Citation: 2006TCC58
Date: 20060126
Docket: 2005-2488(IT)I
BETWEEN:
SUZANNE MOLNAR,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Lamarre Proulx J.
[1] The issue to be determined in this appeal under the informal procedure is whether the Appellant cohabited with Neil Gaucher in a conjugal relationship from July 31, 2002, to August 2, 2004, for the 2002 and 2003 base years.
[2] The facts on which the Minister of National Revenue ("the Minister") relied in determining whether the Appellant and Mr. Gaucher were common-law partners are set out as follows in paragraph 11 of the Reply to the Notice of Appeal ("the Reply"):
[TRANSLATION]
(a) On November 12, 2004, the Minister sent the Appellant and Mr. Gaucher a questionnaire to fill out in order to determine their marital status commencing July 31, 2001.
(b) On December 1, 2004, the Minister received the Appellant's completed questionnaire in which the Appellant stated that she had been divorced since 2001. Documents were enclosed with the questionnaire (bank account, credit card, home insurance, life insurance and auto insurance) and Mr. Gaucher's name did not appear on them.
(c) On November 30, 2004, Neil Gaucher sent the Minister a completed questionnaire in which, inter alia, he responded, under marital status, that he lived with the Appellant from July 2001 to August 2004.
(d) On December 15, 2004, in further response, he sent the following additional information to the Minister:
(i) a document establishing that he and the Appellant had a $3,000 line of credit with the Caisse populaire Desjardins du Mont Saint-Bruno;
(ii) a disclosure that, from July 2002 to July 2004, he had deposited his wages directly in the Appellant's bank account No. 038363 at the Caisse populaire Desjardins du Mont Saint-Bruno;
(iii) and a claim that he had paid 50% of the bills for current expenses.
(e) On December 9, 2004, the Minister notified the Appellant in writing that she was considered Neil Gaucher's common-law partner from July 31, 2002, to August 2, 2004, and, consequently, that adjustments would be made to the tax benefits, GST credit and income tax.
(f) At the objection stage, the Appellant orally confirmed Mr. Gaucher's statement as set out in his further response, but reiterated her understanding of the facts, which was that Mr. Gaucher was a roommate from July 2001 to June 2002 and renter of the basement in her house from July 2002 to August 2002, and letters were submitted in this regard.
(g) Also at the objection stage, the Appellant submitted a copy of the incident report (Longueuil city police department) filled out when Mr. Gaucher was expelled from the Appellant's house. The report states that the Appellant had been seeing Mr. Gaucher for three years.
(h) The Minister considered the Appellant and Neil Gaucher common-law partners from July 31, 2002, to August 2, 2004, which resulted in the following changes:
(i) Mr. Gaucher's net income was taken into account in computing the Appellant's net family income, and in computing the child tax benefit for the 2002 and 2003 base years and the GST credit for the 2001, 2002 and 2003 taxation years; and
(ii) in respect of the 2003 income tax return, the following amounts were disallowed:
(a) in computing non-refundable tax credits, the amount claimed as the credit for a wholly dependent person was disallowed; and
(b) in computing her income, the amount claimed as child care expenses was disallowed because the Appellant's income was higher than her common-law partner's income.
[3] In her Notice of Appeal, the Appellant states as follows:
[translation]
I lodged Mr. Gaucher in my home during these years, and, following his forced departure, to get back at me, he told you that he was a common-law partner.
And yet, through several documents, I have proven that this was not the case.
[4] The Appellant explained that she met with Mr. Gaucher at a party one evening in 2000. They liked each other. They moved into a Boucherville apartment together in 2001. There were two bedrooms: one for her and Mr. Gaucher, and a second, larger one for the Appellant's daughters.
[5] The Appellant says that they shared the bedroom only for a short time. Thereafter, Mr. Gaucher slept in the living room. Nonetheless, they shared the cost of the apartment and other costs, although she always looked after her daughters' needs on her own. Even before they left the Boucherville apartment, they lived as roommates. On March 22, 2002, she took out a hypothecary loan to purchase a property in Saint-Bruno.
