Wajchendler v. The Queen, docket 2001-1839(IT)I (Informal Procedure)

Date: 20020515

Docket: 2001-1839-IT-I

BETWEEN:

JEANETTE WAJCHENDLER,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasonsfor Judgment

O'Connor, J.T.C.C.

[1]            The issue in these appeals is whether the Appellant is entitled to child tax benefits in respect of her four children after September 1, 1998. The Reply to the Notice of Appeal states in part as follows:

6.              In the 1997 and 1998 taxation years, the Appellant's child tax credit entitlement was calculated based on a net family income of $64,684.00 and $25,107.00, respectively.

7.              The Minister assessed the Appellant for the 1997 and 1998 taxation years, Notices of Assessment thereof mailed on September 21, 1998 and June 1, 1999, respectively.

8.              In so assessing the Appellant for the 1997 and 1998 taxation years, the Minister recalculated the child tax credit entitlement.

9.              In so assessing the Appellant, the Minister made the following assumptions of fact:

(a)            the Appellant and her former spouse, Irving Wajchendler ("Irving"), have four children: Lauren, Sarah, Shaina and Elliot (the "Children");

(b)            on or about September 1, 1998, the Children's primary residence became that of Irving;

(c)            in the 1997 taxation year, the net income of the Appellant was $Nil;

(d)            in the 1997 taxation year, the net family income for the purposes of calculating the child tax credit was $Nil;

(e)            during the period July to September 1998, the Appellant had four qualified dependants as defined in subsection 122.2(6) of the Income Tax Act (the "Act");

(f)             during the period October 1998 to June 1999, the Appellant had no qualified dependants as defined in subsection 122.2(6) of the Act;

(g)            during the period July 1999 to June 2000, the Appellant had no qualified dependants as defined in subsection 122.2(6) of the Act;

(h)            in the 1997 taxation year, the Appellant was entitled to a child tax credit entitlement in the amount of $1,475.00;

(i)             in the 1998 taxation year, the Appellant was entitled to a child tax credit entitlement in the amount of $Nil.

[2]            The relevant provisions of the Income Tax Act ("Act") are as follows:

122.6       In this subdivision,

...

"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 no amount were included in respect of a gain from a disposition of property to which section 79 applies in computing that income;

"base taxation year", in relation to a month, means

(a)            where the month is any of the first 6 months of a calendar year, the taxation year that ended on December 31 of the second preceding calendar year, and

(b)            where the month is any of the last 6 months of a calendar year, the taxation year that ended on December 31 of the preceding calendar year;

"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;

...

"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,

(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,

...

(e)            is, or whose cohabiting spouse or common-law partner is, a Canadian citizen ...

...

122.61(1) Where a person and, where the Minister so demands, the person's cohabiting spouse or common-law partner at the end of a taxation year have 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 ...

[3]            The following is an attempt to explain the workings of the child tax benefit. The child tax benefit was introduced in the 1992 federal budget. Beginning in January, 1993 it replaced the family allowance, refundable child tax credit and the non-refundable tax credit for dependant children with a single non-taxable monthly payment made to the custodial parent (described as the "eligible individual") of a child (described as a "qualified dependant"). In order to be a "qualified dependant" a child must be under the age of eighteen and must not be in receipt of certain other benefits.

[4]            The "eligible individual" must be resident in Canada, must reside with the child and must be the person who has the primary responsibility for the care and upbringing of the child. It is to be noted that the pleadings and some of the applications and orders refer to the expression "primary residence". This is not entirely exact because the "eligible individual" is the parent of the "qualified dependant" who primarily fulfils the responsibility for the care and upbringing of the "qualified dependant". I take it however that when the various proceedings and orders refer to "primary residence" in relation to a person they are referring to that person who in effect is the "eligible individual" as defined in the Act.

[5]            Regulation 6302 establishes the factors to be considered to determine "eligible individual". That regulation reads as follows:

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 hygenic 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.

[6]            A child tax benefit is a geared-to-income mechanism in which the benefit may be increased or reduced depending upon the income level of parents who are cohabiting or in cases of parents who are separated, the income level of the eligible individual.

[7]            The adjusted income figure used in the calculation of benefit entitlement is that for the base year. For the months January through June, the base year is the second preceding calendar year. For the months July through December, the base year is the immediately preceding calendar year. Thus in calculating entitlement for the months January through June, 1999, the income for 1997 would be used; payments to be made for the months July through December, 1999 would use 1998 as the base year. To receive the child tax benefit a return of income must generally be filed. The amount of the benefit is paid in monthly instalments and its amount is determined according to a formula set forth in subsection 122.61(1).

