Citation: 2008TCC183
Date: 20080509
Docket: 2007-2792(IT)I
BETWEEN:
NADINE W. GOODWIN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Angers J.
[1]
This is an appeal from
the confirmation of redeterminations respecting the Canada child tax benefit
(CCTB) made by the Minister of National Revenue (the Minister) on
March 21, 2007, in respect of the 2003, 2004 and 2005 base taxation years,
and also respecting the goods and services tax credit (GSTC) for the 2003, 2004
and 2005 taxation years.
[2]
The appellant and her
former spouse, Earl Allen, are the parents of Amy, born February 18, 1988 and
Cara, born August 13, 1991. At all material times, the appellant and Mr.
Allen were living separate and apart due to the breakdown of their marriage.
They were divorced on December 12, 1996.
[3]
The Minister reviewed
the appellant’s entitlement to the CCTB for the period from April 2005 to
September 2006 with regard to her two daughters. The Minister determined that
the appellant was not the eligible individual in respect of Cara during that
period and was not the eligible individual in respect of Amy during the period from
October 2005 to September 2006. The Minister assessed the appellant for an
amount of $6,875.48 representing the CCTB overpayment that she had received, as
follows:
|
(a)
base taxation year
2003: received from April 2005 to June 2005 inclusive
|
$ 1,305.50
|
|
(b) base
taxation year 2004: received from July 2005 to June 2006 inclusive
|
$ 4,770.00
|
|
(c) base
taxation year 2005: received from July 2006 to September 2006 inclusive
|
$ 799.98
|
|
Total overpayment
|
$ 6,875.48
|
[4]
The Minister also reviewed
the appellant’s entitlement to the GSTC for the period from April 2005 to
October 2006 with regard to both Amy and Cara. The Minister determined that the
appellant was not the eligible individual in respect of Cara during that period,
nor was she with respect to Amy during the period from October 2005 to October
2006. For the 2003, 2004 and 2005 taxation years, the Minister assessed an
amount of $700.68 for the recovery of the GSTC overpayment received by the
appellant during those periods, as follows:
|
(a) taxation year 2003: received April 2005
|
$ 114.30
|
|
(b) taxation year 2004:
received from July 2005 to June 2006
|
$ 409.38
|
|
(c) taxation year 2005:
received from July 2006 to October 2006
|
$ 177.00
|
|
Total overpayment
|
$ 700.68
|
[5]
It is admitted by the
respondent that the Minister erred in calculating the overpayment of both the
CCTB and the GSTC to the appellant. The Minister now accepts that the appellant
was the eligible individual with respect to Amy during the period from April
2005 to September 2005 and that the calculation of the overpayment should
reflect that fact. The amount of the overpayment therefore needs to be
corrected.
[6]
In addition, the
appellant now agrees that she did not reside with her child Cara during the
period from May 2006 to August 2006 and agrees to pay back the overpayment with
respect to that child for that period.
[7]
The issue to be decided
is whether the appellant was the eligible individual entitled to receive the
CCTB in respect of both children (the qualified dependants), that is, in
respect of Cara during the period from April 2005 to September 2006 and in
respect of Amy during the period from October 2005 to February 2006, the month
of Amy’s eighteenth birthday, and also whether the appellant was the eligible
individual entitled to receive the GSTC in respect of Cara during the period from
April 2005 to October 2006 and in respect of Amy during the period from October
2005 to October 2006.
[8]
The appellant’s former
spouse made applications for the CCTB and the GSTC for both children. In
correspondence with the Canada Revenue Agency (Exhibit R‑1), he indicates
that Cara had been living with him all of the time from March 1, 2005 to
the date of his application, which date was not specified but would have been
sometime in June or July 2006, and that Amy had been living with him all of the
time from September 1, 2005 to March 1, 2006, the month after her eighteenth
birthday. He also indicates that he had the day-to-day care of both children
and considered himself the person primarily responsible for their care and
upbringing for the periods they were with him.
[9]
Prior to the
above-mentioned applications being made, the former spouse had made an
application to vary an existing divorce order that contained custody, access
and support provisions. The variation order was signed on May 11, 2006.
