Citation: 2010 TCC 231
Date: 20100430
Docket: 2009-2398(IT)I
BETWEEN:
MARGARET CONNOLLY,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Hershfield J.
The Issue
[1] The Appellant
appeals Notices of Determination for the base taxation years 2004, 2005 and
2006 denying her the Canada Child Tax Benefit (“CCTB”) received by her in
respect of those periods.
[2] The Notices
informed the Appellant that she had been overpaid the CCTB in the amounts of $2,730
for the base taxation year 2004 (in respect of the period July 2005 to June
2006), $2,975 for the base taxation year 2005 (in respect of the period July
2006 to June 2007) and $1,520.06 for the base taxation year 2006 (in respect of
the period July 2007 to December 2007). The CCTB had been paid to the Appellant
in respect of her son who was born in 1993.
[3] The Appellant and
the boy’s father divorced in 1998 after which the boy’s father married
Stephanie B.. The boy continued to live with the Appellant who, pursuant to a
Québec Superior Court Judgment ratifying and incorporating a Mediation
Agreement, was granted legal custody of the child who according to the Judgment
“shall ordinarily reside with the mother”.
[4] In the fall of 2004
when the boy was 11 years old, he began staying with his father and Stephanie B.
in Ottawa in order to go to
school there. The town where he lived with his mother was a small rural
community in Québec about an hour and a half from Ottawa. He continued to live with his
mother on weekends, during the summer and at various other times as will be
noted later in these Reasons.
[5] This pattern of
living with both parents continued throughout the periods covered by the
subject appeals.
[6] The determination that
the Appellant was not entitled to the CCTB was made on the basis that the
Appellant was not the individual eligible to receive it under the Income Tax
Act (the “Act”). That is the issue being appealed; namely, whether
the Minister of National Revenue (the “Minister”) correctly determined that the
Appellant was not the “eligible individual” entitled to receive the CCTB in
respect of her son for the periods under appeal.
The Statutory Provisions
[7] The term “eligible
individual” is defined in section 122.6 of the Act as follows:
"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,
[…]
(h) prescribed factors shall be considered in
determining what constitutes care and upbringing;
[8] The prescribed factors referred to in paragraph (h)
to be considered in the determination of which parent meets the qualification in
paragraph (b) are set out in Regulation 6302 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.
The
Minister’s Assumptions and other Background
[9] The facts set out
in paragraphs 3, 4 and 5 above are not in dispute. They were either adduced in
evidence or assumed by the Minister without contradiction by the Appellant.
[10] The operative
assumptions are set out in paragraphs 6(e) through (i) of the Reply to the
Notice of Appeal (“Reply”) which read as follows:
e)
In September 2004 the
child moved in with his father and stepmother in Ottawa in order to attend school on a full time basis;
f)
On October 17, 2007
the Minister of National Revenue (hereinafter “the Minister”) received a Canada
Child Benefits Application from Stephanie Byrne, requesting the CCTB from
September 1, 2004 and on.
g)
Following the request
the Minister issued a questionnaire to the Appellant and Stephanie Byrne;
h)
The Appellant did not
return the completed questionnaire, and Stephanie Byrne returned the same
indicating that the child lived part time with her and that she considered
herself to be the person primarily responsible for the care and upbringing of
the child for the periods he lived with her;
i)
Based upon the
request for the CCTB and the return of the questionnaire the Minister issued
the letters of determination on January 18, 2008 advising the appellant that
there had been a change in eligible children and that she had been overpaid:
i) $2,730 for the
base year 2004 and period July 2005 to June 2006;
ii)
$2,975 for the base
year 2005 and period July 2006 to June 2007; and
iii)
$1,520 for the base
year 2006 and period July 2007 to December 2007.
[11] The assumption in
paragraph 6(h) of the Reply raises some definitional questions and concerns
over the status of Stephanie B. as an eligible individual. She is not a biological
parent of the dependant child in these appeals and is not given any parental
authority under the Québec Superior Court Judgment. She claims to be, on a part
time basis, the person primarily responsible for the care and upbringing of the
child for the periods he lived with her. Neither she nor the boy’s father was
at the hearing. While the testimony of the Appellant admitted to the
possibility that the father might have a claim to be the boy’s primary
caregiver for certain periods, no such suggestion was even hinted at in
relation to Stephanie B..
[12] The definitional
concerns appear to be resolved by the definitions in section 252 of the Act.
Paragraph 252(1)(c) defines child of a taxpayer to include a child
of that taxpayer’s spouse and subparagraph 252(2)(a)(i) defines a
parent of a taxpayer to include “a person whose child the taxpayer is” (or using
more colloquial language the two provisions read together essentially say that
if I am a biological child of a person, then that person’s spouse is my parent
even if such spouse is not my biological mother). Still, based on the evidence I can only
conclude that Stephanie B. was not at any time an eligible individual.
