REASONS
FOR JUDGMENT
V.A. Miller J.
[1]
The issue in this appeal is whether the
Appellant is entitled to receive the Canada Child Tax Benefit (“CCTB”) and the
Goods and Services Tax Credit (“GSTC”) for her two step-sons, A and T (the “Children”)
for the period July 2011 to June 2013.
Background
[2]
The Appellant received the CCTB and the GSTC in
respect of her two sons, E and D. The benefits with respect to E and D are not
in dispute. However, on August 19, 2011, the Minister of National Revenue (“Minister”)
issued redeterminations in respect of E and D due to a change in the
Appellant’s marital status and family income. It was determined that the
Appellant had received an overpayment of CCTB and GSTC.
[3]
On October 6, 2011, the Appellant applied for
the CCTB in respect of her step-sons A and T. Her application was denied and
the Appellant objected to the determination of her entitlement to the CCTB for
the 2010 and 2011 base taxation years and the GSTC for the 2010 base taxation
year. It is the Appellant’s position that the Children were with her 6.5 hours
each day during the period in issue. She took care of their needs and she
should be entitled to receive the CCTB.
[4]
William McRae is the natural father of the two
Children and Constance Wagner is their natural mother. The Appellant and
William McRae are spouses of one another.
[5]
Mr. McRae and Ms. Wagner separated in 2007 and
Ms. Wagner received the CCTB and the GSTC in respect of the two Children from
the time of separation up to and including the period in issue.
Facts
[6]
The witnesses at the hearing were the Appellant
and Ms. Wagner. It was apparent from the interaction between the two witnesses
that their relationship is extremely acrimonious.
[7]
Mr. McRae and Ms. Wagner entered into a Custody
Agreement on June 24, 2009 which was amended on February 23, 2010, April
29, 2013, and August 4, 2013. Only the February 2010 and April 2013 versions of
this Custody Agreement are relevant to this appeal.
[8]
According to the February 2010 Agreement, Mr.
McRae and Ms. Wagner shared joint custody of the Children based on an equal
shared parenting agreement which they drafted and signed on March 8, 2009. The
February 2010 Agreement contained a “Week Schedule” and a Statutory Holiday
schedule which detailed the times that each parent had the Children in his/her
care.
[9]
The “Week Schedule” provided that Mr. McRae
would collect the Children from school on Mondays and drop them off to Ms.
Wagner at her place of work at 9 p.m. On Tuesdays and Wednesdays, he would pick
them up from Ms. Wagner at 4 p.m.; on Thursdays and every second Friday, Mr.
McRae would pick the Children up from his mother at 4 p.m. On Tuesday,
Wednesday and Thursday, he would drop the Children off to Ms. Wagner at 9 p.m.
Mr. McRae and Ms. Wagner had the Children on alternate weekends. On Mr. McRae’s
weekend, he had the Children from 4 p.m. on Friday until 9 p.m. on Sunday. On
Ms. Wagner’s weekend, she had the Children after school on Friday until 5 p.m.
on Sunday when Mr. McRae picked them up.
[10]
Mr. McRae and Ms. Wagner agreed to changes in
the “Week Schedule”. For instance, during the period, the Children were never
in the care of Mr. McRae’s mother. From Tuesday to Friday each week, Ms.
Wagner met the Children at 3 p.m. at school and walked with them to her place
of employment which was three to four blocks from their schools. Mr. McRae or
the Appellant picked up the Children from Ms. Wagner between 3:20 p.m. and 4
p.m. every Tuesday to Thursday and alternate Fridays. The remaining Fridays,
the Children remained in Ms. Wagner’s care after school. According to the
Appellant, on the weekends that Ms. Wagner had the Children, she or Mr. McRae
picked them up on Sunday at 10 a.m. instead of 5 p.m. Ms. Wagner disagreed with
this statement. It was Ms. Wagner’s evidence that on the weekends when the
Children were with her, they were picked up at 5 p.m. Regardless, the Children
slept at Mr. McRae’s home on Sunday evenings and he took them to school Monday
morning.
