Citation: 2009 TCC 300
Date: 20090605
Docket: 2008-1983(IT)I
BETWEEN:
MARILYN MAY MCLAUGHLIN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Little J.
A.
Facts
[1]
From April 2003 until
January 27, 2006 the Appellant and Graham John Willis (“Graham”) lived in a
common‑law relationship.
[2]
The Appellant and Graham
are the parents of two children:
(a)
a daughter who was born
on December 8, 2004 (“First Daughter”); and
(b)
a daughter who was born
on July 15, 2006 (“Second Daughter”).
(The daughters are hereinafter referred to
collectively as the “Children”.)
[3]
The Appellant and Graham
separated in January 2006.
[4]
By Consent Order of the
Supreme Court of British Columbia dated May 18, 2006, the Appellant and Graham
were granted joint custody and guardianship of the First Daughter. The First
Daughter was under the care of each parent on alternate weeks.
[5]
By Order of the Supreme
Court of British Columbia dated June 25, 2007, the Appellant and Graham were
granted joint custody and guardianship of the Children, with the Children being
under the care and control of each parent on alternate weeks.
[6]
In September 2006, the
Appellant applied for Child Tax Benefits (CCTBs) in respect of the Second
Daughter.
[7]
In January 2008, the
Appellant applied for CCTBs in respect of the First Daughter.
[8]
The evidence before the
Court indicated that from September 1, 2006 to June 15, 2007 Graham was on
parental leave from his employment at the British Columbia Ferry Corporation
(“BC Ferries”). (See Exhibit R-2, Tab 5)
[9]
The Minister of
National Revenue (the “Minister”) determined that the Appellant was the primary
caregiver of the Second Daughter for the months of August and September 2006 of
the 2005 base taxation year and for the period from February 2008 to June 2008,
inclusive, of the 2006 base taxation year.
[10]
The Minister determined
that Graham was the primary caregiver of the Second Daughter from October 2006
to June 2007, inclusive, of the 2005 base taxation year and for the period from
July 2007 to January 2008, inclusive, of the 2006 base taxation year.
[11]
The Minister determined
that the Appellant was the primary caregiver of the First Daughter for the
period from February 2008 to June 2008, inclusive, of the 2006 base taxation year.
[12]
The Minister also
determined that Graham was the primary caregiver of the First Daughter for the
period from July 2006 to June 2007, inclusive, of the 2005 base taxation year
and for the period from July 2007 to January 2008, inclusive, of the 2006 base taxation
year.
B.
Issue
[13]
The issue in this
appeal is whether the Minister properly calculated the Appellant’s entitlement to
the CCTBs for the Children for the 2005 and 2006 base taxation years.
C.
Analysis and
Decision
[14]
During the hearing
counsel for the Minister filed a document headed “Summary of the Minister’s
Determination” (Exhibit R-1). The document reads as follows:
Marilyn May McLaughlin 2008-1983(IT)I
Summary of the Minister’s Determination
|
Month
|
Base Year
|
Primary Caregiver
for Julia
|
Primary Caregiver
for Keltie
|
Notes
|
|
Jul
2006
|
2005
|
 Graham Willis
|
n/a
|
Reply paragraph 13(m)
|
|
Aug
2006
|
 Appellant
|
Reply paragraph 13(j)
|
|
Sep
2006
|
|
Oct
2006
|
 Graham
Willis
|
Reply paragraph 13(k)
|
|
Nov
2006
|
|
Dec
2006
|
|
Jan
2007
|
|
Feb
2007
|
|
Mar
2007
|
|
Apr
2007
|
|
May
2007
|
|
Jun
2007
|
|
Jul
2007
|
2006
|
 Graham
Willis
|
 Graham
Willis
|
Reply paragraphs 13(k) & (m)
|
|
Aug
2007
|
|
Sep
2007
|
|
Oct
2007
|
|
Nov
2007
|
|
 Dec 2007
|
|
Jan
2008
|
|
Feb
2008
|
 Appellant
|
Appellant
|
Reply paragraphs 13(l) & (j)
|
|
Mar
2008
|
|
Apr
2008
|
|
May
2008
|
|
Jun
2008
|
[15]
The Appellant’s claim
for CCTBs relates to the 2005 and 2006 base taxation years. According to the
definition of “base taxation year” contained in section 122.6 of the Income
Tax Act (the “Act”), the Minister reviewed the following periods:
(a)
July 1, 2006 to June
30, 2007 (the “2005 base taxation year”); and
(b)
July 1, 2007 to June
30, 2008 (the “2006 base taxation year”).
