Citation: 2010 TCC 336
Date: 20100618
Docket: 2009-2573(IT)I
BETWEEN:
ROSEMARY GUEST,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Woods J.
[1] This appeal
concerns the child tax benefit provisions in sections 122.6 to 122.64 of the Income
Tax Act.
[2] The appellant, Mrs. Rosemary Guest, received monthly
child tax benefits in respect of her daughter during the period from July 2005
to May 2007. The total amount received was $2,265.85.
[3] A review of Mrs. Guest’s entitlement to these benefits
was undertaken by the Canada Revenue Agency as a result of a change of marital
status reported on Mrs. Guest’s income tax return. It was determined that Mrs.
Guest was not entitled to any of the above benefits.
[4] Mrs. Guest has appealed these determinations to this
Court. Her husband represented her at the hearing and testified on her
behalf.
[5] In his
testimony, Mr. Guest stated that he had
difficulty finding out from the CRA why the benefits had been denied. He stated
that he had no problem with the Minister’s determination for the period from
July 2006 to May 2007 (the “Second Period”) but that he could not understand
the determination for the period from July 2005 to June 2006 (the “First Period”).
[6] The Minister’s assumptions as stated in the reply are
not in dispute, and are reproduced below.
a)
the appellant was initially issued CCTB for the period of July 2005 to
May 2007 on the basis that she was separated, single, widowed or divorced since
December 31, 2006;
b)
the appellant was separated on or about July 31, 2003;
c)
the appellant and the Spouse (Jim Guest) were living in a common law
relationship from on or about November 2004 to March 2006;
d)
the appellant and the Spouse were separated from on our [sic] about
March 2006 to September 2007;
e)
the appellant and the Spouse married on or about September 2007;
f)
the appellant informed Canada Revenue Agency that she was separated from
on our [sic] about March 2006 to September 2007 in May 2008; and
g)
the Spouse’s net income for the 2004 taxation year was $63,907.
Discussion
[7] The arguments of the parties focused solely on the
benefits received for the First Period because the appellant did not take issue
with the benefits for the Second Period.
[8] At the
beginning of his argument, counsel for
the respondent initially relied on the following two grounds to support the
Minister’s determination in respect of the First Period.
(a)
Mr. Guest’s income was
sufficiently large to result in the benefit being reduced to zero pursuant to
“B” of the formula in subsection 122.61(1) of the Act. (This ground was
not mentioned in the reply.)
(b)
Mrs. Guest failed to file a
notification of change of marital status within the 11-month limitation period required
by subsection 122.62(1) of the Act.
[9] Counsel subsequently abandoned the first argument and
relied solely on the second. He stated that the failure to provide the
notification in s. 122.62(1) on a timely basis was the sole reason for denying
the benefits for the First Period. Counsel is to be commended for taking this
position since the first argument was not mentioned in the reply and the
appellant had no notice of it.
[10] It is not necessary that I consider the first
argument. However, I would offer a comment concerning that argument, given Mr.
Guest’s understandable frustration in attempting to understand the relevant
provisions. I am similarly frustrated in trying to understand the legislation. It
appears that Mrs. Guest had an option as to how the benefits would be
calculated. The benefits may be determined for the First Period by taking into
account Mr. Guest’s income for the base taxation year of 2004 because Mrs. and
Mr. Guest were living in a common law relationship at the end of the year (Definition
of “adjusted income” in s. 122.6). It appears that Mr. Guest’s income was
sufficiently high that this would have resulted in a denial of the benefits. Alternatively,
Mrs. Guest had the option to elect that only her income be taken into account
for months in the First Period that the couple were separated (Section
122.62(6)). If this election had been made, it appears that it may have given
partial relief.
[11] As it
turns out, the above analysis is not relevant because the respondent has
restricted its argument to the notification requirement
in subsection 122.62(1). It provides:
122.62(1)
For the purposes of this subdivision, a person may be considered to be an
eligible individual in respect of a particular qualified dependant at the
beginning of a month only if the person has, no later than 11 months after the
end of the month, filed with the Minister a notice in prescribed form
containing prescribed information.
[12] It is not clear on the face of this provision whether
or not it applies to a change in marital status, and I was not provided with
the form that has been prescribed for purposes of the subsection. Subsection
122.62(1) appears to relate to the “eligible individual” criteria. Mrs. Guest’s
marital status has nothing to do with this criteria (Definition of “eligible
individual” in s. 122.6).
[13] Subsequent to the hearing, I reviewed the most recent
Guide published by the Canada Revenue Agency concerning the child tax benefit
(T4114(E), Rev. 09). Regarding a change of marital status, it provides:
If your
marital status changes, be sure to let us know as soon as possible, as this may
affect the amount of CCTB to which you are entitled. […] Complete Form RC65, Marital
Status Change, or notify us in a letter of your new marital status and the
date of the change.
[14] As it does not affect my decision, I will assume
without deciding that Form RC65 is a prescribed form for purposes of subsection
122.62(1).
[15] The appellant acknowledges that she only notified the
Minister of her change in marital status in May 2008. This was subsequent to
the 11-month period. The question, then, is whether the appellant’s failure to
file a notice under s. 122.62(1) in a timely manner is a sufficient reason for
the benefits to be disallowed.
[16] The problem that I have with the respondent’s position is
that the legislation contemplates that the Minister may either waive the
notification requirement or extend the notification deadline. The relevant
provisions, subsections 122.62(2) and 220(2.1) of the Act, are
reproduced below.
122.62(2)
The Minister may at any time extend the time for filing a notice under
subsection (1).
220(2.1)
Where any provision of this Act or a regulation requires a person to file a
prescribed form, receipt or other document, or to provide prescribed
information, the Minister may waive the requirement, but the person shall
provide the document or information at the Minister’s request.
[17] It
appears that the Minister did not
consider whether an extension or waiver should be granted in this case. Counsel
for the respondent seemed to be unaware that this option was open to the
Minister. He stated that he had been told by the relevant CRA officer that the
CRA’s hands were tied because the notice was not filed in time.
[18] Given the clear
intent of Parliament that the Minister may waive or extend the notification
requirement, the Minister should have given consideration to this before making
the determination to disallow the benefits in their entirety.
[19] In all the circumstances of this case, it is
appropriate in my view to allow the appeal with respect to benefits received
for the First Period. In reaching this conclusion, I have taken several factors
into consideration:
(a)
The Minister should have
considered whether to waive or extend the notice period in s. 122.62(1).
Although the matter could be sent back to the Minister for this consideration, that
course of action would unduly delay the disposition of this appeal.
(b)
At the hearing, the appellant did
not contest the disallowance of benefits with respect to the Second Period.
(c)
The T4114 guide does not clearly
advise applicants that benefits could be denied simply by being late in filing
the prescribed form.
[20] In the muddied circumstances of this case, I have
concluded that the appellant should be entitled to child tax benefits in
respect of the First Period. In the result, the appeal will be allowed with respect to child tax benefits
for the First Period but not the Second Period.
Signed at Ottawa, Canada this 18th
day of June 2010.
“J. M. Woods”
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