Citation: 2012 TCC 240
Date: 20120709
Docket: 2012-371(IT)I
BETWEEN:
TRINA BRADY,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
(Edited from the transcript of Reasons for Judgment delivered orally from
the Bench on June 6, 2012 at Vancouver, British Columbia )
Campbell J.
[1]
All right, let the record show
that I am delivering reasons in the appeal of Trina Brady, which I heard on
Monday, June 4, 2012.
[2]
This appeal is in respect to the
2010 base taxation year, and involves the calculation of the child tax benefit payments
for the period July 2011 through to June 2012. The appellant and her spouse,
Sean Brady, have been separated since November 2010.
[3]
Initially the Minister determined
that the appellant was entitled to the CTB payments for the 2010 base taxation
year. In
August 2011, the Minister notified the appellant that her previous entitlement
to these benefits for the 2010 base taxation year would be adjusted on the
basis of an application in July 2011 by Sean Brady for these benefits, in which
he claimed that they shared custody of the three children of the marriage. The
Minister, on a redetermination of the entitlement to these benefits, and on the
basis that the parents shared custody of the children, requested that the appellant
repay an overpayment of benefits for this period.
[4]
The appellant’s argument is that
she is not a “shared custody parent” in respect to the three children as the
Minister has determined but rather, she is the parent that primarily fulfills
the responsibility for the care and upbringing of these qualified dependents. Consequently,
she is claiming the full amount of the benefit.
[5]
The definition of “shared custody
parent” was added to section 122.6 in 2010, in respect to overpayments arising
after June 2011. The reduction in the tax benefit where a parent is in a shared
custody parent situation is referenced in 122.61(1.1) which was also added to
the Act at the same time.
[6]
The Child Tax Benefit is payable
in respect to qualified dependents, and it is payable monthly to an eligible
individual, which is most often that parent who resides with the qualified
dependent and acts as the dependent’s primary caregiver.
[7]
Section 122.61 of the Act
creates a deemed overpayment by an individual who is entitled to the Child Tax
Benefit. This legislation creates a notional overpayment. Subsection (1.1) of
paragraph 122.61 provides an alternate calculation for these benefits where an
eligible individual is a “shared custody parent” in respect to qualified
dependents at the beginning of the month.
[8]
The introduction of 122.61(1.1)
meant that the deemed overpayment that translates to the CTB is reduced in the
case of a shared custody parent. Prior to the amendments concerning shared
custody parenting, the Act contemplated only one parent being the
eligible individual for the benefit. In R. v. Marshal [sic], 96 D.T.C. 6292, Justice Stone at
paragraph 2 made the following comment in respect to section 122.61:
“This
section of the Act contemplates only one parent being an “eligible individual”
for the purpose of allowing the benefits. It makes no provision for prorating
between two who claim to be eligible parents. Only Parliament can provide for
a prorating of benefits but it has not done so.”
[9]
In the case of joint custody, CRA
administrative policy split the benefit into two six-month portions for each
parent. This worked as long as the parents were in agreement, or neither parent
appealed the assessment. Prior to July 2011, some cases allowed an allocation
of the CTB between spouses. Justice Hershfield in the case of Connolly v.
The Queen, 2010 D.T.C. 1166, allowed a taxpayer to claim a five-month CTB
because the taxpayer resided with the child.
[10]
In Campbell v. The
Queen, 2010 D.T.C. 1072, Justice Webb found that each parent was entitled
to claim six months in respect to the benefit, because each parent was a
primary care giver. Since Parliament made amendments in 2010 to ensure equality
in a shared custody parent situation, no cases have, as of yet, considered the
new shared custody parent definition. The prior cases which split the benefit
are now no longer applicable under the new regime.