The joint custody of both children was not changed but the provision now stated
that the former spouse was to have the day-to-day care of both Amy and Cara and
that the appellant was to have reasonable access on reasonable notice. The
order also forgives all child support arrears of the former spouse, which, at
June 1, 2006, amounted to $4,480, representing eight months at $560 per
month. The appellant gave her consent to the variation order.
[10]
The affidavit in
support of the variation order was signed by the former spouse on
February 27, 2006. He stated therein that the arrears were $2,240 and that
this was for the period from October 2005 up to and including February 2006.
The affidavit reads October and November “2006,” but is no doubt wrong and
should read “2005.” The former spouse stated that he was seeking forgiveness of
these arrears for the time that Amy and Cara resided with him. Yet in
paragraph 12 of his affidavit he stated that Amy had been residing with
him since September 2005 and Cara since March 2005. There is obviously an
inconsistency between his testimony and the contents of his affidavit.
[11]
The former spouse
testified that Amy moved in with him in September 2005 and that Cara would have
done so in May 2005. He made the application for a variation order because he
wanted to stop paying child support and be forgiven the arrears on the basis
that the children were living with him and that he had day-to-day care of them.
He does agree that Cara went back and forth between him and the appellant but said
that she was living with him more that with the appellant as of May 2005. At
the appellant’s request, he signed a statement (Exhibit A-2) on
December 15, 2006, indicating that the appellant was responsible for both
Amy and Cara until May 2006, that Cara began seeing and staying with him more in
March 2005, but that the appellant had been responsible for the upbringing
of both until May 2006. The former spouse now says that the statement about the
appellant being responsible for both Amy and Cara until May 2006 is incorrect.
He did not prepare the statement and, although he signed it, he states that at
the time he did not want to get involved.
[12]
Amy testified that she
lived with the appellant until September 2005. She then lived with her father
for one week but was with him a lot less after that as she spent time at her
boyfriend’s place. As for Cara, Amy testified that she had always been going
back and forth between both parents since January 2005.
[13]
The appellant’s
position is that she was the primary caregiver for both children until May 2006
when the variation order was signed. She agrees that her former spouse became
the primary caregiver at that time. She testified that prior to May 2006 Amy
only stayed with her father for a period of two weeks in February 2005 and that
Cara seldom saw her father until March 2005 when she lived with him for one
week. She went back to live with the appellant and afterwards apparently went back
and forth until May 2006 when she moved in with her father. Up to that point, it
was the appellant who bought her clothes and provided for her personal needs.
[14]
As to the reasons why
she gave her consent to the variation order, the appellant testified that she
signed the document thinking that it was to stop the maintenance payments for
Cara, who was staying more with her father at the time. She was not represented
by a lawyer and did not read the order before giving her consent and signing
it.
[15]
In order to qualify for
the CCTB and the GSTC, the appellant must establish on a balance of
probabilities that she satisfies all the requirements of the definition of
“eligible individual” found in section 122.6 of the Income Tax Act in
the case of the CCTB and section 122.5 in the case of the GSTC. Both
definitions require, among other things, that the appellant have resided with
the qualified dependants, namely, Cara and Amy. The only issue in this instance
is whether both Amy and Cara resided with the appellant during the relevant
months. The aforementioned definitions read as follows:
Section 122.6
"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 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,
Section 122.5
"eligible individual", in relation to a month
specified for a taxation year, means an individual (other than a trust) who
(a)
has, before the specified month, attained
the age of 19 years; or
(b)
was, at any time before the specified month,
(i) a parent who resided with their child, or
(ii) married or in a common-law partnership.
[16]
The issue of whether a
child resides with a parent has been discussed by this Court in cases similar
to this one. In S. R. v. The Queen, 2003 TCC 649, Mr. Justice
Bonner wrote at paragraph 12:
The word "reside" with as used in the section 122.6
definition of the term "eligible individual" must be construed in a
manner which reflects the purpose of the legislation. That legislation was
intended to implement the child tax benefit. That benefit was introduced in
1993 with a view to providing a single nontaxable monthly payment to the custodial
parent of a child. That payment was intended to benefit the child by providing
funds to the parent who primarily fulfilled the responsibility for the care and
upbringing of the child. The threshold test is whether the child resides with
the parent. Physical presence of the child as a visitor in the residence of a
parent does not satisfy the statutory requirement. The word
"resident" as used in s. 122.6 connotes a settled and usual abode. .