[11]
The “Week Schedule” was followed during spring
break, summer break and Christmas break. During the school breaks, the Children
remained in Ms. Wagner’s care throughout the day until they were picked up
at the regular time by the Appellant or Mr. McRae. If Ms. Wagner had to work,
she arranged for a baby-sitter to care for the Children until Mr. McRae picked
them up.
[12]
In 2012, there was a period when Mr. McRae was
hospitalized and the Children remained in Ms. Wagner’s care during the
weekdays. The parties did not state the exact number of times that this
occurred. In January 2013, there was a change in the “Week Schedule” so that
neither Mr. McRae nor the Appellant picked the Children up from Ms. Wagner.
Instead, Ms. Wagner used public transportation to take the Children from New
Westminster to Surrey where Mr. McRae or the Appellant met them.
[13]
According to the Statutory Holiday Schedule, Mr.
McRae and Ms. Wagner each had the Children in alternate years for various
holidays. However, both the Appellant and Ms. Wagner testified that the only
statutory holidays which were consistently alternated were Christmas Eve,
Christmas Day, Boxing Day, New Year’s Eve and Halloween. Ms. Wagner worked
on most statutory holidays and during these occasions the Children were in the
care of Mr. McRae. He returned the Children to Ms. Wagner at 9 p.m. on
statutory holidays unless the holiday occurred during his weekend with the
Children.
[14]
The February 2010 Agreement was amended on April
29, 2013 with the result that Mr. McRae had the Children only on alternate
weekends. Otherwise, the Children were in Ms. Wagner’s care. On Mr. McRae’s
weekends, Ms. Wagner took the Children to him at 4 p.m. on Friday and they
stayed with him until 8:30 p.m. on Sunday.
[15]
Both the Appellant and counsel for the
Respondent prepared charts which portrayed the rotating “Week Schedule”. These
charts were based on the Schedule attached to the Custody Agreement. The chart
prepared by the Appellant (Exhibit A-1, tab 10) was inaccurate and self-serving.
The Appellant used a 35 day period and estimated that the Children were with
her 321 hours, with Ms. Wagner for 56 hours, at school for 150 hours and “not
with us” for 369 hours. The number of hours allocated exceeded the total hours
in 35 days. On cross examination she conceded that the hours she allocated to
the category “not with us” were actually hours the Children were with Ms.
Wagner.
[16]
I found that the chart prepared by counsel
(Exhibit R-6) was more reliable. According to Exhibit R-6, during a two week
period, the Children were with Mr. McRae and the Appellant for 110 hours
(33%) whereas the Children were with Ms. Wagner for 166 hours (49%) and the
Children were in school for 60 hours (18%).
Issue
[17]
For the purposes of the GSTC benefit, subsection
122.5(6) provides that if parties who have the same qualified dependants do not
agree who is entitled to the benefit, the individual who is eligible to receive
the CCTB under section 122.6 is the individual who will receive the GSTC.
Therefore, with respect to both benefits, the issue is whether the Appellant is
an eligible individual in respect of the Children for the period July 2011 to
June 2013 in accordance with section 122.6 of the Income Tax Act (“ITA”).
Legislation
[18]
For the purposes of the CCTB section 122.6 of
the Income Tax Act defines the following terms
“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 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 122.6 eligible
individual (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;
“shared-custody
parent” in respect of a qualified dependent [sic] 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,
[19]
The prescribed factors to consider in
determining whether one parent primarily fulfills the care and upbringing of
the Children are listed in section 6302 of the Income Tax Regulations
(the “Regulations”) 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.
Analysis
[20]
The Children were qualified dependants as
defined under section 122.6 for the purposes of the CCTB.
[21]
The Children are considered to be the children
of the Appellant and she is their “parent” as a result of her marriage to Mr.
McRae. See paragraphs 252(1)(c) and 252(2)(a) of the ITA.
[22]
The presumption in respect of the female parent
set out in paragraph (f) of the definition of “eligible individual” does
not apply, because both the Appellant and Ms. Wagner applied for the CCTB for
the Children for the period July 2011 to June 2013.
[23]
In order to qualify as an eligible individual in
respect of the Children, I must be satisfied that:
a)
the Appellant resided with the Children during
the period,
b) the Appellant is the parent who primarily fulfilled the
responsibility for the care and upbringing of the Children and is not a
shared-custody parent in respect of the Children; or
c)
the Appellant is a shared custody parent in
respect of the Children.
[24]
During the period, the Children had a routine
where they spent a considerable amount of time with the Appellant and their
father Mr. McRae. I have concluded that for purposes of the CCTB and the GSTC, the
Children resided with the Appellant. However, after a review of the evidence in
terms of the prescribed factors in section 6302 of the Regulations, it
is my view that the Appellant was not the parent who primarily fulfilled the
responsibility for the care and upbringing of the Children.
Prescribed Factors
[25]
My conclusions from the evidence are as follows:
a.
Both the Appellant and Ms. Wagner contributed to
the care and upbringing of the Children during the period at issue. They each
cared for the daily needs of the Children on the respective weekends when the
Children were with them.
b.
On weekdays, Ms. Wagner was responsible for
getting the Children ready for school, transporting them to and from school,
managing the majority of their meals and ensuring they were groomed and rested.
On weekdays, the Appellant and Mr. McRae cared for the Children from 3:20 p.m.
or 4 p.m. until 9 p.m.
c.
Both the Appellant and Ms. Wagner maintained a
secure home for the Children. There was evidence that Ms. Wagner had separate
bedrooms for each of the Children. The Children primarily slept at Ms. Wagner’s
home. In a two week period, the Children slept at Ms. Wagner’s home 11
evenings.
d.
Both the Appellant and Ms. Wagner made medical
appointments for the Children and transported them to the appointments. Ms.
Wagner also made arrangements for the Children to attend counselling and she
transported them to their counselling sessions.
e.
Both witnesses testified that Mr. McRae took the
Children to their sport activities during the week and on the weekends they
were with him. Ms. Wagner took the Children to their sport activities on the
weekends they were with her. However, the evidence indicated that Mr. McRae was
more involved with the Children’s recreational activities.
f.
Both Mr. McRae and Ms. Wagner attended parent
teacher meetings. Ms. Wagner also attended other school related activities
such as book fairs and school concerts. The Appellant attended the Children’s
Christmas concerts.
g.
Both the Appellant and Ms. Wagner attended to
the Children when they were ill or injured.
h.
Both the Appellant and Ms. Wagner cared for the
Children’s hygienic needs on the respective weekends the Children spent with
them. However, I have concluded that Ms. Wagner was primarily responsible for
the hygienic needs of the Children as they groomed, brushed their teeth and
showered at her home the majority of the time.
[26]
The evidence showed that both the Appellant and
Ms. Wagner cared for the Children and provided guidance to them. Their
parenting styles may have been different but that is not a consideration in
deciding who is entitled to the benefits in issue: Hrushka v R, 2013 TCC
335 at paragraph 26. However, as stated earlier, the Children spent most of
their time with Ms. Wagner and I have concluded that she primarily fulfilled
the responsibility for the care and upbringing of the Children during the
period at issue.
Shared-Custody
[27]
If parents are shared-custody parents, then the
benefits are to be shared between them. The definition of “shared-custody
parent” states that a shared custody parent is an individual who is one of two
parents of the qualified dependant where (a) the parents are not co-habiting;
and (b) reside with the qualified dependant on an equal or near equal basis;
and (c) primarily fulfill the responsibility for the care and upbringing of the
qualified dependant when the qualified dependant is residing with them.
[28]
It is clear in the present case that the
Appellant is not a shared-custody parent as the Children did not reside with
her on an equal or near equal basis during the period. During a two week
period, excluding the time the Children were in school, they were with Ms.
Wagner for 166 hours or 49% of the time and with the Appellant for 110 hours or
33% of the time. When the hours in school are allocated based on who picked the
Children up and who dropped them off to school, Ms. Wagner had the Children 65%
of the time.
[29]
As a result, the Appellant has not shown that
during the period she was the parent who was primarily responsible for the care
and upbringing of the Children nor has she shown that she was a shared-custody
parent. I find that the Appellant was not an “eligible individual” with respect
to the Children during the period July 2011 to June 2013. The appeal is
dismissed without costs.
Signed at Ottawa, Canada, this 1st day of May 2015.
“V.A. Miller”
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