|
Citation: 2005TCC169
|
|
Date: 20050408
|
|
Docket: 2004-3680(IT)I
|
|
BETWEEN:
|
|
WAYNE CHU,
|
|
Appellant,
|
|
and
|
|
|
|
HER MAJESTY THE QUEEN,
|
|
Respondent.
|
REASONS FOR JUDGMENT
Little J.
A. STATEMENT OF
FACTS:
[1] The Appellant was married to Kerry
Ann Chu ("Kerry Ann").
[2] The Appellant and Kerry Ann are
the natural parents of a daughter (the "Daughter") born
in 1994 and a son (the "Son") born in 1998 (the
Daughter and Son are collectively referred to as the
"Children").
[3] The Appellant and Kerry Ann
separated. They appeared before a Master of the Supreme Court of
British Columbia for a custody order for the Children.
[4] An Interim Order of the Supreme
Court of British Columbia dated November 14, 2001 provided as
follows:
(a) the Appellant and Kerry Ann had
joint custody of the Daughter and the Son;
(b) the Daughter and the Son were to
alternate residences between the Appellant and Kerry Ann; and
(c) the Appellant was to pay child support
of $200.00 per month to Kerry Ann in respect of the Daughter
and the Son commencing on December 1, 2001 and continuing on the
first day of each and every month thereafter until a trial or
further Court Order.
[5] When the Appellant filed his
income tax return for the 2002 taxation year he deducted the
amount of $6,482.00. In Schedule 5 of the tax return the
Appellant stated that the amount of $6,482.00 was claimed with
respect to the Son.
[6] The Appellant testified during the
hearing that the amount of $6,482.00 represented the payments
that he made for the Children. The Appellant said that he pays
for all of the financial needs of the Children including
groceries at the home of Kerry Ann plus clothing and
entertainment expenses. The Appellant also said that he did not
realize that the amount of $6,482.00 was only claimed for the Son
because, in his opinion, the amount related to the payments that
he made in 2002 for the Son and the Daughter. The Appellant also
testified that Kerry Ann does not work and he is the sole
means of financial support of the Children.
B. ISSUE:
[7] The issue is whether the Appellant
is entitled to claim either or both of the Children as a wholly
dependent person for the purpose of calculating his
non-refundable tax credit for the 2002 taxation year.
C. ANALYSIS:
[8] The Appellant testified that the
Court Order issued by the Supreme Court of British Columbia was
dated November 14, 2001 and that he made a payment of $200.00 on
behalf of the Children on December 1, 2001. However the Appellant
said that on January 1, 2002 Kerry Ann and the Children moved
back into the Appellant's home and remained with him until
May 2002. During this period the Appellant said that he did not
make any support payments to Kerry Ann but he paid for all
of the living expenses of the Children.
[9] Commencing on June 1, 2002 and on
the first day of each month until the end of 2002 the Appellant
paid child support to Kerry Ann in the amount of $200.00 per
month.
[10] Paragraph 118(1)(b) of the
Income Tax Act (the "Act") allows for a
so-called equivalent to spouse tax credit where a taxpayer,
at any time in the year, is married (or in a common-law
partnership) and neither lived with the spouse and who is not
supported by the spouse. To qualify for the credit the taxpayer
must maintain a domestic establishment and support a dependent in
that establishment.
[11] Subsection 118(5) of the Act is
an exception to the tax credit provision. Where a taxpayer pays a
support amount, as defined in the Act, and lives separate
and apart from his spouse or former spouse (or common-law
partner), the taxpayer is disentitled to the credit that is
provided under subsection 118(1).
[12] Subsection 118(5) of the Act
reads as follows:
118. (5) No amount may be deducted under subsection (1) in
computing an individual's tax payable under this Part for a
taxation year in respect of a person where the individual is
required to pay a support amount (within the meaning assigned by
subsection 56.1(4)) to the individual's spouse or
common-law partner or former spouse or common-law partner in
respect of the person and the individual
(a) lives
separate and apart from the spouse or common-law partner or
former spouse or common-law partner throughout the year
because of the breakdown of their marriage or common-law
partnership; or (underlining added)
(b) claims a
deduction for the year because of section 60 in respect of a
support amount paid to the spouse or common-law partner or former
spouse or common-law partner.
[13] In this case, the Appellant was married
to Kerry Ann. The Appellant testified that he alone supported his
children and that Kerry Ann did not work.
[14] As noted subsection 118(5) precludes
the tax credit under subsection 118(1) where a taxpayer is
required to pay a support amount for a person in respect of whom
the tax credit would otherwise be claimed.
[15] However, in order for the tax credit to
be denied, one of two additional conditions as set out in
paragraphs (a) and (b) must be met. Paragraph
(b) does not apply in this case because the Appellant
could not have claimed a deduction under section 60. The
Appellant must fall within paragraph (a) in order for the
Minister's position to be correct. Paragraph (a)
states that the taxpayer must live separate and apart from his
spouse, former spouse or common-law partner throughout the
year. The Appellant lived separate and apart from Kerry Ann
for part of the year, but they lived together during the months
of January, February, March, April and May 2002.
[16] The word "throughout", when
used in relation to a period of time, has been held to mean the
entire period. In Smith v. M.N.R., [1995] 2 C.T.C. 2454,
Justice Rip of the Tax Court considered the word
"throughout" in relation to time periods, and at
paragraph 10 noted:
Mr. Smith resided in a prescribed area during two
distinct and separate periods, one in 1987 and the other in 1988.
He did not reside in a prescribed area "throughout a
period of not less than six months ...". The word
"throughout" is defined in the Shorter Oxford
English Dictionary on Historical Principles as:
b. Through or during the whole of (a period of time or course
of action); from beginning to end of 1540.
Thus, "throughout" means through the entire time
period. A "year" means a period of 12 consecutive
months: Interpretation Act, R.S.C. 1985, c. I-21,
s. 37(1). Therefore, the phrase "throughout the
year" means the entire consecutive 12-month period from
January 1 to December 31 of the particular taxation year. It is
also noteworthy that Parliament has deliberately chosen other
language (such as "at any time during the year") when
it is intended that the provision apply to an event that occurs
sporadically or periodically and not continuously for the whole
year.[1]
[17] The Appellant did not live separate and
apart from his spouse or former spouse throughout the 2002
year. Consequently, subsection 118(5) does not apply and the
Appellant is entitled to a tax credit in the amount of $6,055.00
under paragraph 118(1)(b) of the Act.
[18] The appeal is allowed, without
costs.
Signed at Vancouver, British Columbia, this 8th day of April
2005.
Little J.
Email this Content