[11]
Section 122.6 defines the terms
“qualified dependents”, “eligible individual” and “shared custody parent.” Those
definitions state:
“qualified dependant” at any time means a person who at that
time
(a) has not attained the
age of 18 years,
(b) is not a person in
respect of whom an amount was deducted under paragraph (a) of the description of B
in subsection 118(1) in computing the tax payable under this Part by the
person’s spouse or common-law partner for the base taxation year in relation to
the month that includes that time, and
(c) is not a person in
respect of whom a special allowance under the Children’s
Special Allowances Act is payable for the month that includes that time;
“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
(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,
(c) is resident in
Canada or, where the person is the cohabiting spouse or common-law partner of a
person who is deemed under subsection 250(1) to be resident in Canada
throughout the taxation year that includes that time, was resident in Canada in
any preceding taxation year,
(d) is not described in
paragraph 149(1)(a)
or (b), and
(e) is, or whose
cohabiting spouse or common-law partner is, a Canadian citizen or a person who
(i) is
a permanent resident within the meaning of subsection 2(1) of the Immigration
and Refugee Protection Act,
(ii) is
a temporary resident within the meaning of the Immigration
and Refugee Protection Act, who was resident in Canada throughout
the 18 month period preceding that time, or
(iii) is
a protected person within the meaning of the Immigration
and Refugee Protection Act,
(iv) was
determined before that time to be a member of a class defined in the Humanitarian
Designated Classes Regulations made under the Immigration Act,
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;
“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.
[12]
The Minister concedes that the
three children are qualified dependents for the purposes of this appeal. Subsection
(f) of the definition of eligible individual contains a presumption in
favour of the qualified dependent’s female parent. However, (g) of this
definition also states that this presumption, in favour of the female parent,
will not apply in “prescribed circumstances.” Regulation 6301 references both
subsections (g) and (f) contained in the definition of eligible
individual in 122.6, and lists the circumstances which are (a) through (d),
where this presumption in favour of the female parent contained in (f)
will not apply. Regulation 6301 states:
6301. (1) For the purposes of paragraph
(g) of the definition “eligible individual” in section 122.6 of the Act,
the presumption referred to in paragraph (f) of that definition does not
apply in the circumstances where
(a) the
female parent of the qualified dependant declares in writing to the Minister that
the male parent, with whom she resides, is the parent of the qualified
dependant who primarily fulfils the responsibility for the care and upbringing
of each of the qualified dependants who reside with both parents;
(b) the
female parent is a qualified dependant of an eligible individual and each of
them files a notice with the Minister under subsection 122.62(1) of the Act in
respect of the same qualified dependant;
(c) there is
more than one female parent of the qualified dependant who resides with the
qualified dependant and each female parent files a notice with the Minister
under subsection 122.62(1) of the Act in respect of the qualified dependant; or
(d) more
than one notice is filed with the Minister under subsection 122.62(1) of the
Act in respect of the same qualified dependant who resides with each of the
persons filing the notices if such persons live at different locations.
[13]
Of these four circumstances
outlined in Regulation 6301, only (d) is applicable to the appeal before
me. Provision (d) states, and I will read this into the record,
"…more
than one notice is filed with the Minister under subsection 122.62(1) of the Act
in respect of the same qualified dependent who resides with each of the persons
filing the notices if such persons live at different locations."
[14]
In this appeal, the father, Sean
Brady, filed an application for the CTB as did the appellant, and consequently
the presumption in (f) in favour of the mother does not apply in these
circumstances. The definition of “shared custody parent” in 122.6 applies where
the presumption in favour of the female parent in paragraph (f) of the
definition of eligible individual does not apply. This definition states that a
shared custody parent is an individual who is one of two parents of a qualified
dependent where (a) the parents are not co-habiting, and (b) reside with the
qualified dependent on an equal or near equal basis, and (c) primarily
fulfill the responsibility for the care and upbringing of the qualified
dependent as determined by reference to the prescribed factors.
[15]
These prescribed factors are
referenced in (h) of 122.6 and that subsection states that,
“Those
factors shall be considered in determining what constitutes care and upbringing
of a qualified dependent.”
