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Citation: 2008TCC108
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Date: 20080304
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Dockets: 2006‑2492(IT)I
2006‑3334(IT)I
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BETWEEN:
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DANIEL BOURRET,
MARJORIE TALBOT
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Appellants,
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and
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HER MAJESTY THE QUEEN,
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Respondent,
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MARJORIE TALBOT,
DANIEL BOURRET,
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Third Parties.
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[OFFICIAL
ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Tardif J
[1] Before this Court are appeals with
regard to the Canada Child Tax Benefit (“the CCTB”) in which the
two parents of the three children concerned are the appellants.
[2] The appeal relates to the 2003, 2004
and 2005 base taxation years. The periods to which the benefits apply
are from July 1,
2004 to June 30, 2005 and from July 1, 2005 to June 30,
2006.
[3] Ms. Talbot initially received the benefits
during the period from July 2004 to June 2005 for the
2003 base taxation year, and during the period from July 2005
to June 2006 for the 2004 base taxation year.
[4] Starting on September 8, 2006, the
Minister of National Revenue (“the Minister”) stopped paying the benefits
owing, given the dispute between the parents with regard to eligibility to
receive the benefits.
[5] In the appeal brought by the female
appellant, Daniel Bourret expressed his intention to intervene. Following the
intervention, an order pursuant to section 174 of the Income Tax Act
(“the Act”) was issued, under which the two parents became
parties to the instant cases.
[6] First of all, I salute the wisdom of the Minister’s decision to stop the tax benefit payments on the basis of
the disagreement as to eligible parent status.
[7] CCTB benefits are payable to the eligible
parent who primarily fulfills the responsibility for the care, upbringing and
place of residence of the children concerned; in cases of joint custody, they
are payable to the parent identified in a written agreement or in an order
issued by the court of competent jurisdiction in the matter, namely, in the
province of Quebec, the Superior Court.
[8] In recent years there has been a marked
increase in the number of these cases, the effects of which are simply
disastrous both for the parents and, most importantly, for the children in
respect of whom these tax benefits are paid.
[9] In practical terms and in terms of
effectiveness, in the best interests of the children concerned, a great deal of
energy and resources could be saved and tension avoided if only all the
stakeholders worked together to set up a practice that would prevent any
misunderstanding in this regard while still respecting the provisions of
the Act.
[10] Indeed, when the Superior Court has before it a
case involving minor children that calls for an order for custody of the
children and possibly support, the parties usually come to an agreement on
these matters.
[11] Obviously this agreement provides for the
children’s place of residence, which, increasingly, is the residences of both
parents under a joint custody arrangement. Regarding support, as a rule, the
amount is determined on the basis of finding a balance between needs and the
ability to pay.
[12] Now, tax benefits are often a
significant financial factor; indeed, they are specifically designed to provide
financial support, to be a sort of financial contribution to help the parent or
parents who must assume responsibility for the children’s care and upbringing
in a context of their best interests.
[13] That said, it appears that the amount of tax
benefits is not taken into account in the process of setting the amount of
support, on the ground that the Superior Court does not have jurisdiction to
determine which of the two parents is the eligible parent within the
meaning of the Act.
[14] I find it regrettable that, because of certain
jurisdictional limitations, parents eligible for CCTB benefits must go through
further proceedings, most often detrimental to the restoration of ideally
harmonious relations in the best interests of the children for whom the parents
are financially responsible.
[15] In a recent decision, I wrote about the Superior
Court’s jurisdiction in this regard; my decision was upheld by the Federal
Court of Appeal in Laurin v. Canada, 2007 FCA 44,
[2007] F.C.J. No. 53.
[16] This case clearly illustrates the nature of the
problem. Indeed, in strictly economic terms, it could be advantageous for a
parent who is eligible to receive the tax benefits to waive them in favour of
the other parent, who does not meet the criteria set out in the Act,
since the former parent’s high income would have the effect of reducing the
amount of benefits payable to zero; in such a case, it is easy to understand
the generosity of the parent who is eligible under the Act toward
the non‑eligible parent.
[17] In practice, the Minister is often held
hostage by pettiness on the part of one parent or the other. I refer in
particular to the case in which one parent takes action in order to receive
benefits without the knowledge of the parent who is already receiving the
benefits.
[18] Following such action, changes may
occur with respect to the beneficiary. Unfortunately, these decisions are often
made on the basis of incomplete files or details, or often deliberate
misinformation, hence the difficulties in determining who is the eligible
parent.
[19] Such action is taken for all sorts of reasons
ranging from vindictiveness to pettiness, or on the advice of various
stakeholders, but rarely in the interests of the children. Sometimes these
decisions result in a claim or an assessment being issued to the parent who has
wrongfully received the benefits.
[20] Since these benefits very often provide
essential financial support, any such claim has consequences that are simply
disastrous, and—what is still more tragic— the entire situation has
repercussions or effects on the children, who are innocent victims.
[21] In the instant case, counsel for the female
appellant stated that the Superior Court systematically refused to intervene or
even to ratify any agreement with regard to eligibility for CCTB benefits, on
the ground of lack of jurisdiction.
[22] Indeed, the determination of eligibility for tax
benefits does not fall within the jurisdiction of the Superior Court;
essentially, it is within the purview of this Court, simply because of the tax
repercussions for one parent or the other.
[23] What we have here then is a situation where,
because of a lack of harmonization, the children are the ones who get the short
end of the stick in a financial support program that is often essential to
their well-being.
[24] In light of the situation, it appears to me that
the Minister should recognize the jurisdiction of the Superior Court in
this regard, since that Court has the jurisdiction, the expertise and the
resources to rule on any issues related to the interests and the well-being of
the children and, most importantly, is most capable of assuming the significant
responsibility of determining which of the parents is most qualified to fulfill
the responsibility for the care and upbringing of the children. For thousands
of family units, tax benefits constitute very meaningful supplementary income
that makes it possible to meet crucial needs.
