Citation: 2012TCC176
Date: 20120530
Docket: 2011-672(IT)I
BETWEEN:
KERRY MICHELE DEXTER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Webb J.
[1]
The
issue in this appeal is whether the Appellant is the eligible individual in
respect of her son for the purposes of the Canada Child Tax Benefit (the
“CCTB”) for the period from July 2008 to May 2010 (the “period under appeal”).
On June 18, 2010 a Notice of Determination for the CCTB was issued in relation
to the 2007 and 2008 base taxation years which stated that the Appellant was
not entitled to the CCTB in the amounts of $3,274 that had been paid to her
during the period of July 2008 to June 2009 and $3,131 that had been paid to
her during the period of July 2009 to May 2010.
[2]
The
Appellant had disputed that all of the CCTB amounts had been paid to her as some
of the payments were deposited into an account of her former husband. However,
when the Appellant filed the notice for the CCTB she directed the Canada
Revenue Agency to deposit the amounts into this account. She did not change
these instructions until August or September 2009 (the first payment that was
not deposited into this account was the one made for September 2009). Since the
Appellant had directed that the CCTB payments would be made directly into the bank
account of her former husband, she cannot now dispute whether she received
these payments.
[3]
In the
Reply (and in the Amended Reply) it is stated that the Appellant was notified
that she was not eligible for the CCTB payments made during the period July
2008 to June 2009 because she was not the primary care giver for her son and
for the period July 2009 to May 2010 because there was “a change to eligible
children”. No further information or explanation of what “change to eligible
children” had occurred was provided in either the Reply (or the Amended Reply)
or during the hearing.
[4]
Under
the Income Tax Act (the “Act”) the CCTB is treated as
an overpayment of the person's liability under the Act and hence, if the
individual is eligible, such amount is paid to the eligible individual as a
refund of this overpayment. Under subsection 122.61(1) of the Act the
overpayment amount is calculated on a monthly basis. This subsection provides,
in part, as follows:
122.61(1) Where a person ... [has] filed a return of income for the
year, an overpayment on account of the person's liability under this Part for
the year is deemed to have arisen during a month in relation to which the year
is the base taxation year, equal to the amount determined by the formula
1/12[(A - B) + C + M]
where
A is the total of
(a) the product obtained by multiplying
$1,090
by the number of qualified dependants in respect of whom the person was an
eligible individual at the beginning of the month, and
…
C is the amount determined by the formula
F – (G × H)
where
F is, where the person is, at the beginning
of the month, an eligible individual in respect of
(a) only one qualified dependant, $1,463, and
…
[5]
The
Appellant has two children – a daughter and a son. The only issue in this
appeal is in relation to the amounts paid with respect to her son. Because the
overpayment is deemed to have arisen during a month for which a person is an
eligible individual in respect of a
qualified dependant at the beginning of the month, this requires a
determination of whether any particular person was an eligible individual at
the beginning of each month in respect of that qualified dependant. As a
result, it does not necessarily follow that because one particular person was
the eligible individual in respect of a qualified dependant at the beginning of
a particular month, that the same person would then be the eligible individual
at the beginning of the following month in respect of that qualified dependant.
The definitions of "eligible individual" and “qualified dependant” in
section 122.6 of the Act provide that:
"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;
“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;
[6]
In
this particular case the Respondent was disputing whether the Appellant’s son
was residing with her during the period under appeal. If the Appellant’s son
was not residing with her during the period under appeal, then the Appellant
would not be an eligible individual in respect of her son (since she would not
be residing with her son) and hence she would not be entitled to the CCTB. If the
Appellant’s son was residing with her, the position of the Respondent is that
the Appellant was not the parent
who primarily fulfilled the responsibility for the care and upbringing of her
son during the period under appeal.
[7]
Paragraph
(f) of the definition of “eligible individual” referred to above
provides a presumption if the child resides with the female parent. This
paragraph provides that the female parent is presumed to be “the parent who
primarily fulfils the responsibility for the care and upbringing of the
qualified dependant,” if the child resides with that parent. This presumption does not
apply in prescribed circumstances. The prescribed circumstances (in which the
presumption would not be applicable) are set out in subsection 6301(1) of the Income
Tax Regulations ("Regulations") and include, as one of
these circumstances, the situation where "more than one notice is filed
with the Minister under subsection 122.62(l) 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".
