Citation: 2013 TCC 335
Date: 20131024
Docket: 2012-1486(IT)I
BETWEEN:
DAVID HRUSHKA,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Woods J.
[1]
The appellant, David Hrushka,
appeals in respect of determinations that he was not eligible for the child tax
benefit and the goods and services tax credit under the Income Tax Act
for the period from January to July, 2011 (the “Period”).
[2]
The issue is whether Mr. Hrushka
was an “eligible individual” as that term is defined in section 122.6 of the Act.
There are two central questions to be decided. The first is whether
Mr. Hrushka primarily fulfilled the responsibility for the care and
upbringing of his daughter, as that phrase is defined. The second is whether
Mr. Hrushka lived with his daughter on an equal or near equal basis with his
former spouse.
Legislative scheme
[3]
The child tax benefit and the
goods and services tax credit are monthly and quarterly benefits, respectively,
that are provided to parents who are responsible for the care of their
children.
[4]
Until July 2011, the benefits were
payable to only one of the parents. The eligible parent was generally the one
who had primary responsibility for the care of the child, although the legislation
for the goods and services tax credit permitted parents to select which of them
would be entitled to the credit.
[5]
Effective July 1, 2011, the legislation was amended to provide
that these benefits had to be shared if separated parents had equal or near
equal responsibility for the child. A new definition of “shared-custody parent”
was introduced for this purpose.
[6]
This appeal straddles the
effective date of this amendment. Accordingly, the new shared-custody
provisions must be considered for the last month of the Period, namely July
2011.
Background
[7]
Mr. Hrushka testified on his own
behalf at the hearing and Sylvia Kuncewicz testified pursuant to a subpoena
issued by the Crown.
[8]
Mr. Hrushka and Ms. Kuncewicz
separated in 2009 and were divorced in 2012. There is one child of the
marriage, a daughter, who at the relevant time was approximately four years old
and attending daycare.
[9]
Mr. Hrushka was a university
student during the Period and Ms. Kuncewicz worked as a public health officer.
[10]
The care of the child is subject
to an interim order of the Court of Queen’s Bench of Alberta dated March 26,
2010. It provides in part:
1. IT
IS ORDERED THAT the [mother] and [father] shall have interim joint custody of
the child of the marriage, [child], with the child to maintain her primary
residence with the [mother].
2. IT
IS ORDERED THAT the [father] shall have reasonable and generous access to the
child of the marriage specified as follows:
(a)
every Wednesday from time of day care pick up to 8:30 pm when he is to
return the child to the [mother’s] residence;
(b)
every Friday from time of day care pick up to 8:30 pm when he is [sic] return
the child to the [mother’s] residence, however, this access shall be extended
every second weekend such that the [father] shall have access from the time of
day care pick up on Friday to Sunday at 5:00 pm when he shall return the child
to the [mother’s] residence.
[11]
During the Period, the above terms
were followed, and they continue to be followed except for a small adjustment
which is not material. Accordingly, it is clear that the child resided with
each parent in each month during the Period. This is not in dispute.
[12]
However, the parents did not agree
as to who qualified for the benefits at issue, and each parent applied for
them.
Discussion
[13]
The legislative regime
that is applicable to the child tax benefit and the goods and services tax
credit is complex. It would not be useful in this appeal to describe the
legislation in detail, and I would refer readers to the excellent summary in the decision of Webb J. (as he then was) in
D’Elia v The Queen, 2012 TCC 180.
[14]
The issue is whether Mr. Hrushka
was an “eligible individual” during the Period, as that term is defined in s.
122.6 of the Act. As described in D’Elia, the relevant legislation
requires that Mr. Hrushka be an eligible individual for both the child tax
benefit and the goods and services tax credit because the parents are not in
agreement as to who should receive the benefits.
[15]
The relevant parts of the
definition of “eligible individual,” as it currently reads, are reproduced
below.
“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 a parent of the
qualified dependant who
(i) is
the parent who primarily fulfils the responsibility for the care and upbringing
of the qualified dependant and who is not a shared‑custody parent in
respect of the qualified dependant, or
(ii) is
a shared-custody parent in respect of the qualified dependant,
[…]
and
for the purposes of this definition,
(f) where the 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;
[16]
The legislation above is the version
currently in force, and it refers to the shared-custody rule. Since this rule
only became effective on July 1, 2011, the references above to shared-custody
should be ignored for all months during the Period except for July 2011. The
effect of the shared-custody rule will be discussed later in these reasons.
The
care and upbringing requirement
[17]
Subject to the new shared-custody
rule, the definition of “eligible individual” requires that Mr. Hrushka reside
with the child and also be the parent who primarily fulfills the responsibility
for the care and upbringing of the child.
[18]
It is clear that the child resided
with Mr. Hrushka because she spent a significant amount of time with her father
as part of her usual routine. The only remaining question, then, is whether Mr.
Hrushka primarily fulfilled the care and upbringing responsibility.
