Citation: 2013 TCC 115
Date: 20130527
Docket: 2012-1182(IT)I
BETWEEN:
FOLASADE ABIOLA,
appellant,
and
HER MAJESTY THE QUEEN,
respondent.
REASONS FOR JUDGMENT
Hogan J.
I. INTRODUCTION
[1]
The appellant, Folasade
Abiola, has appealed the denial of her claims for a wholly dependent person tax
credit and a child tax credit in respect of her daughter, who is identified as OA
in the respondent’s reply to the appellant’s notice of appeal for her 2009
taxation year. The credits were disallowed by the Minister of National Revenue
(the "Minister") on the grounds that the Income Tax Act of
Canada (the "ITA") bars a taxpayer from claiming wholly
dependent person and child tax credits in respect of a child for whom the
taxpayer is required to pay child support to a former spouse or common-law
partner.
[2]
For the most part, the
facts are not in dispute. The appellant was married to Philip Abiola. There are
three children of the marriage, a daughter, OA, born in 1996, and two sons, S,
born in 1994, and T, born in 1993. The appellant and Philip Abiola divorced on
January 12, 2009.
[3]
At the time of the
divorce, the three children were in the care of Philip Abiola.
[4]
On April 2, 2009, the
appellant was ordered to pay an amount of $843 per month to Philip Abiola,
commencing on February 5, 2009. This order was in respect of all three children
of the marriage.
[5]
The situation changed
shortly after that order was issued. The appellant’s daughter, OA, moved in
with the appellant in April 2009. The appellant’s employment came to an end on
May 8, 2009, and she collected employment insurance from May until September
2009. The appellant then obtained employment as an administrative assistant
commencing September 2, 2009, earning approximately $42,000 per annum.
[6]
On November 17, 2009, a
new order was issued, stating that the appellant was $1,658 in arrears for the
months of February through August 2009. The order did not provide a breakdown
of the arrears amount.
[7]
The appellant claimed
OA as an eligible dependant in her 2009 tax return. By a signed statement dated
February 7, 2013, Philip Abiola agreed that the appellant could claim OA as a
dependant for the 2009 taxation year.
[8]
On June 25, 2010, the
CRA initially assessed the appellant, at which point the wholly dependant
person and child credits were allowed as claimed.
[9]
On December 20, 2010,
the Minister reassessed the appellant and denied her claims for the tax credits in respect of OA because
the appellant was allegedly required to make support payments for OA during the
2009 taxation year.
[10]
On April 1, 2011, the appellant filed a notice of objection
to the reassessment for the 2009 taxation year. On November 17, 2011, the
Minister confirmed the reassessment on the basis that the appellant was required
by a court order dated September 23, 2009 to make support payments in respect
of OA and is thus precluded from claiming the tax credits at issue in this
appeal.
II. ISSUES
[11]
Was the appellant required to make support payments in
2009 with respect to her daughter? If not, was the appellant entitled to the
wholly dependent person and child tax credits under paragraphs 118(1)(b)
and (b.1) of the ITA in respect of OA for her 2009 taxation year?
III. APPELLANT’S
POSITION
[12]
At the hearing, the
appellant argued that the second order required her to pay child support only
in respect of her two sons, and not her daughter, who chose to live with her in
2009.
IV. RESPONDENT’S POSITION
[13]
The respondent submits
that no claim can be made as there was a court order under which the appellant
was to make support payments to her spouse, as referred to in by subsection
56.1(4) of the ITA. According to the respondent, subsection 118(5) of
the ITA prohibits the appellant from claiming non-refundable tax credits
in respect of OA.
V. ANALYSIS
[14]
For the appellant to
succeed, she needs to show on a balance of probabilities that (1) there was no
order to make support payments with respect to her daughter, OA, in 2009 and
that (2) there was an agreement with her former spouse that the appellant could
claim their daughter for tax purposes. Such an agreement was produced at the
hearing, thus satisfying the second condition.
[15]
The appellant was
required to pay child support in respect of her three children by a court
order, as can be seen in the respondent’s evidence (Exhibit R-1, court order,
of April 2, 2009, "First Order"). However, there was a new order
issued as a result of a change in the situation of the appellant (Exhibit R-1,
court order, of November 17, 2009, "Second Order"). The Second Order
states that the appellant was $1,658.00 in arrears, but it does not break down
the amount.