[8]
The
facts upon which the Minister relied in making the determination that the
Appellant was not entitled to the CCTB payments made in relation to her son
(and in confirming this determination following the serving of the notice of
objection) were set out in paragraph 6 of the Amended Reply (and the same
assumptions were set out in the same paragraph of the Reply) and were the
following:
6. In order to
establish the determinations and confirming the same, the Minister relied on
the following same assumptions of fact:
(a)
During the 1990 taxation
year the Appellant and Claude Courville were married;
(b)
From the marriage to
Claude Courville there were two children J and E;
(c)
During May 2008 the
Appellant and Claude Courville separated and the child E remained in the care
of Claude Courville;
(d)
Based on the
information provided in the questionnaire issued to the Appellant the Minister
concluded that the child E had not been in her care for the purposes of the
CCTB for the period of June 2008 to May 2010 while the CCTB during this period
for child E had been issued to her.
[9]
No
assumptions were made with respect to whether Claude Courville had filed the
notice contemplated by subsection 122.62(1) of the Act in relation to
the Appellant’s son nor was there any evidence during the hearing that he had filed
this notice. There was no suggestion that any of the other prescribed
circumstances as set out in subsection 6301(1) of the Regulations were
applicable in this case. As a result, if her son resided with her during any
part of the period under appeal, the presumption that she was “the parent who primarily fulfils the
responsibility for the care and upbringing of the qualified dependant” during this period will
be applicable.
[10]
The only assumptions
made in relation to whether the Appellant was the eligible individual in
respect of her son during the period under appeal were that her son “remained
in the care of Claude Courville” (paragraph 6 (c) in the Amended Reply) and
that her son was not in “her care” (paragraph 6 (d) in the Amended Reply).
There are two requirements that must be satisfied if a person is to be an
eligible individual in respect of a qualified dependant:
(a)
the person must reside
with the qualified dependant; and
(b)
the person must be “the
parent of the qualified dependant who primarily fulfils the responsibility for
the care and upbringing of the qualified dependant”.
[11]
The word “care” appears
in paragraph (b) of the definition of “eligible individual”. The
requirement as stated in paragraph (b) is that the person must be “the
parent … who primarily fulfils the responsibility for the care and upbringing
of the qualified dependant”. Paragraph (h) of the definition of
“eligible individual” provides that:
(h) prescribed factors shall be considered in
determining what constitutes care and upbringing;
[12]
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.
[13]
In The Queen v. Anchor
Pointe Energy Ltd., 2003 FCA 294, [2004]
5 C.T.C. 98, Justice
Rothstein (as he then was) in writing on behalf of the Federal Court of Appeal
stated that:
8 In
the Reply to the Notice of Appeal, the Minister's assumptions are set forth,
including assumptions arising as a result of the Global decision. Specifically,
the Reply states at paragraph 10:
In
reassessing, the Minister assumed the following facts:
...
(q) FCA/CAFAPI,
APII, APIII, APIV and APV did not purchase the seismic data for the purpose of
determining the existence, location, extent or quality of an accumulation of
oil or gas;
(r)
the seismic was not used for exploration purposes;
...
(z) the seismic data purchased by API, APII, APIII, APIV and APV does
not qualify as a Canadian Exploration Expense ("CEE") within the
meaning of s. 66.1(6)(a) of the Income Tax Act (the "Act").
…
24 Paragraph
10(z) was struck by Rip J. for an additional reason. He considered it to be a
conclusion of law "that has no place among the Minister's assumed
facts".
25 I
agree that legal statements or conclusions have no place in the recitation of
the Minister's factual assumptions. The implication is that the taxpayer has
the onus of demolishing the legal statement or conclusion and, of course, that
is not correct. The legal test to be applied is not subject to proof by the
parties as if it was a fact. The parties are to make their arguments as to the
legal test, but it is the Court that has the ultimate obligation of ruling on
questions of law.
26 However,
the assumption in paragraph 10(z) can be more correctly described as a
conclusion of mixed fact and law. A conclusion that seismic data purchased does
not qualify as CEE within the meaning of paragraph 66.1(6)(a) involves the
application of the law to the facts. Paragraph 66.1(6)(a) sets out the test to
be met for a CEE deduction. Whether the purchase of the seismic data in this
case meets that test involves determining whether or not the facts meet the
test. The Minister may assume the factual components of a conclusion of mixed
fact and law. However, if he wishes to do so, he should extricate the factual
components that are being assumed so that the taxpayer is told exactly what
factual assumptions it must demolish in order to succeed. It is unsatisfactory
that the assumed facts be buried in the conclusion of mixed fact and law.
