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Citation: 2003TCC118
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Date: 20030307
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Docket: 2002-3565(IT)I
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BETWEEN:
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DONALD JAMES KILLICK,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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REASONS FOR JUDGMENT
Campbell, J.
[1] This appeal is
from an assessment made by the Minister of National Revenue for
the 2000 and 2001 taxation years. The Appellant was denied the
claim for an equivalent-to-spouse credit for a wholly dependent
person in the amount of $6,140.00 for 2000 and $5,293.00 for
2001.
[2] At the outset,
Respondent counsel advised the Court that a notice of objection
to the assessment for the 2001 taxation year had never been
served on the Minister. I advised the Appellant of his limitation
periods in respect to the assessment dated June 10, 2002 and of
the requirement to file a notice of objection before this Court
could hear his appeal for that year. Respondent counsel advised
that if necessary the Crown would be prepared to consent to an
extension of time for filing the notice. Consequently the only
year before me is the 2000 taxation year.
[3] The Minister
relied upon the following assumptions of fact set out in
paragraph 10 of the Reply to the Notice of Appeal:
10. In so
assessing the Appellant, the Minister made the following
assumptions of fact:
(a)
the Appellant is the natural parent of two children,
Steven James Frank Killick, born July 15, 1985, and Ian
Patrick Killick, born August 31, 1987, (collectively
referred to as the "children");
(b)
Elizabeth Joan Shaw is the natural mother of the children;
(c)
the Appellant and Elizabeth Joan Shaw became divorced from one
another in 1996;
(d)
the claim made by the Appellant for a personal tax credit for a
wholly dependent person for the 2000 and 2001 taxation years was
made in respect of one of the children;
(e)
pursuant to a Child Support Agreement made on December 17,
1999 (the "Agreement"), Elizabeth Joan Shaw was
required to make support payments to the paternal grandparents of
the children, Victor Killick and Ethel Killick, (collectively
referred to as the "grandparents") in respect of the
children in the amount of $831.00 per month commencing
September 1, 1999;
(f) pursuant to
the Agreement, the Appellant was required to make support
payments to the grandparents in respect of the children in the
amount of $580.00 per month commencing August 1, 1999;
(g)
pursuant to the Agreement, the children were to reside primarily
with the grandparents;
(h)
during the 2000 and 2001 taxation years, the Appellant made
support payments to the grandparents in respect of the
children;
(i) at all
material times to the 2000 and 2001 taxation years, the children
resided with their grandparents in the same domestic
establishment located at 1901 Amisk Drive, Denare Beach,
Saskatchewan;
(j) at all
material times, the Appellant was employed as an airline
pilot;
(k)
at all material times, the Appellant did not reside with the
children, rather he lived in an apartment located at 102B - 111
Tait Crescent, Saskatoon, Saskatchewan;
(l) the Appellant
did not reside with the children in the 2000 and 2001 taxation
years due to the nature of his employment, which required the
Appellant to travel a lot;
(m) the
Appellant did spend time with his children during the 2000 and
2001 taxation years when he was not travelling in the course of
his employment; and
(n)
at all material times to the 2000 and 2001 taxation years, the
children were not wholly dependent upon the Appellant for
support, rather they were wholly dependent upon the grandparents
for support.
