under a written agreement; or
(b) the payer is a natural parent of a child of the recipient and the amount is receivable under an order made by a competent tribunal in accordance with the laws of a province.
► 118(5)◄
(5) Support. No amount may be deducted under subsection (1) in computing an individual's tax payable under this Part for a taxation year in respect of a person where the individual is required to pay a support amount (as defined in subsection 56.1(4)) to the individual's spouse or former spouse in respect of the person and the individual
(a) lives separate and apart from the spouse or common-law partner or former spouse or common-law partner throughout the year because of the breakdown of their marriage or common-law partnership; or
(b) claims a deduction for the year because of section 60 in respect of a support amount paid to the spouse or common-law partner or former spouse or common-law partner.
Decision
[23] The appeal is allowed, without costs, and the assessment is referred back to the Minister for reconsideration and reassessment on the basis that the appellant was entitled to include an equivalent-to-spouse amount in respect of one of his children in computing his non-refundable tax credits for the 2000 taxation year.
Signed at Ottawa, Canada, this 9th day of January 2003.
|
"Lucie Lamarre" |
J.T.C.C.
COURT FILE NO.: 2002-1058(IT)I
STYLE OF CAUSE: Ellis L.G. Barefoot v. The Queen
PLACE OF HEARING: Ottawa, Ontario
DATE OF HEARING: December 4, 2002
REASONS FOR JUDGMENT BY: The Honourable Judge Lucie Lamarre
DATE OF JUDGMENT: January 9, 2003
APPEARANCES:
For the Appellant: The Appellant himself
Counsel for the Respondent: Marlyse Dumel
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2002-1058(IT)I
BETWEEN:
ELLIS L.G. BAREFOOT,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on December 4, 2002, at Ottawa, Ontario, by
the Honourable Judge Lucie Lamarre
Appearances
For the Appellant: The Appellant himself
Counsel for the Respondent: Marlyse Dumel
JUDGMENT
The appeal from the assessment made under the Income Tax Act for the 2000 taxation year is allowed, without costs, and the assessment is referred back to the Minister of National Revenue for reconsideration and reassessment on the basis that the appellant was entitled to include an equivalent-to-spouse amount in respect of one of his children in computing his non-refundable tax credits for the 2000 taxation year.
Signed at Ottawa, Canada, this 9th day of January 2003.
|
"Lucie Lamarre" |
J.T.C.C.