[14]
It seems to me that
whether her son was “in her care for the purposes of the CCTB” is a conclusion
of mixed fact and law. The relevance of “care” for the purposes of the CCTB is
in relation to whether the Appellant was the parent who was primarily
responsible for the care and upbringing of her son. This can only be determined
by applying the law to the facts. Section 6302 of the Regulations sets
out the various factors that “are to be considered in determining what
constitutes care and upbringing of a qualified dependant”. The Minister should
have assumed the factual components of the test for “care and upbringing” not
the conclusion that the child was “not … in her care for the purposes of the
CCTB” or that the child was in the “care” of someone else. Therefore the
assumptions in paragraphs 6 c) and d) of the Reply are not proper assumptions.
[15]
There are no facts that
are assumed by the Minister in relation to either the issue of whether her son
was residing with the Appellant or whether the Appellant was the parent who was
primarily responsible for the care and upbringing of her son. As a result the
Minister has the onus of proof with respect to any facts upon which the Minister
may wish to rely in relation to these issues. In The Queen v. Loewen,
2004 FCA 146, Justice Sharlow, on behalf of the Federal Court of Appeal, made
the following comments:
11 The constraints on the Minister that
apply to the pleading of assumptions do not preclude the Crown from asserting,
elsewhere in the reply, factual allegations and legal arguments that are not
consistent with the basis of the assessment. If the Crown alleges a fact
that is not among the facts assumed by the Minister, the onus of proof lies
with the Crown. This is well explained in Schultz v. R. (1995),
[1996] 1 F.C. 423, [1996] 2 C.T.C. 127, 95 D.T.C. 5657 (Fed. C.A.) (leave to appeal refused, [1996]
S.C.C.A. No. 4 (S.C.C.)).
[16]
Leave to appeal the
decision of the Federal Court of Appeal in Loewen to the Supreme Court
of Canada was refused ([2004] S.C.C.A. No. 298).
[17]
The only evidence in
relation to whether her son was residing with her was provided by the
Appellant. It is clear that when the Appellant left Claude Courville that her
son did not leave with her. She was initially either living with a friend or at
a women’s shelter. However, prior to August 2009 she was living at a place
where her son could live with her and commencing the first of August 2009 her
son started to live with her again. Therefore it is clear that for the period
from July 2008 to July 2009 her son was not residing with her (and therefore
she was not the eligible individual in respect of her son during this period)
but for the period from August 2009 to May 2010, he was residing with her.
[18]
Since her son was
residing with the Appellant during the period from August 2009 to May 2010 and
since there was no evidence that Claude Courville had filed the relevant notice
for CCTB in respect of their son, the presumption in paragraph (f)
of the definition of “eligible individual” referred to above is applicable. As
a result the Appellant is presumed to be “the parent who primarily fulfils the
responsibility for the care and upbringing of the qualified dependant.” No evidence
was called to rebut this presumption and therefore the Appellant has satisfied
both conditions that are necessary for her to be the eligible individual in
respect of her son for the period from August 2009 to May 2010 – he was
residing with her and she was the parent who was primarily responsible for his
care and upbringing during this time.
[19]
Counsel for the
Respondent had requested that the judgment that is issued not address whether
there was an overpayment but simply refer the matter back to the Minister for
redetermination. The reason for this request was that during the hearing the
Appellant stated that she had remarried. The Canada Revenue Agency had not
taken her spouse’s income into account in determining whether there was an
overpayment of CCTB. The only basis upon which it was determined that there was
an overpayment was the basis referred to above. There was no evidence with
respect to the amount of the Appellant’s spouse’s income. However, in her
notice of appeal which was filed on February 27, 2011, the Appellant did state
that:
I am now remarried and unemployed my husband is my sole provider.
[20]
An individual’s CCTB
for a particular month is, in accordance with the formula as set out in
subsection 122.61(1) of the Income Tax Act (the “Act”), reduced
by the amount of that individual’s adjusted income for the base taxation year
for that month. For the first six months of any particular calendar year, the
base taxation year is the second preceding taxation year and for the last six
months of any particular calendar year, the base taxation year is the
immediately preceding taxation year.
