Citation: 2008TCC161
Date: 20080325
Docket: 2007-1092(IT)I
BETWEEN:
LUBOV SURIKOV,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Bowie
J.
[1] This appellant has
been advised by the Minister of National Revenue that she is indebted to Her
Majesty for overpayments of Canada Child Tax Benefit (CCTB), National Child
Benefit Supplement (NCBS), Goods and Services Tax Credit (GSTC) and Energy Cost
Benefit (ECB). By various notices sent to her she has been told that she must
repay certain amounts. Her position is that no such overpayments were made to
her, and she has come to this Court seeking relief to that effect. Her appea1s
to the Court were met by a preliminary objection brought by counsel for the
respondent, who took the position that the Court has no jurisdiction to
entertain appeals from any of these Notices.
[2] The notices sent by
the Minister to the Appellant claiming repayment of these amounts were entered
into evidence. The following table shows the amounts that the Minister claims
were overpaid.
|
Exhibit
|
Date
|
Benefit
|
Amount
|
Period of the
overpayment
|
|
A-3
|
October 20, 2006
|
CCTB
|
$921.00
|
October 2005 to June 2006
|
|
|
|
NCBS
|
786.79
|
October 2005 to June 2006
|
|
A-4
|
October 20, 2006
|
CCTB
|
313.74
|
October 2005 to June 2006
|
|
|
|
NCBS
|
268.47
|
October 2005 to June 2006
|
|
A-5
|
October 6, 2006
|
GSTC
|
170.25
|
October 2005 to April 2006
|
|
A-6
|
October 6, 2006
|
GSTC
|
116.00
|
July 2006 to October 2006
|
|
A-8
|
October 27, 2006
|
GSTC
|
283.00
|
July 2004 to June 2005
|
|
A-7
|
October 27, 2006
|
ECB
|
250.00
|
None stated
|
The
total of the amounts that the Minister seeks to recover from the appellant,
then is:
|
CCTB
& NCBS
|
$2,290.00
|
|
GSTC
|
569.25
|
|
ECB
|
250.00
|
|
Total
|
$3,109.25
|
The
CCTB and the NCBS are shown separately on Exhibits A-3 and A-4, but both are
computed under section 122.61 of the Income Tax Act (the Act).
For practical purposes, they are the same benefit and reference herein to
the CCTB includes the NCBS. Exhibits A-3 and A-4 are styled canada child tax benefit notice. A-7 is simply headed energy
cost benefit, and A-5, A-6 and A-8 are headed goods and services tax/harmonized sales tax (gst/hst) credit. A-4,
A-5, A-6 and A-8 all contain the
words “Your entitlement has been reviewed based on …”. A‑7 says
“Your eligibility for the Energy Cost Benefit (ECB) has been reviewed.” Nowhere
are the words “notice of determination” or “notice of assessment” used to
describe any of these documents, but each contains the words “This amount owing
was assessed under the Income Tax Act”. No particular provision of the Act
is mentioned in any of them, however.
jurisdiction
[3] At the beginning of
the hearing, counsel for the respondent sought to have me quash the appeals for
lack of jurisdiction in this Court to entertain them. He relies on the
decisions of the Federal Court of Appeal in Boucher v. Canada, and Neuhaus v. Canada. Those cases stand for the
proposition that a taxpayer whose dispute with the Minister is not as to the
amount of an assessment for income tax but as to whether that assessment has
been paid in part, by way of withholdings at source, cannot litigate that issue
in this Court. The jurisdiction given to this Court by Parliament is to hear
and determine disputes as to the correctness of assessments under the Act,
but not whether those assessments have been satisfied. The correctness of that
proposition is by no means in doubt, insofar as the context of those cases is
concerned. They do not deal with determinations of entitlement to GSTC and
CCTB, however.
[4] Counsel for the
respondent also referred me to three decisions of this Court dealing with
overpayments, actual or alleged, of CCTB. In Cheung v Canada, this Court was dealing with
a situation similar to the present case. There had been a change in the custody
of the child, with the result that the appellant was no longer entitled to
receive the CCTB payments as the eligible individual. The payments after the
date of that change were made to a bank account that was not hers, and it was
her position that she had not received them, and therefore was not required to
repay them. The judge dismissed the appeal, stating that the issue before him
was “ … strictly a collection matter …”.