[6] The Saint-Bruno residence was a semi-detached house. There were three bedrooms and one bathroom on the second floor. On the ground floor, there were living rooms. Mr. Gaucher's furniture and the home computer were in the basement. This is where Mr. Gaucher lived. His personal effects were in the powder room on the ground floor but he took his shower in the main bathroom. Mr. Gaucher washed his own clothes. He had access to the kitchen and dining room. He could eat his meals with the Appellant and her children, but he often took his plate and ate downstairs. She was the one who prepared the meals. She did the grocery shopping because he had no car. Mr. Gaucher had his daughter every other weekend. She slept in the basement. The Appellant drove the young girl because the mother had no car.
[7] According to their agreement, Mr. Gaucher contributed $750 per month to general household expenses, including food. At one point, money in his bank accounts was being seized; this problem explains why his cheques were deposited into the Appellant's bank account.
[8] A line of credit statement for the period of July 1 to July 31, 2004, shows both names as holders of the line of credit (Exhibit A-1, tab 2). The Appellant's explanation for this joint line of credit is that when they left Boucherville for Saint-Bruno, Mr. Gaucher owed her money. The only way to get access to this money was to get a joint line of credit, which was used for the move.
[9] The Appellant testified that although Mr. Gaucher contributed to the household expenses, he did so as a roommate and he lived in the basement. She had a few intimate evenings with him but never shared the same bedroom. They had no social activities together.
[10] A Longueuil city police force report dated August 3, 2004, states as follows:
[translation]
Background: Ms. Molnar owns the house and has been seeing the individual in question for three years. For one month, she has been forced to support him, and she is fed up.
She asked him to leave, and he said that he would do so, but he is still on the premises.
We reported to the scene and explained the situation to the individual in question, who agreed to leave the premises. He later reported with a police escort to gather his personal effects.
[11] The Appellant claims that she told the police that they had been living together in the house for three years, but had done so as roommates.
[12] The notice of objection was filed as Exhibit I-1. The first three paragraphs read as follows:
[translation]
I had neither a husband nor a common-law partner during the years set out in the attached notices of assessment.
In 2001, I agreed to do Neil Gaucher a favour for a certain amount of time. I lodged him and helped him financially on occasion because he had financial problems and trouble holding down a job.
Mr. Gaucher provided absolutely nothing, paid no board, did not participate in household duties, was not involved with the children, and practically never worked.
[13] Her explanation for this version of the facts is that Mr. Gaucher often did not contribute regularly to household expenses. Here are her comments from pages 47 and 48 of the transcript:
[translation]
Q. If I understand correctly, Mr. Gaucher didn't provide much, and ultimately it was you who almost had to help him sometimes - support him -I have some trouble understanding that the very basis for having him was financial help or financial security for yourself.
A. Yes.
Q. And I see, now, that during this entire period, he was a financial liability for you?
A. Well, yes. But at first, it was because he always spoke reassuringly and told me "I will find myself a job and repay you." I relied on him, accepted his word and said to myself: "Sure, he'll find a job; he really wants to find one." It was . . . it is why I continued to live with him . . . always in the hope that he would finally be able to help me with the finances. But, ultimately, if you drew up a balance sheet . . .
Q. But, getting back to your testimony, things were not going well when you were in Boucherville, during . . . when you were in the apartment. That must be when the line of credit was obtained. Did Mr. Gaucher owe you a lot of money?
A. Yes. Yes. Well, what do you mean when you say things were not going well?
Q. I mean financially.
A. Well, no.
Q. I understand that you had to take out a line of credit with him so that he could pay you certain amounts?
A. That's right. That's right.
Q. All right. So how do you explain why you went and bought a house, left with the gentleman again, and brought him with you to Saint-Bruno, if he was a financial burden for you?
