Citation: 2010 TCC 23
Date: 20100112
Docket: 2009-1037(IT)I
BETWEEN:
BONNIE FRASER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Woods J.
[1] The issue in this case is whether the appellant, Bonnie
Fraser, is entitled to the Canada child tax benefit (CCTB) and the goods and services
tax credit (GSTC) in respect of her daughter. The relevant provisions are
sections 122.5 and 122.6 of the Income Tax Act.
Period at issue
[2] At the commencement of the hearing, there was some
confusion as to the period at issue.
[3] Attached to the notice of appeal was a confirmation
letter dated December 15, 2008. It notified the appellant that she was denied
benefits for the period from April 1, 2006 to June, 2008. The appellant had
assumed that this was the period at issue.
[4] Counsel for the respondent, on the other hand, stated
that the period at issue is reflected in notices of redetermination that were
subsequently issued (i.e., on January 20, 2009). According to the respondent,
these redeterminations denied the CCTB for the period from May 2006 to June
2008 and denied the GSTC in respect of the period from July 2006 to April 2007.
These notices were not available at the hearing.
[5] Since the only evidence before me as to the period at
issue is the letter dated December 15, 2008 that was attached to the notice of
appeal, I will rely on it to establish the period at issue. Accordingly, the
relevant period for both the CCTB and the GSTC is from April 1, 2006 to June
30, 2008.
[6] I would
also note that each of the parties made certain concessions for portions of the period at issue. In this regard, the
appellant informed the Court that she would not contest the determinations for
any period after 2006. As for the respondent, counsel informed the Court that
the benefits for the month of April, 2006 were conceded.
[7] The period that remains to be decided, then, is from
May 1, 2006 to December 31, 2006.
Positions of parties
[8] The position of Ms. Fraser, as stated in her notice of
appeal, is that she qualifies for the CCTB and the GSTC in respect of her
daughter for the relevant period for the reason below.
I always have
been and still am the caregiver of my daughter [name]. I incur all expenses except
for ½ of her sports programs, [her] father does not!
[9] The position of the respondent is that the CCTB and
the GSTC should be denied because the daughter resided with her father and not
Ms. Fraser during the relevant period.
[10] In the alternative, the respondent submits that Ms.
Fraser is ineligible for benefits because she was not the primary caregiver for
her daughter during this period.
[11] I would mention at the outset that the respondent’s
position is contrary to an agreement reached between Ms. Fraser and the father
of the child. By way of a written agreement, they agreed that Ms. Fraser would
be entitled to the benefits for 2006 and 2009, and that the father would be
entitled to the benefits for 2008 (Ex. A-1).
Entitlement to CCTB
[12] The legislative requirements for the CCTB and the GSTC
differ and therefore each of these benefits will be discussed separately. I
begin with the CCTB.
[13] The CCTB is a monthly benefit generally provided to a
parent in respect of a dependant child. It is provided for in section 122.6 of
the Act.
[14] In order to qualify, it must be established that the
appellant is an “eligible individual” at the beginning of the month to which
the benefit relates. The relevant provision reads:
"eligible individual" in respect of a qualified
dependant at any time means a person who at that time
(a) resides with
the qualified dependant,
(b) is the parent of the qualified
dependant who primarily fulfils the responsibility for the care and upbringing
of the qualified dependant,
[...]
and for the purposes of this definition,
(f) where a qualified dependant resides
with the dependant's female parent, the parent who primarily fulfils the
responsibility for the care and upbringing of the qualified dependant is
presumed to be the female parent,
(g) the presumption referred to in
paragraph (f) does not apply in prescribed circumstances, and
(h) prescribed factors shall be
considered in determining what constitutes care and upbringing;
[15] The first question to be decided is
whether the appellant resided with her daughter throughout the relevant period
as required by clause (a) above.
[16] For purposes of the CCTB, the term
“resides with” means “to live or stay with someone in a given place with a
certain constancy, a certain regularity or else in an habitual manner:” Hall
v. The Queen, 2008 TCC 636, [2009] 2 CTC 2034.
[17] At the hearing, Ms. Fraser testified on
her own behalf and the daughter’s father, Anik Cardin, was subpoenaed to
testify for the respondent.
[18] Ms. Fraser and Mr. Cardin were in a
common-law relationship from June 1992 until May 2002. Their daughter was born
in 1995.
[19] When the relationship ended in 2002, Ms.
Fraser left the family home in Pierrefonds,
Quebec and moved with her
daughter to a new residence in the same location (Ex. R-1). A few months later,
a consent judgment was entered into which provided that Ms. Fraser would have
sole custody of her daughter and she would receive child support from the
father. Mr. Cardin was given access every second weekend and holidays.
