Citation: 2006TCC697
Date: 20061229
Docket: 2006-320(IT)I
BETWEEN:
SUSAN KERVIN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
O'Connor, J.
[1] The basic facts and
issues in this appeal are set out in the following paragraphs of the Reply to
the Notice of Appeal:
5. In filing her income tax return for the 2001, 2002 and 2003
taxation years, the Appellant indicated her marital status as “separated”.
6. During the period July 2002 to July 2003, the Appellant
received annual CTB [“Child Tax Benefit”] in the amount of $2,110.25, with
respect to the 2001 “base taxation year”.
7. During the period July 2003 to June, 2004 the Appellant
received CTB in the amount of $3,237.75 with respect to the 2002 “base taxation
year” and during the period of July 2003 to April 2004 received GSTC [“Goods
and Services Tax Credit”] in the amount of $660.00 with respect to the 2002
taxation year.
8. During the period July 2004 to October 2004, the Appellant
received CTB in the amount of $491.94 with respect to the 2003 “base taxation
year” and GSTC in the amount of $220.41 with respect to the 2003 taxation year.
9. Pursuant to a letter from CRA [“Canadian Revenue Agency”]
dated October 29, 2004 it was determined that the Appellant was not eligible
for the CTB and GSTC for the period under review.
10. By Notices of Redetermination dated November 19, 2004, the
Minister advised the Appellant that a revised CTB had been calculated in regard
to the 2001 'base taxation year' that resulted in an overpayment of $2,110.25
as referred to in paragraph 6 herein.
11. By Notices of Redetermination dated November 19, 2004 for
CTB and November 26, 2004 for GSTC, the Minister informed the Appellant that
with respect to the 2002 “base taxation year”, and 2002 taxation year it had
been re‑determined that the amount of CTB and GSTC she had received in
regard to the said “base taxation year” and taxation year have been overpaid by
the amounts of $3,237.75 and $330.00 respectively as referred in paragraph 7
herein.
12. By Notice of Redetermination dated November 19, 2004 for CTB
and November 26, 2004 for GSTC, the Minister informed the Appellant that with
respect to the 2003 “base taxation year”, and 2003 taxation year it had been re‑determined
that the amount of CTB and GSTC she had received in regard to the said “base
taxation year” and taxation year have been overpaid by the amounts of $491.94
and $85.00 respectively as referred in paragraph 8 herein.
13. The Appellant served on the Minister a Notice of Objection
dated December 7, 2004 in regards to the Notices referred to in paragraphs 10,
11 and 12 herein.
14. By letter dated October 20, 2005, the Minister advised the
Appellant that the Notices of Redetermination as referred to in paragraphs 10,
11 and 12 herein had been confirmed in accordance with the relevant sections of
the Income Tax Act (the “Act”).
15. In so redetermining the Appellant's CTB for the 2001, 2002
and 2003 “base taxation years” and GSTC for the 2002 and 2003 taxation years,
the Minister relied on the following assumptions of fact:
a) at all material times, the Appellant and Kevin Arthur
Kervin (the “Former Spouse”) were parents of two children namely Jordan Francis
Kervin born September 20, 1985 and Tyler Ross Kervin born February 26, 1991
(the “Children”);
b) the Children referred to in subparagraph 15(a) herein were
eligible for purposes of receiving the CTB and GSTC;
c) on or about August 26, 2001 the Appellant left the
matrimonial home that was located at 28 Mason Crt, Guelph, Ontario;
d) the Children remained at the matrimonial home with the
Former Spouse following the Appellant’s departure from the said residence;
e) the Children spent the majority of time living with
the Former Spouse but did stay with the Appellant on some weekends and
occasionally during the week;
f) the Appellant was responsible for some aspects of the
Children’s care and upbringing including bringing them to dental and doctor
appointments;
g) Jordan F. Kervin turned 18 September 2003 and was therefore
no longer eligible for the CTB effective the following month;
h) in June 2004, Jordan F. Kervin moved in with the Appellant
but Tyler R. Kervin continued to reside with the Former Spouse, and
i) the Appellant did not move back into the matrimonial home
at any time after August 2001.
B.
ISSUES TO BE DECIDED
16. The issues are whether the Minister has properly determined
that the Appellant is not entitled to any CTB with respect to the 2001, 2002
and 2003 “base taxation years” and GSTC in excess of the amounts [redetermined
by the Minester]
C.
STATUTORY PROVISIONS, GROUNDS RELIED ON AND RELIEF SOUGHT
17. He relies on sections 122.6 and 122.61, and subsections
122.5(1) and 122.5(3) of the “Act”.