He apparently was not referred to subsections 152(1.2), 160.1(1) and 160.1(3)
of the Act, all of which have a bearing on the issue. There are at least
four other cases
in which this Court has dealt with alleged overpayments of CCTB, but in none of
them is the jurisdictional issue discussed in any depth.
[5] The statutory scheme that
governs the determination and redetermination of entitlement to payment of CCTB
and GSTC is complex almost beyond belief. Certainly it would baffle any lay
taxpayer. The entitlement to CCTB and its computation are governed by sections
122.6 to 122.64 of the Act. The entitlement to GSTC and its computation
are governed by sections 122.5 and 122.51. For present purposes, it is
sufficient to know that in both these provisions the benefit conferred by the
legislation takes the form of a deemed payment, or in the case of the CCTB a
deemed overpayment, of tax by the taxpayer, entitling her to a refund. The ECB
is a one-time payment under the Energy Costs Assistance Measures Act (the ECAM Act).
It is payable to an individual who is entitled to receive the NCBS under
section 122.61 for the month of January 2006.
[6] More germane to the
immediate problem before me are paragraph 152(1)(b) and subsections
152(1.2), 160.1(1) and 160.1(3) of the Act, and section 4 of the ECAM
Act.
Income
Tax Act
152(1) The Minister shall, with all due
dispatch, examine a taxpayer’s return of income for a taxation year, assess the
tax for the year, the interest and penalties, if any, payable and determine
…
(b) the amount of tax, if any,
deemed by subsection 120(2) or
(2.2), 122.5(3), 122.51(2), 125.4(3), 125.5(3), 127.1(1), 127.41(3) or
210.2(3) or (4) to be paid on account of the taxpayer’s tax payable under
this Part for the year.
…
152(1.2) Paragraphs 56(1)(l) and 60(o),
this Division and Division J, as they relate to an assessment or a reassessment
and to assessing or reassessing tax, apply, with such modifications as the
circumstances require, to a determination or redetermination of an amount under
this Division or an amount deemed under section 122.61 or 126.1
to be an overpayment on account of a taxpayer’s liability under this Part,
except that …[the exceptions are not relevant]
160.1(1) Where at any time the Minister
determines that an amount has been refunded to a taxpayer for a taxation year
in excess of the amount to which the taxpayer was entitled as a refund under
this Act, the following rules apply:
(a) the excess shall be deemed
to be an amount that became payable by the taxpayer on the day on which the
amount was refunded; and
(b) the taxpayer shall pay to
the Receiver General interest at the prescribed rate on the excess (other than
any portion thereof that can reasonably be considered to arise as a consequence
of the operation of section 122.5 or 122.61) from the day it became payable to
the date of payment.
…
160.1(3) The Minister may at any time
assess a taxpayer in respect of any amount payable by the taxpayer because of
subsection 160.1(1) or
160.1(1.1) or for which the taxpayer is liable because of subsection 160.1(2.1)
or 160.1(2.2), and this Division applies, with such modifications as the
circumstances require, in respect of an assessment made under this section as
though it were made under section 152.
Energy Costs Assistance Measures Act
4. For the purposes of section 160.1
of the Income Tax Act, an amount paid to a person under section 2
or 3 is deemed to be an amount that has been refunded to the person as a
consequence of the operation of section 122.61 of that Act.
(emphasis added)
These
provisions have the following effect:
(i) Paragraph 152(1)(b)
requires the Minister to make a determination of the GSTC entitlement of the
taxpayer;
(ii) Subsection 152(1.2) makes the
provisions of Divisions I and J of Part I, of the Act that relate
to assessments, reassessments, objections, confirmations and appeals to this
Court applicable to both determinations and redeterminations of GSTC
entitlement made under paragraph 152(1)(b) and determinations and
redeterminations of CCTB entitlement;
(iii) Subsection 160.1(1) has the
effect of making a taxpayer liable to repay any amount that the Minister has
determined to be an overpayment of a refund, including an overpayment of GSTC
or CCTB;
(iv) Subsection 160.1(3) authorizes
the Minister to assess the taxpayer for any such overpayment, and it makes the
provisions of Division I of Part I relating to objections to assessments
applicable to any such assessment;
(v) Section 4 of the ECMA Act
has the same effect as 3 and 4 above in respect of an overpayment made under
that Act.