[20] In April 2006, Ms. Fraser moved from the
new residence to Lancaster, Ontario, which
was closer to her employment.
[21] Shortly after moving, Ms. Fraser concluded
that it would be in her daughter’s interest to stay with her father during
weekdays for the remainder of the school term so that she would not have to
change schools mid-year. After a short period of time, Mr. Cardin agreed to
this arrangement and it continued until the end of the school year.
[22] During July and August, the daughter
stayed with both parents on a regular basis each week. The daughter was
involved with soccer near her father’s home and it made sense for the daughter
to spend a considerable amount of time there. It also enabled her to spend time
with her father.
[23] The testimony was contradictory as to
where the daughter spent the majority of her time during the summer. I am
satisfied based on the evidence that the daughter lived with each parent for a
considerable time during the summer.
[24] Ms. Fraser testified that she had planned
that her daughter would start school in Lancaster in
September. However, this did not happen because the daughter preferred to go to
school in Quebec where she qualified for high school.
Accordingly, when school started in September the daughter stayed with her
father during the week and she spent weekends with her mother. It is likely
that the daughter spent on average four nights a week with her father and three
nights a week with her mother from September to December.
[25] The pattern throughout the period from May
to December 2006, then, was fairly consistent in that the daughter lived with
each parent for a considerable period of time. I conclude that the daughter had
dual residence throughout the period. Her settled routine was split between the
two parents.
[26] Counsel
for the respondent submits
that the daughter only visited Ms. Fraser during this period. She suggests that
the daughter never moved to Lancaster.
[27] I disagree with this submission. According
to exhibit R-1, the daughter lived with her mother after the separation and the
mother had sole custody. It was not a situation where the daughter continued to
reside in the matrimonial home with the father after the separation. The daughter
was not visiting her mother during the relevant period.
[28] I now turn to the respondent’s alternative argument
that Ms. Fraser was not the primary caregiver as required by clause (b)
of the definition of “eligible individual.”
[29] The main problem that I have with this argument is
that it is not mentioned in the reply. The relevant statutory provision is
mentioned, but the only ground stated is the residency requirement.
[30] A similar issue was recently discussed by Justice
Bowie in Bibby v. The Queen, 2009 TCC 588. In that case, the respondent
was not permitted to raise a new argument at the hearing because it had not
been mentioned in the reply. Justice Bowie noted that the respondent would have
been entitled to raise the issue if the pleadings were amended. However, the
respondent did not seek to do so.
[31] At paragraph 23 of the Bibby decision, Bowie J.
notes the importance of the reply:
Subsection 49(1)
of the General Procedure Rules requires that every Reply shall
state:
(a) the statutory provisions relied on; [and]
(b) the reasons the respondent intends to rely on
The purpose of
these requirements is to ensure that the issues are properly defined for the
purposes of discovery and trial, and so that the appellant will know what
arguments he must meet, and so that he will be able to marshal and lead his
evidence accordingly. This is not a mere formality that may be overlooked when
it has not been complied with; it is a core component of the trial process, and
to ignore non‑compliance would undermine the integrity of that process:
see Glisic v. The Queen.
[32] While the above passage refers to the Rules under the
General Procedure, a similar requirement for an appeal heard under the Informal
Procedure is contained in section 6 of the Informal Procedure Rules.
[33] The respondent’s
alternative argument should be rejected for this reason.
[34] Counsel for the respondent submits that this principle
should not be applied here because the appellant was not taken by surprise by the
alternative argument. I was invited to ask Ms. Fraser whether she was taken by
surprise.
[35] In my view, this is not a satisfactory response in
this case. Even if the appellant had agreed that she was aware of the caregiver
requirement, I would have no confidence that it was fully understood. The
bottom line is that Ms. Fraser, and the Court, should be entitled to rely on
the pleadings for an understanding of the issues in the appeal.
[36] I would also note
that the reply does not provide any assumptions of fact relating to the
caregiver requirement. Even if Ms. Fraser was generally aware of a caregiver
requirement, the failure of the respondent to state assumptions of fact
supporting its position likely resulted in prejudice to Ms. Fraser. It became clear
during Ms. Fraser’s argument that she had not introduced many relevant facts
during her evidence.
[37] Although
it is not necessary for my decision, I
would also mention that I would have decided the issue in favour of the
appellant on the merits as well.
