Citation: 2010 TCC 331
Date: 20100617
Docket: 2009-3423(IT)I
BETWEEN:
SEAN PERRIN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Woods J.
[1] The issue in this appeal is whether the appellant, Mr.
Sean Perrin, is entitled to claim one of his children as a dependant for
purposes of determining his tax liability under the Income Tax Act for
the 2007 taxation year.
[2] According to the reply filed by the respondent, the
issue is relevant for purposes of the personal tax credit in subsection 118(1)
of the Act and for other purposes that were not specified.
[3] Since the arguments at the hearing were limited to the
personal tax credit in subsection 118(1), that is the only issue that I propose
to consider.
[4] Mr. Perrin submits that he is entitled to the tax
credit provided by paragraph 118(1)(b) for one of his two children because
he was separated from his spouse during the relevant year and the children
lived with him 50 percent of the time. He stated that the spouses had agreed
that they would each claim one of the children as a dependant.
[5] The respondent acknowledges that the conditions in paragraph
118(1)(b) have been satisfied by Mr. Perrin.
[6] However,
the respondent submits that paragraph
118(1)(b) is not applicable because Mr. Perrin was required to pay child
support to his spouse. The relevant provision, subsection 118(5), provides:
118(5) No
amount may be deducted under subsection (1) in computing an individual’s
tax payable under this Part for a taxation year in respect of a person where
the individual is required to pay a support amount (within the meaning
assigned by subsection 56.1(4)) to the individual’s spouse or common-law
partner or former spouse or common-law partner in respect of the person and the
individual
(a) lives separate and apart from the spouse or common-law
partner or former spouse or common-law partner throughout the year because of
the breakdown of their marriage or common-law partnership; or
(b) claims a deduction for the year because of section 60 in
respect of a support amount paid to the spouse or common-law partner or former
spouse or common-law partner. [Emphasis
added]
[7] Mr. Perrin submits that subsection 118(5) does not
apply in his circumstances because he is not required to pay child support. He
submits that the term “required” implies that the support is governed by a
court order.
[8] I
disagree. The interpretation suggested by
the appellant fails to give the term “required” its ordinary meaning. I agree
that the term suggests an imperative, but I do not agree that it implies an
imperative directed by a court.
[9] In this case, Mr. Perrin was obligated to pay monthly
child support in the relevant taxation year pursuant to a written separation agreement
made on November 14, 2006. The agreement was prepared by a lawyer and there is
no reason to think that it is not binding and enforceable by law.
[10] The child support payments under this agreement were
required to be made, in my view.
[11] Mr. Perrin also submits that s. 118(5) does not apply
because both he and his spouse pay child support to each other pursuant to
federal support guidelines. The reason for this, it is submitted, is that each
parent earns income which gives rise to a child support obligation which is
netted under the guidelines.
[12] The circumstance
of both spouses paying child support is specifically contemplated by subsection
118(5.1) of the Act, which came into force beginning in 2007. It would
provide the relief sought by the appellant if in fact both spouses paid child
support. Neither party referred to this provision at the hearing, and it is
reproduced below.
118(5.1) Where, if this Act were read without reference to
this subsection, solely because of the application of subsection (5), no
individual is entitled to a deduction under paragraph (b) or (b.1)
of the description of B in subsection (1) for a taxation year in respect of a
child, subsection (5) shall not apply in respect of that child for that
taxation year.
[13] This provision is intended to avoid the harsh
application of s. 118(5) where both spouses pay child support for the same child
in the relevant year. It is designed to enable one of the spouses to claim the
tax credit under paragraph 118(1)(b) in these circumstances.
[14] This
provision has no application here, however, because only Mr. Perrin was required to pay child support in the
2007 taxation year. The relevant clauses in the Separation Agreement are set
out below:
10.1 Commencing
on the sale of the matrimonial home, and on the 1st day of each
subsequent month thereafter, the husband shall pay to the wife, for the support
and maintenance of the children, the sum of $376.50 per month per child, for a
total of $753.00 (based upon a salary of $50,000) per month […].
10.2 The
husband and the wife agree to use the Federal Guidelines to establish child
support.
10.3 (1) The
husband acknowledges that he will pay the full child support figure outlined in
the Federal Guidelines despite the fact that there is an equal shared access
schedule. This clause will apply to any variation for child support based on a
change in the husband’s income.
[15] These provisions strongly suggest that only Mr. Perrin was
required to pay child support for the two children in the 2007 taxation year. I
am not satisfied based on the evidence presented that the Federal Guidelines
would provide for a different result.
[16] In reaching this conclusion, I have reviewed the
decision of Lamarre J. in Rabb v. The Queen, 2006 TCC 140, 2006 DTC
2674, which was not referred to at the hearing. In that case, it was determined
that child support was required to be paid by each parent under the Federal
Guidelines when they each had custody of one of the children. The facts in that
case are distinguishable because Mr. Perrin and his spouse had shared custody
of both children.
[17] Mr. Perrin further submits that the legislation should
be applied in an equitable manner so that he and his spouse could each claim
the tax credit for one of their children as they had agreed to do.
[18] This Court has no power to grant this relief. Parliament has the power to enact
tax legislation, and this Court’s mandate is only to ensure that tax assessments
conform to that legislation. Parliament has not extended the dependant tax
credit to persons in Mr. Perrin’s circumstances and it is Parliament’s
prerogative to do so.
[19] The appeal will be dismissed.
Signed at Ottawa, Canada this 17th
day of June 2010.
“J. M. Woods”
Email this Content