18. He submits that the Appellant is not eligible to receive the
CTB for the period in dispute, namely July 2002 to October 2004, as the “qualified
dependants”, namely the Children lived with the Former Spouse as of August 2001
and therefore the Appellant was not an “eligible individual” within the meaning
of the said term as defined in paragraph (a) per section 122.6 of the Act
as she did not reside with the “qualified dependants” and therefore the
Appellant is not eligible for the CTB as computed in accordance with section
122.61 of the Act for the Children with respect to the said
period in regard to the 2001, 2002, and 2003 “base taxation years” as indicated
in the CTB Notices of Redetermination dated November 19, 2004.
19. He further submits that the Appellant is not eligible to
receive the GSTC for the period in dispute, namely July 2003 to October 2004,
as the “qualified dependants”, namely the Children lived with the Former Spouse
as of August 2001 and therefore the Appellant was not an “eligible individual”
within the meaning of the said term as defined section 122.5 of the Act,
as she did not reside with the “qualified dependants” and therefore the
Appellant is not eligible for the GSTC as computed in accordance with
subsection 122.5(3) of the Act for the Children with respect to the said
period in regard to the 2002 and 2003 taxation years as indicated in the GSTC
Notices of Redetermination dated November 26, 2004.
[2] The Appellant
testified further as follows:
- that
she was a factory worker whose income levels were low enough to qualify her for
the CTB and the GSTC;
- that
the matrimonial home referred to in paragraph 15(c) of the Reply was
jointly owned by the Appellant and her Former Spouse and upon their divorce which
became effective 31 days after May 27, 2005 the said home was settled upon him.
- that
the amount of time she spent with the children on matters dealing with health,
dental problems, athletics, social events, school, meals and other matters was
significant and on occasion the Children slept and stayed over with the
Appellant in her separate residence which was not far from the matrimonial
home;
-
that
she had difficulty finding appropriate housing for herself;
-
that
the mental and physical difficulties she was having with the Former Spouse were
such that she felt it preferable for the Childrens’ benefit if she moved out of
the matrimonial home and accordingly she did;
-
that
she kept a detailed log covering most of the days from February 7, 2002 to June
3, 2002 (Exhibit A-3) detailing her activities with the Children;
-
she
gave further detail of her actual activities and involvement with the Children
in an overview of what was happening (Exhibit A-4);
-
in
Exhibit A-2 signed sometime shortly after June 25, 2004 and addressed “To Whom It
May Concern” the Appellant stated as follows:
I spoke to Tara Hastoo from your Toronto office on June 25, 2004 expressing my
concerns about this review. I had called in 2002 regarding my eligibility to
the Child Tax Credit. I believe I had filed a similar questionnaire at that
time and there have been no changes since then except my oldest son no longer
qualifies for the Tax Credit. I was to advise your office if there were
changes. The following is a summary to your question in Part 1 of your review.
Since August 2001, my children and I have
had no specific schedule as far as living arrangements. I have repeatedly tried
to have an agreement drafted regarding Kevin’s responsibilities through the
courts but he would not cooperate. This matter is still ongoing and will be
presented in the courts again in September. I have been overseeing their
overall health and welfare even though they sleep at their father’s house. Jordan now resides with me full-time but is still
attending school on a part-time basis. Tyler sleeps at his fathers because it is near his school. I have not contested
this as to not disrupt Tyler’s lifestyle or take him out of the reach
of his closest friends. Kevin works long hours being absent from the home on
average 12 to 14 hours a day. My work schedule is weekend only. I maintain
a relationship with my children through the week along with ensuring they are
safe with their father during the weekends. This allows me to take them for
dental and medical appointments or any extracurricular activities they be
involved with.
I have spent many hours in emergency with
Tyler from injuries with sports. We have been
to Kitchener for MRI’s on account of his knee. I have
expressed my concerns with Kevin but he states that he doesn’t have the time to
attend to Tyler’s health. When Tyler and Jordan were
playing sports, I arranged with Kevin to transport them to and from the events.
I have been solely maintaining Tyler and
Jordan’s dental care. It’s been strongly advised that Tyler have braces to save his teeth so I’ve been saving the money from the Child
Tax Credit to invest in braces for him. Jordan also needs dental surgery. I have had to recently get Tyler’s health card and birth certificate replaced. The
health card was left with Tyler’s father but it was lost.
I volunteer at Tyler’s school and have maintained communication to ensure his grade are
maintained at a satisfactory level.
Please find copies of letters including:
Letter from Dr. Friars
Letter from Dr. White
Letter from College Avenue Public School
Copies of x-rays
Copy of Health Card
Estimate of Dental Surgery for Jordan
I have taken the initiative, at great
expense, to ensure my children are being looked after. Although I may not be
with my children 100% of the time, I go to extreme lengths to ensure they are
well cared for.
If you require any further information,
please do not hesitate to contact me.