[16]
A list of those prescribed factors
which are referenced in (h) of 122.6 are contained at Regulation 6302. They
include:
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.
[17]
The Court must consider the
evidence in light of those prescribed factors set out in Regulation 6302 in
order to determine the appellant’s entitlement to the CTB for the 2010 base
taxation year. The new provision 122.61(1.1) now stipulates what is to occur in
circumstances where it is determined that both parents equally fulfill the
responsibility for the care and upbringing of the qualified dependents. That
is, if they are shared custody parents, then the CTB will be calculated in
accordance with 122.61(1.1) so that it is a shared benefit which was not
previously provided for in the Act.
[18]
The onus is on the appellant to
establish that she and Sean Brady are not shared custody parents and that she
is the sole parent who primarily fulfills the responsibility for the care and
upbringing of the three children who are qualified dependents.
[19]
After listening to the evidence given by both parents,
it is evident that each of them are dedicated, responsible parents who care
deeply about the wellbeing of their three children. It is also evident,
however, that there continues to be a great deal of acrimony between these
individuals.
[20]
The appellant maintains meticulous
records that track the pick-up and drop-off times of the children with each
parent according to a schedule that the appellant established. The father
agreed that these records accurately tracked their schedule with the children. According
to the appellant’s evidence, on average the percentage for which each parent
had the responsibility for the care of the three children, based on a 160 hour
week, was 55 percent in her favour, and 45 percent in favour of the father. Both
parents agreed that those percentages could vary slightly from week to week due
to vacations, late pick up, and so forth.
[21]
Subparagraph (b) of the
definition of the term “shared custody parent” contains two parts. The first
part is that the individual must reside with the qualified dependent. The
second part is that it must be on “an equal or near equal” basis.
[22]
Justice Webb in the case of Timothy
Campbell, in determining where a child resides, or is ordinarily resident,
stated that the test is whether the child lived with the parent on a settled
and usual basis.
[23]
There was a well defined and
regular cycle or schedule that was followed by the parents throughout the
period in this appeal. The children had a settled and usual abode with both
parents according to the evidence.
[24]
The interpretive problem that
arises now is the meaning of the term “equal or near equal” basis as contained
in (b) of the definition of “shared custody parent.”
[25]
The word “equal” is defined in the
Oxford English Dictionary, 2nd Edition, as “identical in
amount.” If each parent resides with the child for the same number of hours in
each week, then the parents reside on an equal basis.
[26]
“Near equal” is a more difficult
concept to define. The dictionary definition is not particularly helpful in
this instance, as it defines the word “near” as meaning “with reference to
space or portion, close at hand, not distant.” Since the words “near equal”
are in close proximity to the word “equal” in the legislation, Parliament
likely intended only a small difference between the amounts of time spent with
each parent. The Latin maxim, noscitur a sociis, states that the meaning
of a word is revealed by the words with which it is associated. I am
referencing here a case called PCS Investments Ltd. v. Dominion of Canada
General Insurance, 1994.
[27]
If Parliament’s goal for residency
is that it is “equal”, then if one applies a strict interpretation, the words
“near equal” should be as close to equal as possible, or only slightly less. However,
I do not believe that Parliament intended that the line be drawn so strictly at
only a 50/50 split, or some very slight variation akin to that. To use such an
interpretation would likely frustrate the purpose of the amendment. Rather, the
purpose as I view it is to ensure that while disproportionate differences
between parents will not be caught by the provisions, parents whose
circumstances exhibit only slight differences or close differences, will fall
within this amendment.
[28]
There have been a number of cases
in our court which have considered the meaning of “near”. Most have been in
respect, however, to tuition costs, and are not helpful in this appeal.
[29]
Since the introduction of these
amendments, CRA has recently published a revised Child Benefits Guide, T4114(E).