Although
subsection 160.1(3) does not specifically make the provisions of Division J,
which include the right to appeal to this Court following confirmation of an
assessment that has been objected to, applicable to an assessment under that
subsection, there can be no doubt that an appeal will lie under subsection
169(1). The wording of subsection 160.1(3) is not materially different from
that of subsection 160(2),
and it has never been doubted that a subsection 160(2) assessment may be
appealed to this Court.
[7] It is clear from the wording
of the various notices that I have referred to at paragraph 2 that the Minister
has made both a determination, or redetermination, and an assessment under
subsection 160.1(3) in respect of each of the amounts that he now seeks to
recover. If there were any doubt about that, it is dispelled by the wording of
the Minister’s letter to the appellant dated February 12, 2007 and its
enclosure styled notification of
confirmation by the minister of the same date. They read as follows:
LUBOV SURIKOV
11 BOUSTEAD
AVE
TORONTO ON
M6R 1Y7
Dear Madam:
Re: Objection to the Canada Child Tax Benefit and the Goods and
Services Tax Credit for the 2003, 2004 & 2005 years
As a result of
this review, we are confirming the notices of determination. The Minister’s decision
is stated in the attached Notice of Confirmation.
If you
disagree with the decision, you can file an appeal with the Tax Court of
Canada. We have attached information on how to proceed.
If you have
any questions concerning this letter you may call Diane A. LeBlanc at (705)
671-4257.
Yours
sincerely,
“Denis
Chretien”
Team Leader
Appeals Division
Enclosure
NOTIFICATION OF CONFIRMATION BY THE MINISTER
Your Notice of
Objection to the Canada Child Tax Benefit and Goods & Services Tax Credit
determinations for the 2003, 2004 and 2005 base years have been carefully
reviewed under subsection 165(3) of the Income Tax Act.
The Minister
of National Revenue has considered the reasons set out in your objection and
all the relevant facts. It is hereby confirmed that the determinations have
been made in accordance with the provisions of the Income Tax Act on the
basis that:
You did not
have a cohabiting spouse as defined under sections 122.5 of the Income Tax
Act and you were not the “eligible individual” who was responsible for the
care and upbringing of Michael as defined under sections 122.5 and 122.6 of the
Income Tax Act. Your Goods and Services tax credit and your Canada Child
tax benefit have been calculated according to subsections 122.5(3) and 122.61(1).
Dated at Sudbury this 12th day of February,
2007
TO: LUBOV
SURIKOV Minister of National Revenue
11 BOUSTEAD AVE
TORONTO ON M6R 1Y7 Per: “D.Chretien
Team
Leader
Appeals
Division
Sudbury
Tax Services
Canada
Revenue Agency
Although
I do not have the notice of objection before me, it is clear from these
documents that the appellant did serve one on the Minister. She has therefore
satisfied the condition precedent to launching these appeals under section 169
of the Act, and her appeals are properly before the Court.
the
redeterminations and assessments
[8] I turn now to
consider whether the Minister correctly redetermined the appellant’s
entitlements and correctly assessed her in respect of overpayments. This
requires an examination of the facts.
[9] The appellant and
Alexandr Surikov were married, and they had one child prior to their separation
on September 16, 2002. From that date until May 11, 2005 their son lived only
with the appellant, and she was his primary caregiver. From May 12, 2005
onward their son lived with Alexandr, and he was the primary caregiver. The
payments to the appellant for CCTB were credited to her bank account by direct
deposit, up to and including the payment made on August 19, 2005. The September
2005 payment, and all subsequent payments, were paid by direct deposit to
Alexandr’s bank account. These facts are agreed to in the pleadings, and so are
not in dispute.