[3] Further as appears
from Exhibit A-5, both the Appellant and the Former Spouse had applied for the
CTB and the GSTC.
[4] The Former Spouse was
present at the hearing but was excluded and did not testify.
Analysis
[5] The issues in this appeal are as stated
above. The Appellant to succeed must establish that she is the eligible
individual with respect to the Children for the period under review, it being
acknowledged that the Children were qualified dependants.
[6] The relevant portion of the definition of
eligible individual in section 122.6 of the Act reads:
In this subdivision,
"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,
...
[7] Sections 122.6 to 122.64 of the Act
were enacted in 1992 in order to consolidate the existing benefits available
with respect to certain persons. This benefit is payable in respect of “qualified
dependants”. A qualified dependant must be under 18 at the relevant time which
was indeed the case until the month following when Jordan turned 18 in September, 2003. The benefit is payable to an "eligible
individual". In order to qualify as an eligible individual, the individual
at that time must (a) reside with the qualified dependant; and (b) be the
parent who primarily fulfils the responsibility for the child's care and
upbringing. In this appeal, it is necessary that the Appellant demonstrate that
both of the above requirements have been met.
[8] Regulation 6302 sets forth the factors to
consider in determining the “eligible individual” it provides:
Factors
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.
[9] The provisions of the Act governing the GSTC are contained in section
122.5 and are explained as follows at pages 1765 and seq. in volume 4 of CCH
Canadian Tax Reporter:
As a consequence of the
introduction of the goods and services tax (GST), the former refundable federal
sales tax credit was replaced by the GST credit. As with the sales tax credit,
the GST tax credit is intended to alleviate the burden of the GST on lower income
taxpayers [ … ] The credit is claimed by checking the application box on the
front of the T1 form when filing the tax return for the year.
[ … ]
The GST credit is novel in its form
of payment. The credit is calculated on the basis of tax payable for a year and
then paid in quarterly instalments over the succeeding year, commencing in
July. For example, if a taxpayer has a GST credit calculated in respect of the
2001 income tax return, the taxpayer cannot use the credit to reduce 2001 taxes
but rather must accept payment of one-fourth of the credit in July and October
2002 and January and April 2003. Improperly paid credits will be recovered
under normal reassessment procedures for the year the credit was claimed. Under
subsection 160.1(1.1), both an individual and a qualified relation are jointly
and severally liable to repay any excess credit claimed.
[ … ]
Before July 2002, the GST credit
was computed on the basis of income and family information provided in the
previous year’s income tax return. The provision was amended, effective July
2002, to provide that the eligibility to the credit and the amount paid in each
quarter will reflect changes in family circumstances that occurred before the
end of the preceding quarter. Thus starting in July 2002, the eligibility for
the credit and the amount of the quarterly payment will reflect the taxpayer’s
family situation at the beginning of each quarter (e.g. whether the taxpayer
has a cohabiting spouse, minor child, etc. at that time). Under the former
rules, these factors were determined as of the end of the previous year.
[ … ]
Eligibility for the
goods and services (GST) tax credit. Subsection 122.5(3) provides that
an “eligible individual” is entitled to a tax credit in respect of the
individual, a “qualified relation” of the individual, a person in respect of
whom the individual claims an equivalent-to-married tax credit, and a
“qualified dependant” of the individual. The calculation of the credit is
outlined in the editorial comment at 19,346a.
Before July 2002, these definitions
were based on the individual’s status and relationship with such other persons
at the end of the previous taxation year. Starting in July 2002, the
definitions, which are outlined below, are based on the applicable status and
relationships at the beginning of each quarter, and more particularly, at the
beginning of a “specified month” for a taxation year. A specified month for a
taxation year is defined as July and October of the year following the taxation
year, and January and April of the second year following the taxation year
(subsection 122.5(4)).
Subsection 122.5(1) defines the
terms outlined above. An “eligible individual” in relation to a specified month
for a taxation year is an individual (other than a trust) who, at the beginning
of the specified month, is either 19 years of age or older, married or in a
common-law partnership, or the parent of a child.
A “qualified relation” is defined
as the individual’s spouse or common-law partner who, at the beginning of the
specified month, is cohabiting with the individual within the meaning assigned
in section 122.6 (child tax benefit). Section 122.6 defines a cohabiting spouse
as the individual’s spouse or common-law partner who at the time has not been
living separate and apart from the individual for 90 days or more.
A “qualified dependant” is defined
as a person who at the beginning of the specified month is a child of the
individual or a person who is dependant for support upon the individual or the
individual’s cohabiting spouse or common-law partner, who resides with the
individual, and who is under the age of 19 years. A person is not considered to
be a qualified dependant if that person is an eligible individual or a
qualified relation of any individual.