Within this guide CRA makes the following statement, and I quote,
“A
child may live with two different individuals in separate residences on a more
or less equal basis. For example, 1) the child lives with one parent four days
a week and the other parent three days a week.; 2) the child lives with one
parent one week and the other parent the following week, or…”
And it is this third one that I find troubling,
“3)
…any other regular cycle of alternation.”
[30]
If such an arrangement is entered
into, the CRA considers that the taxpayer is in a shared custody parent
arrangement, and therefore will reduce the benefits to 50 percent. My conclusion
is that this position is probably too broad. For example, a regular cycle of
alternation could consist of one parent residing with the children for three
weeks, while the other parent takes custody and resides with the children for
only one week out of the month. I do not view such an arrangement as this as
being one that is contemplated by this amendment. It does not fall within the
equal or near equal basis, since there is a clear difference in the times where
the children reside with each parent in the example I have provided.
[31]
The evidence was that the
appellant spent on average 91 hours per week residing with the three children,
while the father spent 77 hours on average. Out of a total 168 hours per week,
the appellant spent a total of 54.17 percent with the children. The difference
in the number of hours spent residing with the children is 14 hours. Expressing
the difference in the hours each parent spends with the children as a
percentage may not be particularly helpful here. If the appellant spends 60
percent of the time with the children, she would spend almost 101 hours with
them, while the father would spend 67 hours. This difference of 34 hours
translates to a day and 10 hours and that would be per week. A difference of 64
hours would mean that the appellant spent 96 hours with the children, which
would be a 57.14 percent difference. The question is whether a 14-hour
difference based on the 55/45 percentage split, which was the average, should
be deemed to be “near equal”. In reality, this difference translates to half a
day plus two hours.
[32]
It is my conclusion that this
falls clearly within the term near equal as contemplated by the amendment. The
differences between the hours that each parent spends residing with the
children, therefore, are “near equal” as contemplated by this provision.
[33]
In considering the other factors
listed in Regulation 6302 which focus on the child’s requirements respecting
supervision, guidance, attendance to needs, care, security, and participation,
the evidence supports that the father attended to all of these needs when the
children were residing with him. He is presently at home on disability, and is
therefore able to spend all day with his 5-year old daughter while the two sons
are at school. The evidence supports that he supervises their homework,
recreational, and school activities, discipline matters, and hygienic needs. He
maintains a secure environment and the appellant testified that it was secure
and that the children were in a safe environment there. However, she was not
satisfied that it was reasonable that the children not have their own bedrooms
as they did at her home. There was nothing in the evidence, however, that would
indicate that the children were having resulting problems. The evidence
actually supports that the children are happy and well adjusted individuals.
[34]
The father coached the oldest
son’s soccer, and attended school events and field trips. He purchased and
rebuilt secondhand scooters that he and the children ride to and from school. It
is apparent that he assisted in homework assignments, and executed these when
the children were residing with him. He testified that the children spent a lot
of time at the pool facilities at his complex. If the children are ill, his
parenting style was to try a home remedy before “running off” to the doctor. However,
none of the three children suffered from any specific illnesses which required
ongoing medical care.
[35]
Although he has less disposable
income than the appellant, he stated that he purchased second-hand clothing for
them and sports equipment. The birthday parties which the father organized were
focused more on his family attending as he did not have sufficient funds to
organize birthday parties for his childrens’ friends, as the mother did. The
evidence supports that the father provides for all of their needs when they are
with him, without resorting to outside assistance, and according to the
appellant’s evidence, the children adored him.
[36]
The appellant was a hands-on
mother who also attended equally to the childrens’ needs when they resided with
her. Although the children resided with her slightly more hours per week, I
have concluded that the slight difference was within the term “near equal
basis” as contemplated in the definition of “shared custody parent.” The
Minister therefore properly determined the appellant’s entitlement to the CTB
payments for the 2010 base taxation year, on the basis that she was a shared
custody parent under subsection 122.61(1.1) of the Act. The appeal is
therefore dismissed.
Signed
at Summerside, Prince Edward Island this 9th day of July 2012.
“Diane Campbell”
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