Assumptions of the sort made in paragraph (h) of the Reply are not meant to
relieve the Respondent of the responsibility to make a bone fide
assessment of competing CCTB claims. The Respondent must come to Court with
something more than such meagre assumptions.
[13] While such state of
affairs is highly unsatisfactory, the Appellant’s testimony was very candid and
did underline the issue to be decided: was she an eligible individual?
Her evidence relating to her being the person primarily responsible for the
care and upbringing of her son was uncontradicted and, as stated, there was no
one at the hearing to support any contention that the father was a caregiver
aside from a few minor concessions made by the Appellant and aside from her
acknowledgement that the father provided the child a place to live during the
school week in order to go to a better school as encouraged by her - his
responsible, care-giving mother.
The Appellant’s
Testimony
[14] The Appellant and a
friend testified at the hearing. Based on such testimony, I am satisfied that
she never gave up being a caregiver.
- She
delivered her son to his father’s residence every Sunday evening for school the
next day or directly to school on Monday mornings.
- She
maintained his room at her home where he lived during weekends, school holidays,
including March break, much of the Christmas holiday and the summer months
commencing when school ended in June and extending into September when school
started.
- Even
when the dependant child was at his father’s, the Appellant talked to him
regularly and provided parental guidance on all subjects whether he was at her
home and his father’s home.
- She
guided his informal education in many areas from home repairs, computers, and planting
and harvesting to cooking.
- She
went to teacher interviews, his grade 6 graduation, and school band concerts.
- She
was responsible for his health care and attended with him at medical
appointments. In grade 7 he was away from school for adenoid surgery. She
attended at doctor appointments, at the hospital for the surgery and his
recovery period was with her at her home.
- She
reconstructed a log of days he spent with her on a calendar year basis. In the
fall of 2004, 45 days from Labour day to Christmas; 169 days in 2005; 153 days in
2006; 165 days in 2007 and 174 days in 2008. This averages closer to 45% than
40%.
[15] Until Stephanie B.
applied for the CCTB, the boy’s mother and father had agreed that the Appellant
would claim the benefit. This was not in writing. After the current issue
arose, the father initially agreed to share the benefit on a 60%-40% basis in
his favour. This agreement was not in writing either and he ultimately reneged
on the agreement.
The Province of Québec, seemingly
under a similar benefit scheme, awarded the Appellant benefits on a 60%-40%
basis in favour of the father. At trial, that was what the Appellant sought as
well.
Argument
[16] Respondent’s counsel
referred to Justice Webb’s decision in Campbell v. The Queen. In that decision
Justice Webb examined subsection 122.61(1) of the Act which assigns the
CCTB on a monthly basis to the parent who is the eligible individual at the beginning
of the month. Respondent’s counsel put emphasis on the roof under which a child
lives at the beginning of a month in terms of the “resides with” test in
paragraph (a) and the “primary care giver” test in paragraph (b) of
the definition of “eligible individual” in section 122.6. Under these tests the
Appellant would qualify, for example, as the “eligible individual” for July and
August and September.
[17] Apparently, satisfied
in the present appeal that the Appellant was the parent who primarily fulfilled
the responsibility for the care and upbringing of the child at least while the
child was with her and that the child was with her on the first day of the
summer months, Respondent’s counsel seemed agreeable to allowing the appeal to
that extent.
[18] The Appellant argued
for her entitlement on the basis that she had never given up her responsibility
as the primary caregiver and should be allowed her share of the CCTB for the
days her son actually lived under her roof. As noted, she seemed resigned to
rounding her entitlement to 40% as allowed by the province of Québec.
Analysis
[19] The definition of
eligible individual looks to the caregiver at a particular point in time;
namely, the first day of the month and the person who is the caregiver at that
point in time gets the whole month’s benefit.
One can resolve this appeal to meet the Appellant’s sense of what is “fair” if
she is an eligible individual 5 months a year. On the basis that the qualified
dependant lived with his mother on the first of July, August, September and
January each year, we have 4 of the 5 months required to give her 41.67% of the
annual CCTB. As to the other 8 months, if one of them began on a weekend or
holiday, she would be, in each 12 month period under review, the eligible
individual 5 of the 12 months.
[20] This assumes that
she was the person primarily responsible for her son’s care and upbringing
during the times he lived under her roof. I have no reservation in concluding
that to be the case.
[21] Indeed, from the
evidence I have heard and considering the factors to be considered under Regulation
6302, I could well find that she never gave up her responsibility as the
primary caregiver to her son even when he lived under his father’s roof.
[22] This leads me to consider
whether the roof under which the child lives at a point in time need be the
determinative factor in establishing with whom the child resides at that point
in time.