[16]
Section 122.6 of the Act
reads as follows:
Definitions
122.6. In this subdivision,
"adjusted
earned income"
(Repealed by S.C. 1998, c.
21, s. 92(1).)
"adjusted
income" "revenu modifié"
"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 under paragraph 56(1)(q.1) or subsection 56(6)
or in respect of any gain from a disposition of property to which section 79
applies in computing that income and if no amount were deductible under
paragraph 60(y) or (z) in computing that income;
"base taxation year" "année de base"
"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" "époux ou conjoint de fait visé"
"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;
"earned
income"
(Repealed by S.C. 1998, c.
21, s. 92(1).)
"eligible
individual" "particulier admissible"
"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,
(d) is not described in
paragraph 149(1)(a) or 149(1)(b), and
(e) is, or whose cohabiting
spouse or common-law partner is, a Canadian citizen or a person who
(i) is a permanent resident
within the meaning of subsection 2(1) of the Immigration and Refugee Protection
Act,
(ii) is a temporary resident
within the meaning of the Immigration and Refugee Protection Act, who was
resident in Canada throughout the 18 month period preceding that time, or
(iii) is a protected person
within the meaning of the Immigration and Refugee Protection Act,
(iv) was determined before
that time to be a member of a class defined in the Humanitarian Designated
Classes Regulations made under the Immigration Act,
and for the purpose of this
definition,
(f) where the qualified
dependant resides with the dependant's female parent, the parent who primarily
fulfils the responsibility for the care and upbringing of the qualified
dependant is presumed to be the female parent,
(g) the presumption referred
to in paragraph 122.6 eligible individual (f) does not apply in prescribed
circumstances, and
(h) prescribed factors shall
be considered in determining what constitutes care and upbringing;
"qualified
dependant" "personne à charge admissible"
"qualified
dependant" at any time means a person who at that time
(a) has not attained the age
of 18 years,
(b) is not a person in
respect of whom an amount was deducted under paragraph (a) of the description
of B in subsection 118(1) in computing the tax payable under this Part by the
person's spouse or common-law partner for the base taxation year in relation to
the month that includes that time, and
(c) is not a person in
respect of whom a special allowance under the Children's Special Allowances Act
is payable for the month that includes that time;
"return of income" "déclaration de revenu"
"return of
income" filed by an individual for a taxation year means
(a) where the
individual was resident in Canada throughout the year, the individual's return of income
(other than a return of income filed under subsection 70(2) or 104(23),
paragraph 128(2)(e) or subsection 150(4)) that is filed or required to be filed
under this Part for the year, and
(b) in any other case, a
prescribed form containing prescribed information, that is filed with the
Minister.
Entitlement to CCTBs under the Act
[17]
As noted above, the
statutory provisions concerning CCTBs are contained in sections 122.6 to
122.64 of the Act. A person’s entitlement to CCTBs depends, in part, on
whether that person is considered to be an “eligible individual”.
[18]
Pursuant to paragraphs
(a) and (b), there are two essential requirements that must be satisfied in
order for a person to qualify as an eligible individual:
1.
First, the child must
reside with that person; and
2.
Second, the person must
be primarily responsible for the care and upbringing of that child.
Paragraphs (c) to (e) of the definition are not
relevant to this appeal, since the Minister does not take issue with the fact
that the Appellant satisfied those elements. Furthermore, the presumption in
paragraph (f) does not apply in the circumstances because the Appellant and Graham
both filed notices with respect to the Children.
(See Income Tax Regulations, C.R.C. 1978,
c.945, paragraph 6301(1)(d))
[19]
The Minister maintains
that the Appellant was not an “eligible individual” during the periods that the
Minister determined that Graham was the primary caregiver, since there can only
be one “eligible individual” for any given period. On this point, the Minister
relies on the Federal Court of Appeal decision in The Queen v. Marshall
et al, 96 DTC 6292, where the Court said:
This section of the Act contemplates only one parent being
an "eligible individual" for the purpose of allowing the benefits. It
makes no provision for prorating between two who claim to be eligible parents.
Only Parliament can provide for a prorating of benefits but it has not done so.
[20]
The Minister maintains
that in order for the Appellant to discharge her burden, the Appellant must
prove on a balance of probabilities that the Children resided with her during
each of the Disputed Periods.