[ … ]
Under subsection 122.5(5), where an
individual has a qualified relation in respect of a specified month, only one
of the two persons may claim the credit for the month (the person claiming the
credit may however claim an amount in respect of the qualified relation).
Beginning in July 2002, if both such individuals attempt to claim the credit,
the Minister will designate which person is the eligible individual in relation
to the specified month.
[ … ]
Subsection 122.5(6) effectively
provides that only one individual may claim a person as a qualified dependant
in relation to a specified month. In particular, two or more individuals who
would otherwise be eligible to claim the person as a qualified dependant must
agree as to who will claim the person as a qualified dependant for the month.
If the individuals fail to make such an agreement, the person will be the
qualified dependant of the individual who is entitled to the Canada Child Tax
Benefit (CCTB) in respect of the person. In any other case, the Minister will
designate which individual may include the person as a qualified dependant.
[10] As can be seen the
conditions for the CTB and the GSTC are very similar and if two individuals are
entitled, such as a husband and wife they can agree on the one to receive the
GSTC but failing such an agreement the one who is entitled to the CTB will also
be entitled to the GSTC.
[11] Extensive testimony
was heard with respect to the Appellant's attention to the Children relative to
schools, pharmacies, medical and dental appointments and many other matters
related to their care. However, it is clear from all of the testimony that the Children
did not reside with the Appellant but rather mostly with the Former Spouse
during the relevant period.
[12] As stated by Bonner
J. in S.R. v. the Queen, Docket: 2003-602(IT)I:
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.
[13] This appeal is
quite similar to Matte v. Canada, [2001] T.C.J. No. 886 where
Rowe D.T.C.J. relied on another similar case Piorkowski v. The Queen,
[2000] 2 C.T.C. 2308. In Pirokowski, Dussault, T.C.J. stated at page 2
as follows:
28. I am faced
here with two parties, the mother of the children on the one hand and their
father (and his new spouse) on the other, who undoubtedly did their best to
give their utmost attention to the care of the children and to be involved in
the upbringing in a difficult joint custody situation. Each provided attention,
each participated, and each got involved in his or her own way and according to
his or her own means.
29. Where the
evidence taken as a whole does not really tip the scales one way or another in
any significant manner, one would want to find a solution that would be in line
with the wish of the parties to share the custody of their children on an equal
basis, which is what was essentially agreed to and adhered to in the present
case.
30. Unfortunately,
except where there is an agreement between the interested parties to share the
child tax benefit on a six-month rotational basis, an arrangement accepted as
an administrative practice by Revenue Canada, it is not possible to divide the
benefit between the parents as was decided by the Federal Court of Appeal in R.
v. Marshall, [1996] 2 C.T.C. 92.
[14] On the facts in Piorkowski,
Dussault, T.C.J. found that:
31. In light of
the factors to be considered, which was based on care, attention, participation
and involvement, and in view of the evidence adduced in the present case, I
must conclude that the appellant has brought insufficient evidence to
demonstrate, on a balance of probabilities, that she has satisfied the
condition set out in paragraph (b) of the definition of 'eligible individual'
in section 122.6 of the Act, namely that she was, during the periods of issue,
the parent who primarily fulfilled the responsibility for the care and
upbringing of the two children.
[15] Dussault T.C.J.
went on to analyze all the evidence, found that both parents contributed
significantly but, left with the task of picking one or the other as being the
primary caregiver during the period in question relied on the determination
made by the CRA.
[16] In this appeal, after considering all the evidence, I have not been convinced that the decision
of CRA was incorrect. More particularly the Appellant has not refuted the
assumptions of the Minister which are therefore presumed to be correct.
[17] As mentioned there
are two conditions for entitlement, one being residence with the qualified
dependant and the other being the primary caregiver. Although the Appellant
contributed significantly to the proper upbringing of the Children, they did
not reside with her. It may be possible in certain circumstances to consider
the Appellant as the primary caregiver but even if this is so the residence
requirement was not met and consequently the Appellant is not the eligible
individual. Consequently, the appeal is dismissed and the Appellant is obliged
to remit to the Minister the overpayments she has received as set forth below:
|
Period
|
Base taxation year /
taxation year
|
CTB paid
|
CTB redetermined
|
GSTC paid
|
GSTC reassessed
|
|
July 2002–July 2003
|
2001
|
$2,110.25
|
Nil
|
N/A
|
N/A
|
|
July 2003-June 2004
-April 2004
(GSTC)
|
2002
|
$3,237.75
|
Nil
|
$660
|
$330
|
|
July 2004-Oct 2004
|
2003
|
$491.94
|
Nil
|
$220.41
|
$85
|
Signed at Ottawa, Canada, this 29th day of December, 2006.
"T. O'Connor"
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