[8]            Testimony was given by the Appellant and by Irving. They married in 1989, came to Canada in 1992 and separated in September, 1992.

[9]            By a Judgment dated December 5, 1994, (Exhibit A-3), the Honourable Madame Justice Wilson of the Ontario Court (General Division) ordered that commencing January 1, 1995 the children would have their primary residence with their mother (the Appellant) and a secondary residence with their father ("Irving"). That Order was granted on consent. Irving bought a house in Thornhill in October, 1993 near the children's school, Wilshire Public School. The Appellant at first lived in premises close to Irving in Thornhill and to said school so that easy access to the children was available to Irving.

[10]          In 1997 the Appellant relocated to a rental home in North York. This was a further distance from Wilshire Public School and from Irving and adversely affected Irving's involvement with the children. Irving took the matter to arbitration. Exhibit A-5 is a 17-page mediation report of Raymond M. Morris, Ph.D., C. Psych. It thoroughly analyzes the conflicts between the Appellant and Irving as to the care and schooling of the children. Each wanted to be the primary residence person (eligible individual) and the bottom line of this report is that the Appellant was to continue to have primary residence of the children.

[11]          On March 31, 1999 Irving made an application to the Ontario Court (General Division) for an Order varying the Judgment dated December 5, 1994 (Exhibit A-3) to provide that Irving shall have primary residence of the children and by a Judgment of the Honourable Justice B. Wright dated August 24, 1999 (Exhibit A-1) the application was granted and Irving was granted primary residence of the children. The Judgment does not specifically state the date when primary residence was to change, however, paragraph 2. of the Judgment indicates that the child support payments that Irving was paying to the Appellant were to terminate effective September 1, 1998 and it is reasonable to conclude that this supports the testimony of Irving that he had custody of the children since September 1, 1998.

[12]          There is further evidence by way of letters from schools and a statement from Morris A. Singer, a solicitor of Irving, which confirms that all of the children had their primary residence with Irving since September 1, 1998.

[13]          In the Affidavit in support of the application Irving states that the children had been residing with him on a full-time basis since September, 1998 and continue to do so. Irving repeated those facts at the hearing of this appeal and I have no reason not to believe him. Although from 1994 (perhaps earlier) to September 1, 1998 the Appellant had primary residence, I have no doubt that from and after September 1, 1998 that role was played by Irving. In other words Irving became the eligible individual on September 1, 1998. Irving also testified that he applied for the child tax benefit and after some difficulty succeeded in securing it retroactive to September, 1998.

[14]          Consequently the appeal is dismissed and the Appellant is obliged to remit to the Minister of National Revenue any overpayments that she received relative to the period from and after September 1, 1998.

                Signed at Ottawa, Canada, this 15th day of May, 2002.

"T. O'Connor"

J.T.C.C.

COURT FILE NO.:                                                 2001-1839(IT)I

STYLE OF CAUSE:                                               Jeanette Wajchendler v. The Queen

PLACE OF HEARING:                                         Toronto, Ontario

DATE OF HEARING:                                           April 9, 2002

REASONS FOR JUDGMENT BY:      The Honourable Judge Terrence O'Connor

DATE OF JUDGMENT:                                       May 15, 2002

APPEARANCES:

Agent for the Appellant:                     David Klimitz

Agent for the Respondent:                 Maria Vujnovic (Student-at-law)

COUNSEL OF RECORD:

For the Appellant:                

Name:                               

Firm:                 

For the Respondent:                             Morris Rosenberg

                                                                                Deputy Attorney General of Canada

                                                                                                Ottawa, Canada

2001-1839(IT)I

BETWEEN:

JEANETTE WAJCHENDLER,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Appeals heard on April 9, 2002 at Toronto, Ontario, by

the Honourable Judge Terrence O'Connor

Appearances

Agent for the Appellant:                       David Klimitz

Agent for the Respondent:                   Maria Vujnovic, Student-at-law

JUDGMENT

          The appeals from the assessments made under the Income Tax Act for the 1997 and 1998 taxation years are dismissed and the Appellant is obliged to remit to the Minister of National Revenue any overpayments of child tax benefits that she received relative to the period from and after September 1, 1998 in accordance with the attached Reasons for Judgment.

          Signed at Ottawa, Canada, this 15th day of May, 2002.

"T. O'Connor"

J.T.C.C.