Primary Care and the Prescribed Factors
[21]
In addition to the
Children residing with the Appellant, in order to be the “eligible individual”
the Appellant must also demonstrate that she is the parent who is primarily
responsible for the care and upbringing of that child during the particular
period. The factors that are to be considered in determining what constitutes
“care and upbringing” are set out at section 6302 of the Income Tax
Regulations (the “Regulations”), as follows:
Factors
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.
Income Tax Regulations, C.R.C. 1978, c.945
(See Tab 2 of the Respondent’s Authorities)
[22]
The Appellant has the
onus of demonstrating that she was primarily responsible for the care and
upbringing of the Children during the Disputed Periods. Lamarre-Proulx J. noted
in Robitaille v. The Queen:
According to the long-standing rules of evidence in tax
litigation, in order to obtain a reversal of this determination, the burden is
on the appellant to show that she was the one who primarily fulfilled the responsibility
for the care of the qualified dependent children. Her testimony was that the
responsibility was shared equally. In light of the lack of evidence and the
fact that the Court is bound by the decision of the Federal Court of Appeal,
cited supra, which states that only one parent may be an eligible individual,
the Minister's determination must be affirmed.
(See Robitaille v. The Queen, 1997 CarswellNat
2845, [1997] T.C.J. No. 6 at paragraph 15)
[23]
Counsel for the Minister
admits that when the evidence is reviewed with these factors in mind, it is
evident that both parents contributed to the children’s care and upbringing.
However, counsel for the Minister maintains that Graham was the parent who was primarily
responsible for the care and upbringing of the Children during the Disputed
Periods.
A. Appellant’s
position re the CCTBs
[24]
The Appellant says that
since the Children were born she was supporting them and that she is entitled
to claim the tax benefits for them. (Transcript page 11, lines 3-7)
[25]
The Appellant said:
“They have resided in both of our residences. It has been a 50-50 arrangement.”
(Transcript page 11, lines 11-12)
[26]
The Appellant filed a
consent order dated May 18, 2006 (Exhibit A-5) (Note: The Consent
Order said that the Appellant and Graham shall have joint custody of the child
(“Julia”). (Transcript page 18, lines 14-15)
[27]
The Appellant said:
… Graham and I
followed that custody order to the letter up until around late August. (2006)
(Transcript page 18, lines 18-19)
…
… Well, I received
the child tax benefit in February 2008, which is when the little chart that
they have says that I became an eligible individual. I received it from
February 2008 until July 2008. Apparently, nobody has received it from
July 2008 to December 2008, …
(Transcript page 57, lines 16-21)
[28]
The Appellant also said: “I have
never given up my role as the primary caregiver. Graham and I had separate
households but we were together as a family unit.” (Transcript page 26, lines
8-10)
[29]
The Appellant referred to the
Affidavit filed by Graham and said:
Okay,
since June 25th, 2007, that custody order has been followed to the
letter. The children spend a week at their dad's, they spend a week at my
house. To that I have a affidavit of Mr. Willis' that he admits that in
paragraph 8 of his affidavit that he -- I've got to find it, sorry. "Since
the Justice…." Sorry, paragraph 10:
"Since
the Justice Bracken order, Marilyn and I have continued exercising joint
custody and joint guardianship of both children. We have been sharing the
children's care roughly equally on a week on, week off basis."
That is since
June 25th, 2007
(Transcript page 51, lines 22-25 and page 52, lines 1-9)
[30]
During the hearing I asked
the Appellant:
JUSTICE: … What, in your view, is the fair answer to this?
A. I
would like -- well, I still believe the child tax benefit should be split
between both of us. But as of right now, I have only been considered eligible
since February of 2008, and a brief time for Julia while I was with Graham. …
JUSTICE: So
when you say split, do you mean –
A. Six
months to him, six months to me.
JUSTICE: For
both children?
A. Yes.
(Transcript page 60, lines 21-25 and page
61, lines 1-8)
B. The Minister’s Position re CCTBs
[31]
The Minister maintains that Graham
was the primary caregiver for Julia and Keltie for the following period:
|
|
Julia
|
Keltie
|
|
2005 base taxation year
|
July 1, 2006
June 30, 2007
|
Oct. 1, 2006
June 30 2007
|
|
Part of 2006 base taxation
year
|
July 1, 2007
Jan. 31, 2008
|
July 1, 2007
Jan. 31, 2008
|
[32]
Counsel for the Minister admitted
that the Minister had determined that Graham was the primary caregiver for the
first seven months of the 2006 base taxation year for both Children and that the
Appellant was the primary caregiver for five months of the 2006 base taxation year.