[21]
“Adjusted income” is
defined in section 122.6 of the Act as follows:
“adjusted income”, of an individual for a taxation year, means the
total of all amounts each of which would be the income for the year of the
individual or of the person who was the individual's cohabiting spouse or
common-law partner at the end of the year if in computing that income no amount
were
(a) included
(i) under paragraph 56(1)(q.1) or subsection 56(6),
(ii) in respect of any gain from a disposition of property to which
section 79 applies, or
(iii) in respect of a gain described in subsection 40(3.21), or
(b) deductible under paragraph 60(y) or (z);
[22]
In determining the
Appellant’s adjusted income for any particular base taxation year, the income
of the person who was her cohabiting spouse or common‑law partner at the
end of such year, would have to be added to her income. “Cohabiting spouse or
common-law partner” is defined in section 122.6 of the Act as follows:
“cohabiting spouse or common-law partner” of an individual at any
time means the person who at that time is the individual's spouse or common-law
partner and who is not at that time living separate and apart from the individual
and, for the purpose of this definition, a person shall not be considered to be
living separate and apart from an individual at any time unless they were
living separate and apart at that time, because of a breakdown of their
marriage or common-law partnership, for a period of at least 90 days that
includes that time;
[23]
In this appeal the
relevant base taxation years are 2007 and 2008. The 2007 base taxation year is
relevant for the monthly payments made during the period July 2008 to June 2009
and the 2008 base taxation year is relevant for the monthly payments made
during the period July 2009 to May 2010 (since the period under appeal ends
with the month of May 2010). In this case since the Appellant was not an
eligible individual in respect of her son for the period June 2008 to July
2009, it is irrelevant whether she had a cohabiting spouse or common-law
partner at the end of the 2007 base taxation year. However, since the Appellant
was an eligible individual in respect of her son during the period August 2009
to May 2010, her entitlement to CCTB payments during this period could be
affected if she had (or was deemed to have had) a spouse or common-law partner
at the end of 2008 (depending on his income). There was, however, no evidence
that she had a spouse or common-law partner at the end of 2008 nor was there
any evidence that she and her spouse had made the joint election as
contemplated by subsection 122.62(7) of the Act as it read prior to
being amended in 2011.
There also was no evidence of her current spouse’s income for any year. Therefore
there is no basis to make any finding that any adjustment should be made to her
payments made during the period August 2009 to May 2010.
[24]
It also seems to me
that it is important to review the nature of the appeal in this case. This was
an appeal from a determination made by the Minister for the CCTB for the 2007
and 2008 base taxation years. Subsection 152(1.2) of the Act provides,
in part, that:
152 (1.2) Paragraphs 56(1)(l) and 60(o), this Division
and Division J, as they relate to an assessment or a reassessment and to
assessing or reassessing tax, apply, with any modifications that the
circumstances require, to a determination or redetermination under subsection
(1.01) and to a determination or redetermination of an amount under this
Division or an amount deemed under section 122.61 to be an overpayment on
account of a taxpayer’s liability under this Part,
[25]
CCTB payments are
monthly refunds of overpayments of a person’s tax liability. This appeal is from a determination of
whether there was an overpayment of the Appellant’s tax liability (which
resulted in a refund paid as CCTB). While it is necessary to determine whether
the Appellant was an eligible individual at the beginning of each month during
the period under appeal, this is not the ultimate question that is the subject
of the appeal. The question is whether the overpayment of the Appellant’s tax
liability (which was paid as CCTB payments) was correct. Therefore the
judgment, just as it would if this was an appeal from an assessment or
reassessment, must address the issue of her liability under the Act,
which in this case arises from the determination that she was overpaid an
amount of CCTB.
[26]
As a result the
Appellant’s appeal is allowed and the matter is referred back to the Minister
of National Revenue for reconsideration and redetermination on the basis that
the Appellant had not been overpaid CCTB payments made during the period from
August 2009 to May 2010. The Respondent shall pay costs to the Appellant which
are fixed in the amount of $250.
Signed at Halifax, Nova Scotia, this 30th day of May 2012.
“Wyman W. Webb”
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