[38] The following are the prescribed factors that are to
be considered in determining the primary caregiver:
6302 For
the purposes of paragraph (h) of the definition “eligible individual” in
section 122.6 of the Act, the following factors are to be considered in
determining what constitutes care and upbringing of a qualified dependant:
(a) the
supervision of the daily activities and needs of the qualified dependant;
(b) the
maintenance of a secure environment in which the qualified dependant resides;
(c) the
arrangement of, and transportation to, medical care at regular intervals and as
required for the qualified dependant;
(d) the
arrangement of, participation in, and transportation to, educational,
recreational, athletic or similar activities in respect of the qualified
dependant;
(e) the
attendance to the needs of the qualified dependant when the qualified dependant
is ill or otherwise in need of the attendance of another person;
(f) the
attendance to the hygienic needs of the qualified dependant on a regular basis;
(g) the
provision, generally, of guidance and companionship to the qualified dependant;
and
(h) the
existence of a court order in respect of the qualified dependant that is valid
in the jurisdiction in which the qualified dependant resides.
[39] In this case, it is clear that both parents took an
active role in the care and upbringing of their daughter during the relevant
period. They both spent considerable time with their daughter although during
the school year the daughter spent more evenings at her father’s residence than
at her mother’s. For certain activities, the father seemed to take a lead role
(i.e., participation in sports) while for other activities the mother seemed to
take a lead role (i.e., educational and medical needs).
[40] In my view, the fact that the daughter spent more
evenings with her father is counterbalanced by the fact that the mother had
sole custody and took responsibility for making the central decisions in
respect of her daughter’s upbringing.
[41] In a situation such as this, it makes sense in my view
to follow the agreement that Ms. Fraser and Mr. Cardin reached, which was for
Ms. Fraser to receive the CCTB benefit for 2006.
Entitlement to GSTC
[42] The GSTC is a benefit that is designed to assist
Canadians with modest incomes. The benefit is enhanced if an individual has a
qualified dependant, as defined. The relevant provision is section 122.5 of the
Act.
[43] Counsel for the respondent made identical arguments
with respect to the GSTC that were made with respect to the CCTB.
[44] For
purposes of the GSTC, the term “qualified
dependant” is defined as follows:
“qualified
dependant” of an individual, in relation to a month specified for a taxation
year, means a person who at the beginning of the specified month
(a) is the
individual’s child or is dependent for support on the individual or on the
individual’s cohabiting spouse or common-law partner;
(b)
resides with the individual;
(c)
is under the age of 19 years;
(d)
is not an eligible individual in relation to the specified month; and
(e) is not a
qualified relation of any individual in relation to the specified month.
(Emphasis added.)
[45] According to this definition, the daughter would be a
qualified dependant of Ms. Fraser if she resided with the appellant and was
under 19 years of age. The age requirement is clearly satisfied. It is the
residency requirement that the respondent takes issue with.
[46] For the reasons described above, I have concluded that
the daughter did reside with Ms. Fraser during the period from May to December,
2006. Accordingly, the daughter was a qualified dependant for purposes of the
GSTC during this period.
[47] I now turn to the respondent’s alternative argument
that the appellant was not the primary caregiver.
[48] As with the CCTB,
the caregiver requirement was not mentioned in the reply. This procedural
defect is sufficient to dispose of this issue but I would also mention another
problem with the respondent’s position.
[49] The caregiver
test is imported into the GSTC provisions as part of a series of rules that are
designed to prevent the payment of multiple benefits in respect of a child. The
relevant provision is subsection 122.5(6), which provides:
(6)
If a person would, if this Act were read without reference to this subsection,
be the qualified dependant of two or more individuals, in relation to a month
specified for a taxation year,
(a) the
person is deemed to be a qualified dependant, in relation to that month, of the
one of those individuals on whom those individuals agree;
(b) in the
absence of an agreement referred to in paragraph (a), the person is
deemed to be, in relation to that month, a qualified dependant of the individual,
if any, who is, at the beginning of that month, an eligible individual within
the meaning assigned by section 122.6 in respect of the person; and
(c) in any
other case, the person is deemed to be, in relation to that month, a qualified
dependant only of the individual that the Minister designates.
[50] The legislative scheme that is contemplated by clause
(a) of s. 122.5(6) enables a dual residence situation to be resolved by
the agreement of the parties. It is only where there is no agreement that the
caregiver test applies by virtue of clause (b).
[51] In this case, the caregiver test has no application
because Ms. Fraser and Mr. Cardin have agreed that Ms. Fraser should receive
the benefit for the relevant period (Ex. A-1).
[52] For this reason, I conclude that the daughter is a
qualified dependant of the appellant for purposes of the GSTC during the period
from May to December, 2006.
Conclusion
[53] In light of these conclusions, the appeal will be
allowed and the determinations will be referred back to the Minister of
National Revenue for reconsideration and redetermination on the basis that Ms.
Fraser is entitled to the CCTB and GSTC for the period from April 1 to December
31, 2006.
[54] Each party shall bear their own costs.
Signed at Toronto, Ontario this
12th day of January 2010.
“J. M. Woods”
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