. .
[17]
Mr. Justice Dussault
wrote the following in Lapierre v. The Queen, 2005 TCC 720:
. . . All things considered, residence implies a
certain constancy, a certain regularity or else a certain permanence according
to a person’s usual lifestyle in relation to a given place and is to be
distinguished from what might be called visits or stays for specific purposes
or of a sporadic nature. When the Act sets as a condition to reside with
another person, I do not consider it appropriate to attribute to the verb “to
reside” a meaning which deviates from the concept of residence as it has been
developed by the courts. To reside with someone is to live or stay with someone
in a given place with a certain constancy, a certain regularity or else in an
habitual manner.
[18]
In this instance, the
appellant resided with both children and received maintenance payments for both
as a result of a joint custody order granted on December 12, 1996 and varied on
August 12, 2004. It is alleged by the respondent that in March 2005 both
children moved in with their father, making him the eligible individual. The
respondent now acknowledges that the appellant was the eligible individual for
Amy up to and including September 2005, but maintains her position that the
appellant ceased being the eligible individual with respect to Cara as of April
2005.
[19]
Of the two children,
Amy is the only one who testified. She testified that in September 2005 she
moved in with her father and that, from then on, she stayed with him but also
spent time at her boyfriend’s place. Although she may have been gone from home
a lot, as her father did mention, she did, in my opinion, move in with her
father in a permanent way and to such a degree that home for her became her
father’s residence sometime in September 2005. Although her testimony may have
been brief, she appeared very credible and clear as to when she actually moved
in with her father. I therefore conclude that the appellant was not the
eligible individual with respect to Amy from the month of October 2005 until
Amy’s eighteenth birthday, as regards the CCTB, and from the month of October 2005
as regards the GSTC.
[20]
All three witnesses
testified that Cara, as of March 2005, was going back and forth from one parent
to the other. The amount of time she may have spent at each place remained
somewhat nebulous and both parents have demonstrated their ability to fulfil
the responsibility for the care and upbringing of Cara. The issue, though, is
one of residence, for in order to be eligible for the CCTB and the GSTC, the
taxpayer has to reside with the child.
[21]
The appellant maintains
that Cara resided with her until April 2006, even though she acknowledges that
Cara was spending more time than usual at her father’s place. The former
spouse, on the other hand, maintains that Cara moved in with him on a full-time
basis in May 2005. In his application for the CCTB, he indicated that Cara had
lived with him all of the time from March 1, 2005. He also swore in his
affidavit in support of the variation order that Cara had been residing with
him since March 2005, but he indicated as well that he was seeking forgiveness
of the arrears for the time both children resided with him. The arrears he sought
to have forgiven were calculated as of October 2005; they consisted of only
half the maintenance amount for October and November 2005 and the full amount
for December 2005, January 2006 and February 2006. No explanations were given
as to why forgiveness of only half the amount was sought if both children
resided with him or why forgiveness of the maintenance for Cara did not go back
to March 2005. What is clear is that the arrears pertaining to Cara were
forgiven because Cara was residing with her father.
[22]
The appellant testified
that she did not read the variation order and that she thought its only purpose
was to stop the maintenance payments for Cara. The variation order does exactly
that and, in my opinion, the appellant was not unaware that the arrears went back
as far as October 2005, or at least she should have known that fact as she was
the person to whom the maintenance payments were being made. I therefore
conclude that in all probability, Cara began residing with her father on a more
permanent and regular basis sometime in September 2005, which thus justified
his request for forgiveness of the maintenance payments for Cara for October
2005. The appellant was therefore the eligible individual for Cara up to and
including September 2005 after which time which the former spouse became the
eligible individual with respect to Cara for both the CCTB and the GSTC.
[23]
The appeal is allowed in
part and the redeterminations are referred back to the Minister for
reconsideration and redetermination in accordance with these reasons.
Signed at Edmundston, New Brunswick, this 9th day of May 2008.
“François Angers”
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