18 September 2006 External T.I. 2006-0179381E5 - Tax Credit - In-Home Care Of Relative

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: Whether paragraph 118(1)(c.1) of the Act would allow a taxpayer to claim a non-refundable tax credit in respect of a relative who on every other weekend and holidays resides with the taxpayer and at other times resides elsewhere?

Position: No.

Reasons: One of the requirements that must be met in paragraph 118(1)(c.1) of the Act for an individual to be able to claim the non-refundable tax credit in respect of the in-home care of an adult relative is that at any time in the year alone or jointly with others, the individual maintains a self-contained domestic establishment which is the ordinary place of residence of the individual and the cared-for relative. For purposes of paragraph 118(1)(c.1) of the Act a cared-for individual cannot have two ordinary places of residence at the same time or during the course of the year change the ordinary place of residence every other weekend and on holidays.

XXXXXXXXXX 								2006-017938

September 18, 2006

Dear XXXXXXXXXX:

Re: Tax Credit - In-Home Care Of Relative

We are writing in response to your letter of March 30, 2006, requesting our opinion on the above-noted issue.

You inquired whether paragraph 118(1)(c.1) of the Income Tax Act (the "Act") would allow your client to claim a non-refundable tax credit in respect of his mother. You indicated that on every other weekend and holidays his mother resides with him and he takes care of her homecare needs. At other times she resides in her own home and receives homecare that is provided by others. It is your view that he should be entitled to the tax credit because he maintains a self-contained domestic establishment that is also his mother's ordinary place of residence for approximately 60 days of each year. Further, it is your view that there is no requirement that the particular self-contained domestic establishment be the cared-for relative's principal place of residence, and that the cared-for relative only need reside there at any time in the year.

One of the requirements that must be met in paragraph 118(1)(c.1) of the Act for an individual to be able to claim the non-refundable tax credit in respect of the in-home care of an adult relative is that at any time in the year alone or jointly with others, the individual maintains a self-contained domestic establishment which is the ordinary place of residence of the individual and the cared-for relative. Your interpretation would mean that in this particular situation your client's mother could either have two ordinary places of residence at the same time or during the course of the year she could change her ordinary place of residence every other weekend and on holidays. For the reasons discussed below we do not agree and therefore, it is our opinion that your client is not entitled to claim the tax credit.

Whether a person ordinarily resides in a particular place is always a question of fact. The courts have established that this place should generally be where the taxpayer, in the settled routine of his or her life, regularly, normally or customarily lives. The leading case on the meaning of "ordinarily reside" is the SCC decision in Thomson v. M.N.R. (1946 S.C.R. 209). The following passages of Thomson are often cited in other judgments:

A reference to the dictionary and judicial comments upon the meaning of these terms indicates that one is "ordinarily resident" in the place where in the settled routine of his life he regularly, normally or customarily lives. One "sojourns" at a place where he unusually, casually or intermittently visits or stays. In the former the element of permanence; in the latter that of the temporary predominates. The difference cannot be stated in precise and definite terms, but each case must be determined after all of the relevant factors are taken into consideration, but the foregoing indicates in a general way the essential difference. It is not the length of the visit or stay that determines the question.

The expression "ordinarily resident" carries a restricted signification, and although the first impression seems to be that of preponderance in time, the decisions on the English Act reject that view. It is held to mean residence in the course of the customary mode of life of the person concerned, and it is contrasted with special or occasional or casual residence. The general mode of life is, therefore, relevant to a question of its application.

Ordinary residence can best be appreciated by considering its antithesis, occasional or casual or deviatory residence. The latter would seem clearly to be not only temporary in time and exceptional in circumstances, but also accompanied by a sense of transitoriness and of return.

Paragraph 118(1)(c.1) of the Act is a relatively new provision (1998) and there are very few court cases on the meaning of "ordinary place of residence" as it pertains to this provision. Similar wording is contained in the definition of "eligible relocation" in subsection 248(1) of the Act, which must be met to claim moving expenses under section 62. For this purpose the courts have generally taken the view that "ordinarily resided" should be given the connotation ascribed by the SCC in Thomson, such that a person is ordinarily resident in the place where, in the settled routine of his or her life, he or she regularly, normally, or customarily lives. In certain decisions involving moving expenses the courts have indicated that a person cannot have more than one ordinary place of residence at the same time. See, for example, the FCTD decision in Mallet v The Queen, (1992 DTC 6537):

The facts of this case establish unequivocally that Mrs. Mallett was not ordinarily resident in England prior to her move to Ottawa. To the extent that she spent time at the home in England, she only resided there casually until her move to her new home in Ottawa.

Accordingly, even assuming that a taxpayer may have two ordinary residences at the same time (a proposition with which I do not agree), Mrs. Mallett has not convinced me that she was ordinarily resident in both Paris and England prior to her move to Ottawa. Since she was not ordinarily resident in England prior to moving to Ottawa, her alternative argument that the costs incurred in moving the effects from the house in England may be construed as being amounts "on account of" moving fails on a plain reading of subsections 62(1) and (3) of the Act.

There is also a decision of the TCC dealing specifically with the application of paragraph 118(1)(c.1) of the Act that is relevant. In the decision of Vaynshteyn v The Queen (2004 TCC 573) the TCC, in deciding that the taxpayer could claim the credit, indicated that it might have decided otherwise had the cared-for relative been moving back and forth between two addresses:

Although not as restricted in her movement as her husband had been, Mrs. Levin had and continues to have her own difficulties in getting around on her own. It is unreasonable to conclude that from October 22, 2002 to December 2002 she was flitting between the two addresses. Given the state of her health and her reliance on her daughter for, among other things, her ability to maintain contact with her husband in the nursing home, I am satisfied that for the period October 22, 2002 to December 2002, she and her daughter Mrs. Vaynshteyn were maintaining as their ordinary place of residence the house at Wolf Ridge Place.

We regret that our opinion could not have been more favourable in this matter but trust our comments will be of some assistance.

Yours truly,

Randy Hewlett
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch