Date: 19980127
Docket: 97-901-IT-I
BETWEEN:
JAMES F. SHERRER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasonsfor
Judgment
Lamarre Proulx, J.T.C.C.
[1]
This is an appeal by way of the informal procedure for the 1995
taxation year. The question at issue is whether the Appellant is
entitled to claim the wholly dependent person tax credit provided
for in paragraph 118(1)(b) of the Income Tax
Act (the "Act") for his children, when
he is entitled to a deduction under paragraph 60(b),
(c) or (c.1).
[2]
The facts of this case are described at paragraphs 13, 14
and 17 of the Reply to the Notice of Appeal
(the "Reply") as follows:
13.
In computing his tax payable for the 1995 taxation year, the
Appellant claimed in the computation of his non-refundable
tax credits, among other things, an amount of $5,380.00 for the
wholly dependent person credit.
14.
By Notice of Reassessment dated September 3, 1996, the
Minister reassessed the Appellant's income tax return for the
1995 taxation year and disallowed the wholly dependent person
credit referred to in paragraph 13 above.
...
17.
In confirming the reassessments with respect to the 1995 taxation
year, the Minister made the following assumptions of fact:
(a)
the facts hereinbefore stated and admitted;
(b)
the Appellant paid an amount of $3,900.00 to Esther Aiken, his
former spouse, during the 1995 taxation year for the support of
his two children pursuant to a Divorce Judgment dated February
21, 1991;
(c)
in computing his net income for the 1995 taxation year, the
Appellant was entitled to a deduction under
paragraphs 60(b), 60(c) or 60(c.1) of
the Act in respect of alimony or maintenance payments;
(d)
the said amount of $3,900.00 was deducted by the Appellant in
computing his net income for the 1995 taxation year pursuant to
paragraphs 60(b), 60(c) or 60(c.1) of
the Act;
(e)
pursuant to subsection 118(5) of the Act, the
Appellant's children are deemed not to be the children of the
Appellant during the 1995 taxation year for the purposes of
section 118 of the Act; and
(f)
the Appellant is not entitled to a wholly dependent person credit
in the computation of his non-refundable tax credits and tax
payable for the 1995 taxation year.
[3]
The reasons given by the Appellant for appealing the
Minister's reassessment are found in his Notice of Appeal
as follows:
...
I am the father of two children and I have been divorced for
many years. The custody agreement provides for joint
custody of the two children. It specifies that the two
children are to live with each of the separated parents for one
half of the time. This has been the case.
Within the agreement I allowed that I would make monthly
payments to my former wife through the now named "Family
Support Plan". This I have done. These payments were to
assist in providing for my children during the one half of time
that they are in her care, and in her home. She, in return was to
assume financial responsibility for all of the day-care
costs incurred.
...
I support two dependants within my home for one half of the
year.
It is therefore my contention that my year is divided in
halves. Since I have two dependants in my care for one half of
the year I should then be allowed to claim the equivalent of one
for the year.
Further the support payments that I make are not intended for
the time that the two are in my care but rather for the half of
the year that they are not. The dollar amount of support payments
I make is certainly far less than it would be if I were a
non-custodial parent.
Is it not the premise of the dependants deduction to assist
parents in the expenses of raising children? The home that I
maintain is not one for a single person but rather one equipped
for my family of two children. My clothing budget has to cover
the expenses for the two growing children. The grocery bill and
laundry costs certainly exceed that of a single person.
Yet I cannot claim the same deduction that is extended to all
other parents and supporters of children.
...
I must contend that the guidelines enforced by the taxation
department are not fair in my case. I am asking that allowance be
made for the division of the taxation year into halves thereby
allowing me to claim the equivalent of one dependant.
[4]
There was no dispute as to the facts. The income tax return was
filed as Exhibit R-1 and the divorce judgment referred
to in subparagraph 17(b) of the Reply was filed as
Exhibit A-1. The Appellant referred more particularly
to the following clauses of the divorce judgment:
...
b)
The husband and the wife shall have joint custody of the children
of the marriage ...;
...
e)
The children shall share equal time with the parents;
Arguments and Conclusions
[5]
The Respondent's representative submitted that the Appellant
was entitled to a deduction under paragraph 60(b),
(c) or (c.1) and that pursuant to
subsection 118(5) of the Act, the Appellant's
children were deemed not to be the children of the Appellant
during the 1995 taxation year, for the purposes of
section 118 of the Act. Therefore, the Appellant was
not entitled to a wholly dependent person credit provided for in
paragraph 118(1)(b) of the Act, in the
computation of his non-refundable tax credits and tax payable for
the 1995 taxation year.
[6]
The Respondent's representative referred to the following
decisions:
Morin v. The Queen, 1997 CanRepNat 739
Werring v. The Queen, CanRepNat 599
Paustian v. The Queen, [1995] 1 C.T.C. 2395
[7]
The Appellant submitted that the amount of his payments in
support for his children took into account the fact that they
were in their mother's care for half the time and therefore,
to allow only that deduction was not equitable, as he had also to
maintain a self-contained domestic establishment where he
supported his children when they were with him for half the year.
In this respect, he submitted that he was economically entitled
to the wholly dependent person tax credit provided for in
paragraph 118(1)(b) of the Act or at least to
some apportionment as specified in the aforementioned last
paragraph of his Notice of Appeal.
[8]
Subsection 118(5) of the Act reads as follows:
Where an individual in computing the individual's income
for a taxation year is entitled to a deduction under paragraph
60(b), (c) or (c.1) in respect of a payment
for the maintenance of a spouse or child, the spouse or child
shall, for the purposes of this section (other than the
definition "qualified pension income" in
subsection (7)) be deemed not to be the spouse or child of
the individual.
[9]
Paragraph 118(1)(b) of the Act reads as
follows:
(1)
For the purpose of computing the tax payable under this Part by
an individual for a taxation year, there may be deducted an
amount determined by the formula
A x B
where
A
is the appropriate percentage for the year, and
B
is the total of,
...
(b)
Wholly dependent person - in the case of an individual not
entitled to a deduction by reason of paragraph (a) who, at
any time in the year,
(i)
is an unmarried person or a married person who neither supported
nor lived with the married person's spouse and is not
supported by the spouse, and
(ii)
whether alone or jointly with one or more other persons,
maintains a self-contained domestic establishment (in which the
individual lives) and actually supports in that establishment a
person who, at that time, is
(A)
except in the case of a child of the individual, resident in
Canada,
(B)
wholly dependent for support on the individual, or the individual
and the person or persons, as the case may be,
(C)
related to the individual, and
(D)
except in the case of a parent or grandparent of the individual,
either under 18 years of age or so dependent by reason of mental
or physical infirmity,
an amount equal to the total of
(iii)
$6,000, and
(iv) an
amount determined by the formula
$5,000 - (D - $500)
where
D
is the greater of $500 and the income for the year of the
dependent person;
[10] It is my
view that subsection 118(5) of the Act clearly prevents the
Appellant from benefiting from the tax credit provided for in
subparagraph 118(1)(b) of the Act. Any
entitlement to a deduction for an alimony payment of any amount
for a child results in the deeming provision that this child is
not the child of the individual entitled to the said deduction.
The legislative provision does not allow any prorating of the
amount or partitioning of the taxation year.
[11] I have
heard a somewhat similar case in the appeal of
Christopher P. Youé and The Queen.
My decision was rendered on November 17, 1995. I dismissed
the appeal as follows:
This deeming provision contemplates, without any doubt
whatsoever, the whole of the taxation year. It contains nothing
that would allow of a partition of the year and I see no
ambiguity in its wording.
[12] This
conclusion is also consistent with the cases cited by the
Respondent's representative and with the decision of the
Federal Court of Appeal in The Queen v. Marshall,
96 DTC 6292, where it is said at page 6293 that only
Parliament can provide for a prorating of benefits and where it
has not done so the Court cannot legislate at its place. I quote
the relevant portion:
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.
This decision was rendered regarding the apportionment of the
child tax benefit between spouses who have the responsibility for
the care and the upbringing of the children. The same reasoning
applies to the case at bar.
[13]
Consequently, the appeal is dismissed.
Signed at Ottawa, Canada, this 27th day of January, 1998.
J.T.C.C.
COURT FILE
NO.:
97-901(IT)I
STYLE OF
CAUSE:
James F. Sherrer and The Queen
PLACE OF
HEARING:
Ottawa, Canada
DATE OF
HEARING:
January 21, 1998
REASONS FOR JUDGMENT BY: The
Honourable L. Lamarre Proulx
DATE OF
JUDGMENT:
January 27, 1998
APPEARANCES:
For the
Appellant:
The Appellant himself
For the
Respondent:
Nadine Hamelin (Student-at-Law)
COUNSEL OF RECORD:
For the
Appellant:
Name:
Firm:
For the
Respondent:
George Thomson
Deputy Attorney General of Canada
Ottawa, Canada
97-901(IT)I
BETWEEN:
JAMES F. SHERRER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on January 21, 1998, at
Ottawa, Canada, by
the Honourable Judge Louise Lamarre Proulx
Appearances
For the Appellant:
The Appellant himself
Agent for the
Respondent:
Nadine Hamelin (Student-at-Law)
JUDGMENT
The
appeal from the assessment made under the Income Tax Act
for the 1995 taxation year is dismissed, in accordance with the
attached Reasons for Judgment.
Signed at Ottawa, Canada, this 27th day of January, 1998.
J.T.C.C
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