Docket: 2004-3588(IT)I
BETWEEN:
MARY CONROY,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeals heard on January
14, 2005 at Halifax, Nova Scotia
Before: The Honourable Justice Gerald
J. Rip
Appearances
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Counsel for the Appellant:
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Shawn Scott
|
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Counsel for the Respondent:
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Martin Hickey
|
JUDGMENT
The appeal from the determination of the Minister of
National Revenue for the period July 2001 to October 2003, with respect to the
Child Tax Benefits for the 2000, 2001 and 2002 base taxation years, is allowed,
and the matter is referred back to The Minister of National Revenue for
redetermination on the basis that the appellant was the eligible individual for
the qualified dependants
The appellant is entitled to costs, if any.
Signed at Ottawa, Canada, this 4th day of March 2005.
" Gerald J. Rip"
Citation:
2005TCC177
Date:
20050304
Docket: 2004-3588(IT)I
BETWEEN:
MARY CONROY,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Rip J.
[1] Mary Conroy appeals from an assessment of tax in which
the Minister of National Revenue determined that she was not the eligible
individual, within the meaning of section 122.6 of the Income Tax Act, ("Act")
during base years 2000, 2001 and 2002 and assessed an amount of $12,119.62
for the recovery and overpayment of benefits received for the said base years.
[2] The facts are not in issue. In 1986 Mary Conroy married David Conroy.
There were two children born of the marriage, a daughter born in 1986 and a son
born in 1990. In July 1997 the Conroys separated. After the separation and
until February 2004 the two children resided with their father.
[3] Before the separation Mrs. Conroy received Child Tax Benefits.
These Child Tax Benefits were deposited directly into a Canadian Imperial
Bank of Commerce ("CIBC") bank account under the name of David Conroy
and Mary Conroy. In July 1997, Mrs. Conroy had her name removed from the
bank account and had no further access to any funds from this account. Child Tax Benefits
continued to be deposited into the CIBC bank account.
[4] In July 1998, Mrs. Conroy and David Conroy signed a
Corollary Relief Judgment and Agreement and Minutes of Settlement
issued on July 11, 2000. Paragraph 10 of the Agreement provided that:
The parties agree that the Husband
shall claim for income tax purposes whatever deduction or credit in respect of
the children of the marriage that may be available pursuant to the Income
Tax Act (including child dependency, or marriage equivalent) and
shall be entitled to receive child tax credit.
[5] Based on this Agreement, Mrs. Conroy stated that she
assumed that David Conroy was claiming and receiving the Child Tax
Benefits with respect to the children.
[6] Mrs. Conroy never notified the Minister that she ceased to
be an eligible individual in respect of the children pursuant to subsection
122.62(4) of the Act. However in each of the relevant taxation years,
she filed an income tax return which included an application for a Goods
and Services Tax/Harmonized Sales Tax credit ("GST-HST") on which she
marked a box that she had no children; she did not claim any dependants in her
income tax return for 1998. When she was laid off from her job in 2002, she
claimed employment insurance as a single person without dependants. In her view
the Minister had knowledge that she did not have custody of the children; her
entries on her income tax returns constituted notice to the Minister of the
fact that she ceased to be an eligible individual in accordance with subsection
122.62(4).
[7] Mrs. Conroy acknowledged she did receive regular Child
Tax Benefit Notices informing her that money was, or would be, deposited into
the CIBC bank account for the particular period. She said since she separated
from David Conroy, Mr. Conroy has not given her any money for the
children. She also acknowledged that in October 2003 she received a cheque
related to the Child Tax Benefit credit in the amount of $447.31. She testified
that she reported to Mr. Conroy that she received the cheque and, the basis of
her conversation with Mr. Conroy, she understood that she was to return the
money to him since the money belonged to him. She did so in October 2003.
[8] Mr. Kirk Fagan, an employee of the Child Tax Benefit Division
of the Canada Customs and Revenue Agency ("CCRA"), explained
that when the CCRA made a direct deposit to a designated bank account the name
of the beneficiary does not appear on any material sent to the bank. All that
is sent to the bank is the number of the bank, the transit number and the client’s
account number. The names of the payor and payee or beneficiary of account are "not necessary".
The CCRA does not confirm the name of any beneficiaries. Until the CCRA is
notified to the contrary all Child Tax Benefits go directly to the designated bank
account, even if the beneficiary (payee) of the payment has no access to the
account.
[9] In the case at bar, the tax authority started making direct
deposits to the CIBC bank account in August 1996 and continued making payments
until September 2003.
[10] The administrators in charge of the Child Tax Benefits
program refused to acknowledge notice that Mrs. Conroy was no longer the
eligible person notwithstanding her income tax returns suggested that she was
not primarily fulfilling the responsibility for the care and upbringing of her
children. Mr. Fagon declared that the CCRA does not recognize that part on
the first page of a tax return concerning a claim for GST-HST credits since "the
client may or may not apply for GST". Or, he added, only one spouse may
apply for GST. And up to 2001, he stated, both parents who are separated could
have applied for GST for different children.
[11] Two things are clear. Firstly, Mrs. Conroy did not give
specific notice to the Minister that she had ceased to be an eligible
individual, as proposed by subsection 122.62(4) of the Act, and secondly,
except for the cheque in the amount of $447.31 which she received in October
2003 and which she immediately forwarded to Mr. Conroy, Mrs. Conroy received no
payment of Child Tax Benefits. All the payments were made to the CIBC bank
account, the sole owner of which was Mr. Conroy.
[12] As far as the notice contemplated by section 122.62(4) is
concerned, the Minister of National Revenue did have notice of several facts
and, had he considered them, he probably would have concluded that Mrs. Conroy
was no longer the eligible individual. These facts include that she did not
claim any dependants in filing her income tax, that she did not claim any
children with respect to her GST-HST credit and the Minister did adopt
information from her tax return; namely, her new address, to communicate with
Mrs. Conroy. In this computer age, when the Minister may compare payments
and receipts between various persons, he had information available to him, had
he taken the time and opportunity, to record in his books and records that the
eligible individual was the person actually receiving the Child Tax Benefits,
namely Mr. Conroy.
[13] As I have already concluded, Mrs. Conroy never received
payments of Child Tax Benefits and never had access to the money. It was Mr.
Conroy who was the eligible individual and it was he who actually received the Child Tax Benefits
to which he was entitled.
[14] It would be intolerable if Mrs. Conroy had to return money
she never received and, as the same time, the tax authority would pay Mr.
Conroy a second time Child Tax Benefits he already received for the period in
issue.
[15] In these circumstances it is best for the appeal to be
allowed, with costs.
Signed at Ottawa,
Canada, this 4th day of March
2005.
"Gerald J. Rip"
CITATION: 2005TCC177
COURT FILE NO.: 2004-3588(IT)I
STYLE OF CAUSE: MARY CONROY AND THE QUEEN
PLACE OF HEARING: Halifax, Nova Scotia
DATE OF HEARING: January 14, 2005
REASONS FOR JUDGMENT BY: Gerald J. Rip
DATE OF JUDGMENT: March 4th, 2005
APPEARANCES:
|
Counsel
for the Appellant:
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Shawn
Scott
|
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Counsel
for the Respondent:
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Martin
Hickey
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COUNSEL OF RECORD:
For the Appellant:
Name: Shawn Scott
Firm: Teryl
Scott, Lawyers Inc.
For the Respondent: John
H. Sims, Q.C.
Deputy
Attorney General of Canada
Ottawa,
Ontario
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