Citation: 2007TCC263
Date: 20070502
Docket: 2006-3504(IT)I
BETWEEN:
TINA L. WALSH,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Webb J.
[1] This appeal relates
to the assessment of the Appellant on the basis that she received payments for
the Child Tax Benefit for the period from September 2005 to January 2006
inclusive when she ought not to have received these payments.
[2] Under the Income
Tax Act ("Act") the Child Tax Benefit amount is treated as
an overpayment of the person's liability under the Act and hence, if the
individual is eligible, such amount is paid to the eligible individual as a
refund of this overpayment. Under subsection 122.61(1) of the Act the
overpayment amount is calculated on a monthly basis. This subsection provides,
in part, as follows:
Where a person ... [has] filed a return of income for the year, an
overpayment on account of the person's liability under this Part for the year
is deemed to have arisen during a month in relation to which the year is the
base taxation year, equal to the amount determined by the formula
1/12 [(A - B) + C + M]
where
A is the total of
(a) the product obtained by multiplying
$1,090 by the number of qualified dependants in respect of whom the person was
an eligible individual at the beginning of the month, ...
[3] Because the
overpayment is deemed to have arisen during a month in respect of a person who was
an eligible individual in respect
of a qualified dependent at the beginning of the month, this requires a
determination of whether any particular person was an eligible individual at
the beginning of each month in respect of that qualified dependent. As a
result, it does not necessary follow that because one particular person was the
eligible individual in respect of a qualified dependent at the beginning of a
particular month, that the same person would then be the eligible individual at
the beginning of the following month in respect of that qualified dependent.
The definition of "eligible individual" in section 122.6
provides that:
"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,
...
and for the purposes of this definition,
(f) where a 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 (f) does not apply in prescribed circumstances, and
(h) prescribed factors shall be
considered in determining what constitutes care and upbringing;
[4] In this particular
case there is no dispute that the Appellant is the female parent of the child
in question. The main issue in this case is whether or not the Appellant was
the parent who primarily fulfilled, at the beginning of each month during the
period in question, the responsibility for the care and upbringing of the child
in question.
[5] In the Reply to the
Notice of Appeal filed by the Respondent one of the assumptions that was made
was that the child in question spent the same amount of time with both the
Appellant and the child's father, Daniel Park. Another assumption that was made
was that the Appellant and Daniel Park had joint custody of the child.
[6] In light of these
assumptions, the first issue that had to be determined was whether or not the
presumption in paragraph (f) of the definition of
"eligible individual" was applicable in this case. The
prescribed circumstances in which the presumption would not be applicable are
set out in section 6301 of the Income Tax Regulations ("Regulations")
and include, as one of these circumstances, the situation where "more than
one notice is filed with the Minister under subsection 122.62(l) of the Act
in respect of the same qualified dependent who resides with each of the persons
filing the notices if such persons live at different locations".
[7] The determination
of whether the presumption is applicable is, in my opinion, directly related to
the question of who will have the onus of proof in this particular case. If the
Appellant is presumed to be the parent who primarily fulfills the
responsibility for the care and upbringing of the qualified dependant, then the
Appellant should not have the onus of proving what she is already presumed to
be. In other words, if the presumption is applicable, then the onus of proof
would shift to the Respondent who would then be challenging the validity of the
presumption. It should be noted that paragraph (f) of the definition of eligible individual
provides that "the parent
who primarily fulfils the responsibility for the care and upbringing of the qualified
dependant is
presumed to be the female parent" and does not provide that this
parent is deemed to be the female parent (emphasis added). This is a
presumption and not a deeming rule. If the presumption is applicable then it
would be open for the Respondent to lead evidence to rebut the presumption but
the onus of proof would then be on the Respondent.
[8] In this particular
case the Respondent led evidence to establish that more than one notice had
been filed with the Minister under subsection 122.62 of the Act for the
period in question and therefore the circumstance described in paragraph (d)
of section 6301 of the Regulations was applicable. As a result the
presumption in paragraph (f) was not applicable and since the Appellant
was challenging the assessment against her in relation to the overpayment of a
Child Tax Benefit, the onus of proof then rested with the Appellant to
establish, on the balance of probabilities, that during the period in question
she was the parent who primarily fulfilled the responsibility for the care and
upbringing of the qualified dependant.
[9] The Appellant testified
that for the two years immediately prior to August 2005 she did not have
any contact with the qualified dependant in this case. The Order of the Supreme
Court of Newfoundland and Labrador, Trial Division, dated July 20, 2004
was introduced as an Exhibit. Paragraph 1 of this Order provided that Daniel Park
would "have custody and care of" the qualified dependant in this case
and that access to the Appellant would be "on a supervised basis with the
intervention of Family Justice Services Western". The Order also provided
that "the commencement of the supervised access [was] to be determined by
the [Family Justice Services Western]".
[10] The Order also provided
that the mother would not initiate contact with the qualified dependant in this
case however the qualified dependant could initiate contact with the Appellant
and "at least the initial contact was to be supervised by a person
designated by the Court".
[11] As a result the Appellant
in this case had the difficult task of establishing that she went from not
having any contact with her daughter for two years to being the parent
primarily responsible for her care and upbringing as soon as contact was re-established.