(Transcript page 70, lines 16‑22)
[33]
Counsel for the
Minister referred to a letter from the Canada Revenue Agency (the “CRA”)
(Exhibit R-2, Tab 4) and quoted from the letter:
A new notice
with respect to the 2006 base taxation year, i.e. benefits for the months of
July 2007 to March 2008, is being issued to you on the 20th of
March, 2008. This notice will advise you that you are the eligible individual
(primary caregiver) for Julia and Keltie for the months of February to July
2008 as it has been determined that you and the other caregiver share equally
in the primary care for the children. Therefore, unless we are advised that
there is a change in the circumstances, benefits will be paid to each parent on
a 6 month rotational cycle.
(Transcript page 74, lines 4-16)
[34]
In other words the Minister has
now agreed that the Appellant and Graham will share the CCTBs for the Children
– Graham for six months of the year and the Appellant for six months of the
year although Graham received seven months for the 2006 base taxation year and
the Appellant only received five months because there was a delay by the
Minister in reaching this conclusion.
[35]
It therefore appears that the
problem regarding the CCTBs for the 2006 base taxation year has been resolved.
I have concluded that I agree with the position of the Minister for the 2006
base taxation year.
[36]
I must review and deal with the
fact that Graham received all of the CCTBs for the 2005 base taxation year for
Julie and the CCTBs for 10 months for Keltie for the 2005 base taxation year.
[37]
The problem is difficult because
both the Appellant and Graham are claiming that they were the primary
caregivers for the Children for the 2005 and 2006 base taxation years.
[38]
After carefully reviewing the
evidence, I have concluded as follows:
Re:
2005 Base Taxation Year:
(a) The Appellant was the
primary caregiver of Julia from July 1, 2006 to August 31, 2006;
(b) The Appellant was the
primary caregiver of Keltie from August 1, 2006 to September 30, 2006;
(c) Graham was the primary
caregiver of Julia from September 1, 2006 to June 30, 2007;
(d) Graham was the primary
caregiver of Keltie from October 1, 2006 to June 30, 2007.
[39]
I have reached this conclusion for
the following reasons:
1. Parental
Leave: Graham stated in evidence that he had obtained parental leave from
BC Ferries from September 1, 2006 to June 15, 2007. (Transcript page 120,
lines 5 and 6) (Note: See also parental leave request, Exhibit R-2,
Tab 5)
Graham also said: “I was on
benefits (parental leave) through June 1st (2007)”. (Transcript page
121, line 16)
2. Commencing
in October 2006 the Appellant was working at BC Ferries on a full time basis –
8 hours per day – 21 days per month. (Transcript page 85, lines 8‑13)
3. The
Appellant paid Graham $600.00 per month as child support payments from October
2006 to April 18, 2007. (Transcript page 34, lines 14-15)
In
other words the Appellant was paying money to Graham to assist him financially
since he was on parental leave and he was spending money to support the
Children. (Transcript page 171, lines 5-6)
In
other words, Graham was on parental leave from September 1, 2006 to
June 15, 2007 and the Appellant was working full time (8 hours a day, 21
days per month from October 2006)
4. From
an examination of the sworn testimony of Graham, I have concluded that Graham
was the parent who was primarily responsible for arranging medical appointments
for the Children during the disputed periods. (Transcript page 184, lines
13-16) (See Regulation 6302(d) – page 8 above)
(Note: The Notices of Appeal only deal with the
2005 and 2006 base taxation years. However, I was advised by counsel for the
Minister that unless there is a change in the circumstances CCTBs will be paid
to each parent on a six month rotational cycle. The six month cycle will
continue from July 1, 2008, i.e. for the 2007 base taxation year.)
[40]
Before closing I wish
to state that I was very impressed with the comments made by the Appellant and
by Graham regarding their Children. The Appellant and Graham each gave me the
impression that they were compassionate, caring and supportive in every way
concerning the Children.
[41]
The appeal for the 2005
base taxation year is allowed, without costs, to give the Appellant CCTBs regarding
the First Daughter for the months of July and August 2006. The appeal filed for
the 2006 base taxation year is dismissed.
[42]
It is further ordered that the
filing fee of $100.00 be refunded to the Appellant.
Signed at Vancouver, British Columbia, this 5th day of June 2009.
“L.M. Little”
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