[16]
Although the Second Order
is vague, the manner in which the payments were calculated demonstrates that
the appellant was required to pay child support only in respect of her two sons
in 2009.
[17]
In my opinion, the
overall result of the Second Order was to confirm that the appellant was not
required to pay any support amount in respect of her daughter for the 2009
taxation year. While the appellant admitted that she was in arrears and that
the arrears amount included support for her daughter for the period of February
and March 2009, the Second Order modified the support requirement so as to
reflect the changes in the appellant’s living situation. This was the result of
a change in the appellant’s income and the fact that her daughter moved in with
her shortly after the First Order was issued. The Second Order eliminated any
requirement to pay support amounts with respect to the appellant’s daughter for
the 2009 taxation year.
[18]
I see no reason to
depart from Judge Hershfield’s analysis in Barthels v. Canada:
10 . . . Consistency
with the new child support guidelines would not be advanced by denying the
equivalent-to-spouse credit to the supporting custodial parent. Clearly in the
case at bar, Diane is not an individual entitled to the credit in respect of
Stephanie. Diane has not supported Stephanie at any time in 1999 in a home
maintained by her (Diane). The scheme of these provisions cannot be taken to intend
that the supporting custodial parent be denied the equivalent-to-spouse credit.
11 Secondly,
I note that subsection 118(5) has a potential ambiguity in that one might ask
the relevance of it not expressly stating when the requirement to pay a support
amount needs to be in place. It is somewhat unusual that that subsection denies
the credit "for a taxation year" where there is "a requirement
to pay a support amount" but makes no mention of when that requirement
must have come into existence or have been extinguished. More typically,
exhaustive drafting styles evidenced in the Act might have said the credit is
denied where there is "in the year" or "at anytime in the
year" or "in respect of the year or any part of the year" a
requirement to pay a support amount. While I hesitate to suggest that these
cumbersome provisions be made more cumbersome by adding further language, I
am inclined in this case to suggest that by not adding a time reference as to
when the requirement to pay must be in existence, an extinguishment, at any
time, of the requirement to pay any support amount "in respect of the
year" might well be sufficient to escape the limitation imposed by that
subsection. Certainly in this case I see no mischief in such a statutory construction
approach.
12 Thirdly, I
find that the First Order payment requirement was inherently conditional on the
custody situation set out in that order. That situation changed in the year preceding
the subject year and remained changed throughout the subject year. The First
Order was not meant to apply to such case. The Second and Third Orders setting
aside the arrears were, in my view, perfunctory and must be given the same
effect as setting aside the order that gave rise to the arrears. The Second and
Third Orders acknowledged the state of affairs, the legal arrangement, as
agreed to when the First Order was made. They acknowledged the inherently
conditional nature of the First Order and clarified that the requirement to pay
child support for Stephanie was not to have effect when the premises on which
that requirement was imposed ceased to exist. These Orders, while not expressly
retroactive in vitiating that requirement, have that effect nonetheless, in my
view.
[Emphasis added.]
[19]
Justice Lamarre relied on those same passages in Giroux v.
The Queen:
22 In 2009,
the appellant, not the former spouse, should normally have been entitled to the
credits set out in paragraphs 118(1)(b) and (b.1). I agree with
Justice Hershfield's statement that consistency with the provisions at issue
would not be advanced by denying the wholly dependent person credit to the
supporting custodial parent. I also agree with his finding that an order
payment requirement is inherently conditional on the custody situation set out
in that order. As soon as the child left the mother's house to move in with his
father, the situation that existed at the time when the Quebec Court of Appeal
ruled on the appellant's payment of child support was no longer the same and
could not entitle the former spouse to require the appellant to pay said
support. . . .
[20]
In the case at bar, the
First Order was conditional on all three children living with Philip Abiola. That
situation changed shortly after the First Order was issued, when OA moved in
with the appellant in April 2009. The Second Order extinguished the requirement
that the appellant pay support in respect of OA. The Second Order, while not
expressly retroactively vitiating that requirement, has that effect
nonetheless.
VI. CONCLUSION
[21]
For these reasons I conclude
that the appellant was not required to pay any support amount in respect of her
daughter, OA, in the 2009 taxation year. As a result, the appellant is entitled
to claim the wholly dependent person and child tax credits under paragraphs
118(1)(b) and (b.1) of the ITA in respect of OA for her
2009 taxation year.
Signed at Ottawa, Canada, this 27th day of May 2013.
“Robert J. Hogan”
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