[10] The evidence was that
when Alexandr assumed custody of their son in May 2005 she advised the
officials of the Canada Revenue Agency (CRA), both by telephone and in writing,
of that fact. The respondent’s position is that CRA was first told of the
change in the primary caregiver by a letter from the appellant dated July 31,
2006. The determinations and assessments against her are based upon the
assumption that the payments deposited to Alexandr’s account between October 2005
and June 2006 were in fact payments made to the appellant. Among the facts
assumed by the Minister, according to subparagraphs 19(f) and (g) of the Reply
to the Notice of Appeal, are these:
(f) the
appellant had access, either directly or indirectly, to the CCTB payments
deposited into the bank account of Alexandr;
(g) whether
or not the CCTB was paid to, or received by, the appellant directly or
indirectly, the money was paid for the benefit of Michael and Michael did so
receive such a benefit;
The
first of these assertions is simply not correct, on the basis of the evidence
before me. The second is no doubt correct, but it is totally irrelevant. I
accept completely the evidence that she had no access to Alexandr’s bank
account, and also the evidence that she notified CRA of the change of primary
caregiver immediately after May 12, 2005. Subsection 122.62(4) of the Act
requires this notice, but it need not be given in writing:
(4) Where during a particular month a person ceases to be an
eligible individual in respect of a particular qualified dependant (otherwise
than because of the qualified dependant attaining the age of 18 years), the
person shall notify the Minister of that fact before the end of the first
month following the particular month. (emphasis added)
I
am satisfied that the appellant complied with that requirement. Her evidence to
that effect is consistent with the fact that CRA stopped the payments to her
account and started the payments to Alexandr’s account in September. The
appellant also testified that when she telephoned CRA she was told that she
would continue to receive the payments for three months, and that she should
give these payments to Alexandr, which she did. Her evidence is corroborated by
Alexandr, and I accept it entirely.
[11] The appellant did
exactly what she was required to do upon the change of primary caregiver, and
exactly what she was told to do by the CRA official to whom she spoke. She did
not receive any payment after August 2005; she received the June, July and
August payments only as agent for Alexandr, on the instructions given to her,
and she paid those to him as she was told to do. She therefore received no
overpayment of CCTB and the determinations and assessments of CCTB and NCBS in
the total amount of $2,290.00, notices of which are dated October 20, 2006,
will be vacated.
[12] The payments for GSTC
and for ECB were paid to the appellant by cheque. Alexandr testified that she
gave the ECB payment of $250.00 to him. As he was the individual entitled to
the January 2006 CCTB payment, he was also entitled to receive the ECB payment.
While the evidence is equivocal, it seems more probable than not that the
appellant was acting as agent in respect of that payment in exactly the same
way as for the three CCTB payments, and so the determination and assessment for
ECB in the amount of $250.00, notice of which is dated October 27, 2006 will also
be vacated.
[13] The GSTC credit is
applied for in conjunction with the return of income for the year, and is paid
by cheque four times during the 12-month-period beginning in July of the
following year. I do not have the appellant’s returns of income before me, or
the applications for the GSTC that she filed with them. Nor is there any cogent
evidence as to the basis on which she made the claims. I must therefore take
the Minister’s assumptions as to those facts as being correct. On that basis
the Minister’s determinations and assessments for the 2004 and 2005 taxation
years, the notices of which are Exhibits A-5 and A-6, both dated October 6,
2006, are correct. Subsections 160.1(1) and (3) permit the Minister to recover
these overpayments by way of assessments. The appeals from the GSTC determinations
and assessments for 2004 and 2005 will therefore be dismissed.
[14] The respondent
concedes at paragraph 28 of the Reply to the Notice of Appeal that the
appellant’s GSTC entitlement for the 2003 taxation year should have been, but
was not, determined on the basis that the appellant was separated, and that
Michael Surikov was her qualified dependant within the meaning of subsection
122.51 of the Act in respect of the July 2004 and the October 2004
payments, as he lived with her throughout that year. The appeal in respect of the
GSTC determination and assessment for the 2003 taxation year will therefore be
allowed and the determination will be referred back to the Minister for reconsideration
and redetermination. The assessment will be quashed, but without prejudice to
the Minister’s right to reassess, if necessary, as a result of that
redetermination.
Signed at Ottawa, Canada, this 25th
day of March, 2008.
“E.A. Bowie”
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