[23] The requirement in
paragraph (a) of the definition of eligible individual requires that the
parent reside with the child on the first day of the month. This is a
peculiar test in that it does not ask if the child resides with the parent.
It is peculiar since the parent, not the child, will have the “place” in which to
reside.
How does a parent reside with a child? While I do not seek a metaphysical
answer, the question seems to me to suggest that the roof under which the child
lives at a point in time need not in all cases be taken as determinative.
Further, and less obtuse, I note that if to reside with someone means “to stay
or live with someone with a certain constancy, a certain regularity or else in
a habitual manner”,
there is an immediate contradiction in believing that the physical structure in
which one lives at a point in time has anything to do with where one
resides even at that point time.
[24] A case that
illustrates the common sense of not being overly fixated on the roof under
which the child lives is Penner v. R..
In that case the grandmother had
legal custody of her granddaughter and was found to be the eligible individual despite
the fact the child was boarded with another family during the school year as
she continued to be responsible for her care and upbringing, including her
medical care and education. A practical consideration in that case was that the
grandmother was financially responsible for the child.
[25] The Campbell decision also illustrates
a tendency of not being overly fixated on the roof under which the child lives. Faced
with the problem of a child moving from one residence to another every two
weeks, it was difficult to determine how the eligible individual tests worked
at the beginning of each month. The practical solution was to find that each
parent was the eligible individual at the beginning of alternating months.
[26] A further example is Sanderson
v. R.
In that case, based on a split of time spent in each home of one-third in favour
of the mother and two-thirds in favour of the father, this Court determined
eligibility for the mother every third month and eligibility for the father for
the intervening months.
[27] Still, in the case at
bar, I am not suggesting that when the child was at his father’s home, his
father was not residing with him. I am simply pointing out another possible
approach to the analysis of where a child resides (or of whether a father
resides with a child) on the first day of a month. If the child resides with
the mother for most of the month but not on the first day, there may be cases
where consideration of the roof under which the child lives on that first day
is not determinative. Clearly, the general rule would be to find that the roof
under which the child lives is determinative but there must be room for exceptions
where the facts and common sense dictate otherwise. I also note that this expansive
approach as to where a person “resides” clearly contemplates that a person can
reside in more than one place at one time.
[28] Admitting to the
possibility of exceptions to this general rule in my view facilitates the
administration of the CCTB provisions on a sensible basis considering their
purpose and considering the administrative problems associated with applying
them on a strict literal basis where there is a good case for finding two
eligible individuals in respect of the same child.
[29] Indeed, Canada Revenue
Agency has, on its own, adopted an administrative practice of allowing the
benefit to be given to each parent for 6 months each year in appropriate
circumstances where the child lives with each parent approximately half the
time. As
it is then, the Act is not being applied on rigid first day of the month
tests. Further, given that the subject legislation has never been changed in
spite of the administrative difficulties that have led, with some guidance from
this Court, to practices that ignore a literal construction of them, one might
well assume that formulating sensible exceptions to a strict and literal
construction of the subject requirement to reside with someone at a point in
time cannot be taken exception to.
[30] Indeed, I tend to believe
that a liberal construction of the subject provisions is being given effect in
order to allow a result that best deals with this sensitive area affecting
children from broken homes. In addition to reported cases like Penner, Campbell
and Sanderson mentioned above, I dare say there are a great number of unreported decisions
that similarly handle such cases of shared responsibility for caring and
housing children whose parents live apart.
[31] Returning to the
case at bar, I have noted that finding a fifth month, the first day of which
the Appellant resided with her child at her home, would only require that at
least one of the 8 months in question commenced on a weekend or school holiday.
Even without finding that an exception to the general rule is warranted in this
case (on the basis of a finding that there were one or more months that the
child resided with his mother notwithstanding that he was sheltered under his father’s
roof on the first day of such month or months), I am satisfied that as a matter
of probability at least one of the 8 months in question would have commenced on
a weekend or school holiday. That is, I am satisfied that on a balance of
probability the Appellant would have in a 12 month period met the requirements for
being the eligible individual in at least 5 months even applying the
requirement in paragraph 122.6(1)(a) of the Act of the definition
of eligible individual on a strict and literal basis.
[32] I make no finding as
to whether the father was ever the primary caregiver to his son even when he
lived under his roof. What concerns me here is that at least one responsible parent,
the Appellant, with the need to receive financial support for the care and
upbringing of the child, for the time that child lives with her, has been
recognized so as to avoid a result that would wholly frustrate the objectives of
the subject provisions.
[33] Accordingly, for the
reasons set out above the appeals are allowed on the basis that the Appellant
was the eligible individual for 3 months in respect of the 6 month period
ending December 31, 2007, and 5 months in respect of each of the 12 month
periods ending June 30, 2006 and June 30, 2007.
Signed at Ottawa, Canada this 30th day of April 2010.
"J.E. Hershfield"
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