In my opinion the Appellant has failed to establish on the balance of
probabilities that during the period in question she was at the beginning of
any of these months the parent who was primarily responsible for the care and
upbringing of the qualified dependant in this case. This determination is only
made for the period in question. This does not mean that the Appellant may not
be the person who is primarily responsible for the care and upbringing of the
child today, but for the period in question she was unable to establish on the
balance of probabilities that she was the parent who was primarily responsible
for the care and upbringing of the qualified dependant.
[12] Both the Appellant
and Daniel Park testified in this matter. Both parties were consistent in
testifying that at the beginning of the period in question (during August and
September 2005) the Appellant was re-establishing contact with the qualified
dependant in this case. It was also confirmed, that during the period in
question, the qualified dependant was spending more time with the Appellant
than she had in the two years preceding the period in question. The qualified
dependant had started to alternate weeks, one week with one parent and the other
week with the other parent and the Appellant testified that she was even
spending more time with her than the qualified dependant was spending with
Daniel Park. Each parent testified that they supervised the daily activities
and needs of the qualified dependant, they maintained a secure environment in
which the qualified dependant resided, they arranged for and transported the
qualified dependant to medical care at regular intervals and as required, they
arranged for and transported the qualified dependant to educational, recreational,
athletic or similar activities of the qualified dependant, they attended to the
needs of the qualified dependant when the qualified dependant was ill, or
otherwise in need, they attended to hygienic needs of the qualified dependant
and they provided, generally, guidance and companionship to the qualified
dependant. Daniel Park also testified that his common‑law spouse, Lisa
Miles, would go shopping with the qualified dependant. The qualified dependant
was 14 years of age in September 2005.
[13] One of the factors
that is listed in section 6302 of the Regulations is the existence of a
Court Order in respect of the qualified dependant that is valid in the
jurisdiction in which the qualified dependant resides.
[14] In this particular
case, the Order of the Supreme Court of Newfoundland and Labrador, Trial
Division dated July 20, 2004 was introduced as an Exhibit and, as noted above,
provided that Daniel Park had custody and care of the qualified dependant. The
Appellant testified that she felt that there was another Order that had changed
the custody rights from that as set out in the 2004 Order. However the only
other Order that was introduced into evidence was an Order dated July 11, 2006
(after the period in question). This Order did grant joint custody of the
qualified dependant to both parents.
[15] The Appellant did
not call the qualified dependant as a witness. As the qualified dependant would
now be 15 years of age, the qualified dependant could have helped in the
determination of which one of her two parents was primarily responsible for her
care and upbringing during the period in question. The Appellant, however, did
not wish to bring her into the middle of this matter. At one point, the
Appellant had indicated that she would rather lose the case than bring her
daughter into what is essentially a dispute between the Appellant and her ex‑husband.
Without the testimony of the qualified dependant the Appellant has
unfortunately failed to establish on the balance of probabilities that she was
the parent who was primarily responsible for the care and upbringing of the
qualified dependant during the period in question.
[16] There is one further
matter that should be addressed.
[17] In the Order of the
Supreme Court of Newfoundland and Labrador, Trial Division dated July 11, 2006, it was
ordered that the father would assign all rights to the "Child Tax Credit"
to the mother. Under the Act, the person who is entitled to the Child
Tax Benefit amount is the person who is the eligible individual in respect of
the qualified dependant at the beginning of the month. The definition of
eligible individual does not provide for the assignment of the deemed
overpayment of tax from one person to another. The definition of eligible
individual is not based on any agreement between the parties but rather on
which of the two parties satisfies the tests as set out in that section, one of
which is the determination of the parent who primarily fulfills the
responsibility for the care and upbringing of the qualified dependant based on
the prescribed factors as set out in section 6302 of the Regulations.
The reference to the existence of a Court Order as one of the prescribed
factors is in relation to the existence of a Court Order in respect of the
qualified dependant not a Court Order in respect of the Child Tax Benefit.
[18] As well, section 67
of the Financial Administration Act provides that a Crown debt is not
assignable. As a Child Tax Benefit is, for purposes of the Act, an
overpayment of tax and hence a liability of the Crown to the eligible
individual, it would be a Crown debt and would not be assignable. The question
of which person is entitled to the Child Tax Benefit amount is to be determined
under the Act not by agreement between the parties.
[19] In the Tax Rebate
Discounting Act, subsection 2(2) provides for the acquisition by a person
of a tax refund from another person. This subsection provides as follows:
(2) For the purposes of this Act, a
person acquires a right to a refund of tax where that person, as between himself
and another person, acquires a right to a refund of tax or to an amount equal
to the amount of a refund of tax, notwithstanding that, by virtue of section 67
of the Financial Administration Act or any provision of any other Act of
Parliament or of the legislature of a province, the refund of tax is not
assignable.
(emphasis
added)
[20] Since, however, this
right is only recognized for the purposes of the Tax Rebate Discounting
Act, it does not assist a person who is claiming a right to a Child Tax Benefit
amount under the Act.
[21] The Appellant's
appeal in this matter is dismissed, without costs.
Signed at Halifax, Nova Scotia, this 2nd day of May 2007.
"Wyman W. Webb"
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