[25] Since the amount of support is set on the basis
of a balance between the children’s needs and the ability to pay, I see no
reason why the amounts of CCTB benefits payable should not, just because of a
jurisdictional problem, form part of the available data analyzed in setting the
amount of support. Since the criteria and conditions taken into account in
determining eligibility for benefits are specific, all the stakeholders
involved at the time of separation could plan for it.
[26] In the instant case, I must determine which of
the two parents, to whom custody has been jointly granted, should receive
the CCTB benefits.
[27] One thing is obvious from the outset: the fact
that the court granted joint custody demonstrates that both parents were
sufficiently qualified and competent to assume the responsibility for the
well-being of the children subject to the joint custody arrangement.
[28] The evidence, consisting of the testimony of
both parents, enables me to find with certainty that both parents are
interested, concerned, serious and responsible with regard to their
responsibility for the well-being and upbringing of their three daughters.
[29] It seems clear that the father’s and the
mother’s roles are assumed quite differently. In other words, the overall aim
of each of the parents is the most ideal outcome and an exceptional future for
their children.
[30] In order to achieve the desired objective, the
parents may each have their own plan or strategy. When parents live together,
the discussions—or indeed the negotiations—most often result in a consensus,
and that is likely the best scenario.
[31] On the other hand, following separation,
reaching such a consensus obviously becomes more difficult and less realistic;
as a result, conflicts often arise.
[32] In those situations, does the Tax Court of
Canada have the background, the knowledge, the expertise and, most importantly,
the resources to determine that one parent’s approach is better than or
superior to the other, particularly when both parents are deeply concerned
about the well-being of their children, as in the instant case? I think not.
[33] In the case at bar, the parents have expressed
and shown a marked and keen interest in rather different ways. The Court must
determine which of the two parents is the eligible parent on the basis of
the following question:
Which of the two
primarily fulfills the responsibility for the care and upbringing of the children?
[34] In helping me to answer this question,
Parliament in its wisdom instructs that the criteria set out in
sections 6301 and 6302 of the Income Tax Regulations should be
taken into consideration:
NON-APPLICATION
OF PRESUMPTION
6301. (1)
For the purposes of paragraph (g) of the definition
"eligible individual" in section 122.6 of the Act, the presumption
referred to in paragraph (f) of that definition does not apply in the
circumstances where
(a) the female parent of the qualified
dependant declares in writing to the Minister that the male parent, with whom
she resides, is the parent of the qualified dependant who primarily fulfills
the responsibility for the care and upbringing of each of the qualified
dependants who reside with both parents;
(b) the female parent is a qualified dependant
of an eligible individual and each of them files a notice with the Minister
under subsection 122.62(1) of the Act in respect of the same qualified
dependant;
(c) there is more than one female parent of the
qualified dependant who resides with the qualified dependant and each female
parent files a notice with the Minister under subsection 122.62(1) of the Act
in respect of the qualified dependant; or
(d) more than one notice is filed with the
Minister under subsection 122.62(1) of the Act in respect of the same qualified
dependant who resides with each of the persons filing the notices if such
persons live at different locations.
(2) For greater certainty, a
person who files a notice referred to in paragraph (1)(b), (c) or
(d) includes a person who is not required under subsection 122.62(3) of
the Act to file such a notice.
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.
[35] As formally worded, the applicable
legislative provision is the following:
"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
fulfills 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 purposes of this definition,
(f) where the qualified dependant resides with the
dependant’s female parent, the parent who primarily fulfills 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;
[36] In the instant case, this Court reiterates that
the conduct of both parents is beyond reproach, given all the constraints
facing them in their respective settings as well as their professional
obligations—and taking for granted that perfection in this regard does not
exist.
[37] The parents, each in their own way and with very
different personalities, availability, constraints and professional
obligations, contribute to meeting the numerous needs of their three daughters.
[38] The female appellant is more disciplined, more
meticulous, more sensitive and perhaps more protective than the male appellant,
who, for his part, is more easygoing, less rigid and more tolerant. The children
have an absolute need for both approaches if they are to develop the balance
they will need in order to become mature, responsible adults.
[39] If the parties were hoping that I would grade
them individually on how well they assume their parental responsibilities, they
will be sorely disappointed: as far as I am concerned, the joint custody order
is irrefutable evidence that they both get very high marks.
[40] Nevertheless, I must make a
determination, basically in order to free up certain significant amounts
withheld as a result of the misunderstanding. To that end, I shall refer solely
to the parents’ approach at the time of the divorce proceedings.
[41] These mature, responsible adults discussed,
negotiated and reached an agreement, both being represented by counsel. The
outcome of that exercise was that the mother received the benefits for a time.
[42] According to the parents’ testimony, the matter
of the tax benefits was raised during those proceedings. The mother did not
agree to shared benefits, and the father has had to live with this ever since.
[43] In other words, the parents were both
represented by counsel and they both took part in negotiations that led to an
agreement.
[44] Although it is not written down or specifically
provided for anywhere, I have to believe that the amount of the tax benefits,
which represents a very high monthly income because there are
three children, was taken into account.
[45] For that reason and that reason alone, I find
that the mother was the eligible individual for the periods during which
the Minister did not pay the benefits.
[46] The appeal brought by the female appellant is
allowed, and the appeal brought by the male appellant is dismissed.
Signed at
Ottawa, Canada, this 4th day of March 2008.
Tardif J
Translation
certified true
on this
18th day of April 2008.
Stefan
Winfield, reviser
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