[19]
If spouses who are separated both
claim the benefits, as they did in this case, then the presumption of care and
upbringing in favour of the female parent in paragraph (f) of the definition of
“eligible individual” does not apply: D’Elia, at paragraph 24.
[20]
In this case, paragraph (h) of the definition of “eligible
individual” requires that the care and upbringing of the child be determined by
prescribed factors. For this purpose the prescribed factors are enumerated in
section 6302 of the Income Tax Regulations, which is set out in the
following excerpt from D’Elia.
[34] These
prescribed factors are set out in section 6302 of the Regulations and are as
follows:
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.
[21]
Based on the totality of the
evidence, I have concluded that Ms. Kuncewicz primarily fulfilled the responsibility
for the care and upbringing of the child during the Period.
[22]
I would first note that clause (h)
of the relevant regulation requires that the court order be taken into account.
The order provides that the primary residence of the child is with Ms. Kuncewicz.
In terms of access by the father, the order provides that the access should be
generous, but the time allotted is less than the time the child spends with Ms.
Kuncewicz. According to the evidence, the court order has been followed. This
is very strong evidence that Ms. Kuncewicz primarily fulfills the
responsibility for the care and upbringing of the child.
[23]
However, the evidence also reveals
that Ms. Kuncewicz has fixed hours of work and Mr. Hrushka has flexibility
with his schedule as a student. In light of this, Mr. Hrushka is sometimes
more available during the day to care for the child if the child has to leave
the daycare for medical or other reasons. Based on the evidence as a whole, I
do not think these occasions are frequent enough to tip the scales so that Mr.
Hrushka can be said to primarily fulfill the care and upbringing role.
[24]
Mr. Hrushka testified
that, after the Period, he was very active in dealing with a problem at the
child’s school and Ms. Kuncewicz did not get involved. Based on the evidence of
both parents, I would conclude that such incidents do not establish that Ms.
Kuncewicz did not assume primary responsibility for the care of the child.
Rather, the circumstances are more indicative of a difference in parenting
style.
[25]
The evidence as a whole
suggests that both Mr. Hrushka and Ms.
Kuncewicz are dedicated parents who are committed to the care and upbringing of
the child. It appears that Mr. Hrushka and Ms. Kuncewicz have different
parenting styles, but this should not be a factor in deciding who should be
entitled to the benefits at issue.
Shared-custody rule
[26]
As a result of an amendment to the
definition of “eligible individual” effective July 2011, if parents are
shared-custody parents, as defined, the benefits are to be shared between them.
[27]
The term “shared-custody parent”
is defined in s. 122.6 of the Act, which reads:
“shared-custody parent” in respect of a qualified
dependent at a particular time means, where the presumption referred to in
paragraph (f) of the definition “eligible individual” does not apply
in respect of the qualified dependant, an individual who is one of the two
parents of the qualified dependant who
(a) are not at that time
cohabitating spouses or common-law partners of each other,
(b) reside with the qualified
dependant on an equal or near equal basis, and
(c) primarily fulfil the
responsibility for the care and upbringing of the qualified dependant when
residing with the qualified dependant, as determined in consideration of
prescribed factors.
[28]
Based on the definition
above, and the evidence before me, it is clear in this case that Mr. Hrushka is not a shared-custody parent because
he did not reside with the child on an equal or near equal basis. The child
spends most of her time at the residence of her mother, except for weekends,
which are divided equally. This does not satisfy the near equal residence requirement.
Procedural issues
[29]
Before concluding, I would mention
two procedural issues. Due to deficiencies with the assumptions made by the
Minister and in the description of the issue in the Reply, there was
considerable confusion at the hearing as to the legal test that was applicable.
Importantly, there was no reference to the care and upbringing of the child
anywhere in the Reply.
[30]
In light of this confusion, the
evidence was presented on one day and the parties returned later in the week
for argument. I am satisfied that there was no ultimate prejudice to Mr.
Hrushka that could not be compensated for by costs.
[31]
Further, in light of the
deficiencies with the assumptions, which did not refer to the care and
upbringing of the child, I concluded that the Crown should bear the burden in
this respect. Since the Crown called Ms. Kuncewicz to testify, I am satisfied
that the relevant facts were brought out into evidence and that the change in
burden did not affect the outcome.
Conclusion and disposition
[32]
In the result, the appeal will be
dismissed. However, Mr. Hrushka should be entitled to costs relating to the
second day of hearing. Costs will be awarded in the amount of $150.
[33]
Finally, I would comment
concerning a financial hardship issue that Mr. Hrushka raised at the
hearing. Mr. Hrushka stated that the CRA originally ruled in his favour and
paid the benefits to him. The CRA subsequently reversed its position, but by
this time Mr. Hrushka could not access the funds to repay the benefits because
he had placed the funds in an account for the child that he is not able to
access.
[34]
Although these circumstances are sympathetic, the legislation does
not permit me to take them into account for purposes of this appeal.
Signed at Toronto, Ontario this 24th day of October
2013.
“J. M. Woods”
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