Date:
20020903
Docket:
2002-1175-IT-I
BETWEEN:
KALEEM W.
KHAN,
Appellant,
and
HER MAJESTY
THE QUEEN,
Respondent.
Reasonsfor Judgment
O'Connor, J.T.C.C.
[1]
The essential facts are set forth in the assumptions contained in
the Reply to the Notice of Appeal. These read as
follows:
13.
In so reassessing the Appellant, the Minister made the following
assumptions of fact:
(a)
in filing his income tax return for the 1999 taxation year, the
Appellant claimed his mother, Suraiya Khan ("Suraiya")
as an infirm dependant age 18 or older in the calculation of his
non-refundable tax credits;
(b)
at all material times, the Appellant's father, Sarfraz Khan
("Sarfraz") claimed Suriaya as a dependant in the
calculation of his non-refundable tax credits;
(c)
Suriaya was a dependant of Sarfraz;
(d)
Suriaya was not a dependant of the Appellant.
ISSUES
[2]
As stated in the Reply the issue was whether the Appellant, who
did not appear at the hearing but whose father did appear, is
entitled to deduct the amount for an infirm dependants age 18 or
older in the 1999 taxation year.
ANALYSIS
[3]
Subsection 118(1) of the Income Tax Act allows a person
who is married a spousal deduction calculated on the basis of a
formula. However, subsection 118(4)(a) (c) and
(d) provide as follows:
(4)
For the purposes of subsection (1), the following Rules
apply:
(a)
no amount may be deducted under subsection (1) because of
paragraphs (a) and (b) of the description of B in subsection (1)
by an individual in a taxation year for more than one other
person;
(a.1) no amount
may be deducted under subsection (1) because of
paragraph (b) of the description of B in subsection (1) by
an individual for a taxation year for a person in respect of whom
an amount is deducted because of paragraph (a) of that
description by another individual for the year if, throughout the
year, the person and that other individual are married to each
other and are not living separate and apart because of a
breakdown of their marriage;
...
(c)
where an individual is entitled to a deduction under subsection
(1) because of paragraph (b) of the description of B in
subsection (1) for a taxation year in respect of any person, no
amount may be deducted because of paragraph (c.1) or (d) of that
description by any individual for the year in respect of the
person;
(d)
where an individual is entitled to a deduction under subsection
(1) because of paragraph (c.1) of the description of B in
subsection (1) for a taxation year in respect of any person, the
person is deemed not to be a dependant of any individual for the
year for the purpose of paragraph (d) of the description;
and
...
[4]
The application of the foregoing sections according to the
counsel for Justice precludes the Appellant from claiming the
deduction he has for an infirm dependant age 18 or older in the
1999 taxation year and in my opinion that is the correct
interpretation.
[5]
The problem for the Appellant and his father is that the father
states that in preparing the 1999 return for the Appellant he
followed the General Income Tax and Benefit Guide
(the "Guide") furnished by CCRA. At pages 26 and 27 of
that guide the following is stated:
Line 303 -
Spousal amount
You may be
able to claim a spousal amount if, in 1999, you had a spouse (see
page 10) whom you supported. In the Identification area on page 1
of your return, be sure to enter the information concerning your
spouse...
Line 305 -
Equivalent-to-spouse amount
You may be
able to claim an equivalent-to-spouse amount if, at any time
in the year, you were single, divorced, separated, or widowed
and, at that time, you supported a dependant to whom all
of the following applied. The dependant:
§
was under 18, your
parent or grandparent, or mentally or physically
infirm;
§
was related to you
by blood, marriage or adoption;
§
lived with you in
a home that you maintained; and
§
in most cases,
lived in Canada..
You cannot
claim this amount if any of the following
applies:
§
You are claiming a
spousal amount (see line 303).
Line 306 -
Amount for infirm dependants age 18 or older
You can
claim an amount for your or your spouse's dependent child or
grandchild only if that child or grandchild was mentally or
physically infirm and was born in 1981 or
earlier.
You can
also claim an amount for a person who meets all of the
following conditions. The person must have been:
§
your or your
spouse's parent, grandparent, brother, sister, aunt, uncle,
niece, or nephew;
§
born in 1981 or
earlier;
§
mentally or
physically infirm;
§
dependent on you,
or on you and others for support; and
§
living in Canada
at any time in the year.
Notes
A parent
includes someone on whom you were completely dependent and who
had custody and control of you when you were under 19 years of
age.
A child
can include anyone who has become dependent on you, even if he or
she is older than you.
If some
else is claiming an amount on line 305 for a dependant, you
cannot claim an amount on line 306 for that dependant. If you are
claiming an amount on line 305 for a dependant who is infirm and
age 18 or older, you may also be able to claim an amount on line
306 for that dependant. You can claim an amount only if the
dependant's net income (line 236 of his or her return, or the
amount that it would be if he or she filed a return) is less than
$6,794.
[6]
The Appellant argues rather forcefully that most Canadian
taxpayers do not read every last word of the Income Tax
Act but in doing their returns they follow the Guide and the
Guide is published by the Government of Canada. Since the Guide
in discussing line 306 simply states you can't claim on both
lines 305 and line 306 for the same dependant. However, this
caveat fails to mention line 303 with the result that it is
incomplete and in this case the claim that the father made was
under line 303 and there is nothing in the Guide at line 306 to
indicate that the claim contemplated on that line for dependants
age 18 or older cannot be made when a claim is made at line
303.
[7]
Thus the Appellant has been lead into error by the incorrect
advice contained in the Guide and for that reason and for any
other reason that the Appellant may raise as to hardship or any
other matter it is recommended that the Remission Order be
granted.
[8]
Notwithstanding this recommendation I must apply the above
provisions of the Act and consequently the appeal is
dismissed.
Signed at
Ottawa, Canada, this 6th day of September, 2002.
J.T.C.C.COURT
FILE
NO.:
2002-1175(IT)I
STYLE OF
CAUSE:
Kaleem W. Khan v. The Queen
PLACE OF
HEARING:
Toronto, Ontario
DATE OF
HEARING:
August 12, 2002
REASONS FOR
JUDGMENT
BY:
The Honourable Judge O'Connor
DATE OF
JUDGMENT:
September 6, 2002
APPEARANCES:
Agent for
the
Appellant:
Sarfraz
Khan
Counsel for
the
Respondent:
Eric Sherbert
COUNSEL OF
RECORD:
Agent for
the Appellant:
Name:
Sarfraz Khan
Firm:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2002-1175(IT)I
BETWEEN:
KALEEM W.
KHAN,
Appellant,
and
HER MAJESTY
THE QUEEN,
Respondent.
Appeal heard
on August 12, 2002 at Toronto, Ontario, by
the
Honourable Judge Terrence O'Connor
Appearances
Agent for
the
Appellant:
Sarfraz Khan
Counsel for
the
Respondent:
Eric Sherbert
JUDGMENT
The appeal from the reassessment made under the Income Tax
Act for the 1999 taxation year is dismissed for the reasons
set forth in the attached Reasons for Judgment. However, as I
mentioned to the parties this might be an appropriate situation
for the granting of a Remission Order. In this regard, annexed to
the Reasons for Judgment is an article on Remission Orders, how
to apply and when they should be rendered and for what reasons.
The article appears in Tax Litigation
Volume No.
2, pages 624 to 628 and as mentioned is annexed to the attached
Reasons for Judgment.
Signed at
Ottawa, Canada, this 6th day of September, 2002.
J.T.C.C.
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