A. Well it's because, every time, I always had the hope that he could work, that he could pay me back and that he could help me. That was what I ultimately hoped would happen. Listen. As a mother with kids, I am always in a whirlwind. So I don't . . . he tells me something, I believe him, I move on to something else; I don't have the time to dwell on it. But ultimately, yes, the balance sheet ... that's exactly what you just mentioned.
Q. So you always had hope, a bit like . . .
A. Always.
Q. ... hope that he would shape up . . .
A. Always.
[14] Mr. Gaucher then testified. His version of events is almost identical, except with respect to the nature of the relationship between him and the Appellant. They met in October 2000. In July 2001, they moved in together. They shared everything. They went to friends' and relatives' homes together. Mr. Gaucher said that, in Boucherville and Saint-Bruno, he and the Appellant always formed a couple.
[15] Mr. Gaucher is a structure assembler. When he met the Appellant, he had a stable job, which lasted until February 2002, shortly after the move to Saint-Bruno. He experienced a five-week disruption of employment. He and the Appellant agreed that the amount of the debt was $1,000. She needed $3,000. This explains the line of credit loan on which he contributed to the interest payments.
[16] He stated that he always paid 50% of the current expenses of the household such as the hypothec and loan payments and the electrical, telephone, television and grocery bills. His cheques were deposited directly into the Appellant's bank account. She took the share that Mr. Gaucher owed, and gave him the balance.
[17] Mr. Gaucher did not say that she failed to give him his due. He also spoke about all his efforts during the move -the 300 hours of improvement work that he and his father did on the Appellant's house. He admitted that their relationship was often stormy. He also admitted that he slept in the basement in July 2004, which was the last month. He explained that he was treated for depression in April 2004, worked in May and June and had a relapse in July. He took antidepressants until September.
Analysis and conclusion
[18] "Common-law partner" is defined as follows in section 248 of the Income Tax Act ("the Act"):
"common-law partner", with respect to a taxpayer at any time, means a person who cohabits at that time in a conjugal relationship with the taxpayer and
(a) has so cohabited with the taxpayer for a continuous period of at least one year, or
(b) would be the parent of a child of whom the taxpayer is a parent, if this Act were read without reference to paragraphs 252(1)(c) and (e) and subparagraph 252(2)(a)(iii),
and for the purposes of this definition, where at any time the taxpayer and the person cohabit in a conjugal relationship, they are, at any particular time after that time, deemed to be cohabiting in a conjugal relationship unless they were not cohabiting at the particular time for a period of at least 90 days that includes the particular time because of a breakdown of their conjugal relationship;
[19] This case essentially involves question of fact. I must determine which version is more plausible - which version I believe.
[20] Regrettably for the Appellant - because I understand the financial effects of this decision -I am of the opinion that the relationship between the Appellant and Mr. Gaucher was a conjugal relationship.
[21] I cited the Appellant's statements. They do not sound like those of a person who is talking about her roommate. They describe an emotional relationship that broke down.
[22] The financial arrangement was that of a couple. A roommate would not deposit his cheque in the other roommate's bank account and would not agree to her taking control of his finances. There must be an element of trust and acceptance that is not characteristic of a relationship between co-tenants. This also applies to the joint line of credit.
[23] My comments are also applicable to the work that Mr. Gaucher and his father did at the Appellant's house.
[24] I must also note that the Appellant's version of the facts often changed. There was one version in the notice of objection, another version in the Notice of Appeal and another version at the hearing. In the notice of objection, the Appellant stated that Mr. Gaucher provided absolutely nothing and paid no board. This was untrue. At the hearing, she said that he bore an equal share of the household expenses.
[25] Consequently, the appeals must be dismissed.
Signed at Ottawa, Canada, this 26th day of January 2006.
"Louise Lamarre Proulx"
Translation certified true
on this 8th day of January 2007
Monica F. Chamberlain, Translator
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