[4] This case centres
upon the interpretation of paragraph 118(1)(b) which
reads as follows:
118(1)(b) Wholly dependent
person - in the case of an individual who does not claim a
deduction for the year because of paragraph (a) and who,
at any time in the year,
(i) is
(A) a
person who is unmarried and who does not live in a common-law
partnership, or
(B) a
person who is married or in a common-law partnership, who neither
supported nor lived with their spouse or common-law partner and
who is not supported by that spouse or common-law partner,
and
(ii) whether alone or
jointly with one or more other persons, maintains a
self-contained domestic establishment (in which the individual
lives) and actually supports in that establishment a person who,
at that time, is
(A) except in the case
of a child of the individual, resident in Canada,
(B) wholly dependent
for support on the individual, or the individual and the other
person or persons, as the case may be,
(C)
related to the individual, and
(D)
except in the case of a parent or grandparent of the individual,
either under 18 years of age or so dependent by reason of mental
or physical infirmity,
an amount equal to the total of
(iii)
$7,131, and
(iv) the
amount determined by the formula
$6,055 - (D - $606)
where
D is the greater
of $606 and the dependent person's income for the year,
[5] The Appellant
filed a child support agreement (Exhibit A-1). The provisions of
this agreement which are relevant to this appeal are paragraphs 1
and 2(c). They read as follows:
1. CUSTODY
The Mother and Father shall continue to have Joint Custody of
the children, however the children will reside primarily with
the paternal grandparents, Victor and Ethel Killick, at 1901
Amisk Drive, Denare Beach, Saskatchewan, and also with the
Father. Given the ages and level of maturity of the children,
the parties agree that the children may determine where they wish
to reside, and that all parties will comply with the wishes of
the children.
. . .
2. (c) The Father shall
provide support to the paternal grandparents, Victor and Ethel
Killick, pursuant to the Federal Child Support Guidelines in the
amount of $580.00 per month, which amount is based on the annual
income of the Father of $42,300.00, commencing August 1,
1999 and continuing on the first of each and every month
thereafter for as long as the children remain children within the
meaning of the Divorce Act, or until further agreement or order
of the Court.
[6] The Appellant
resides in an apartment in Saskatoon for approximately 200 days
out of each year. As an airline pilot he could be anywhere in
North America within this 200 day period. When he is on reserve
status, he is on call and must be within a two-hour report time
to the Saskatoon airport. For the remainder of the year, when he
is not flying or on reserve status, he resides with his parents
and his children at his parents' residence at Denare Beach,
Saskatchewan.
[7] Pursuant to the
child support agreement, the mother and the Appellant (the
children's father) share joint custody but the agreement goes
on to state that the children are to reside primarily with the
paternal grandparents and with the father. It is also clear from
the Agreement that the Appellant provides support for the
children. However under paragraph 118(1)(b), the Appellant
must also maintain a self-contained domestic establishment and
must support the children in the self-contained domestic
establishment.
[8] Although the
Appellant maintained an apartment or self-contained domestic
establishment in Saskatoon, his evidence was that it was
maintained so that he could retain his employment as an airline
pilot. When he was not required to be in Saskatoon, he was
residing and caring for his children in Denare Beach. The
Appellant did not alone maintain the self-contained domestic
establishment in Denare Beach but he did so jointly with his
parents. The Agreement stipulated that he was to pay monthly
support of $580.00. However in his Notice of Appeal he states
that he voluntarily pays $750.00 monthly. I view the voluntary
payment as further indication that he was assisting his parents
in the additional cost of maintaining this establishment in which
his children resided. As well according to the Appellant's
Notice of Appeal, he also pays for extracurricular activities,
clothing and travel to see their mother. The fact that the
Agreement stipulates that the children are to reside with both
the Appellant and his parents is a further indication that the
Appellant would be residing with his children at Denare Beach and
helping to maintain this establishment. The Appellant meets the
requirement of subparagraph 118(1)(b)(ii). He alone
does not maintain the self-contained domestic establishment but
he does so jointly with one or more other persons, that
is, his parents. The fact that it is his parents' residence
is irrelevant. He assists them in maintaining this domestic
establishment and supports his children who reside there.
[9] I see nothing in
paragraph 118(1)(b) which would prevent an individual from
maintaining more than one self-contained domestic establishment.
Judge Lamarre reached this same conclusion in
Mujawamariya v. The Queen, 2001 DTC 396. The Saskatoon
apartment is a necessary adjunct to his employment. It is his
work base. In any event I see this establishment as playing a
relatively minor role in the facts of this case. He is based out
of this apartment for approximately 200 days each year but
because he is a pilot, he is clearly not staying 200 nights at
the Saskatoon apartment. I have no evidence before me as to a
breakdown of days and nights at each establishment but I would
think it is reasonable to conclude that he probably spends more
actual time at the Denare Beach establishment than in the
Saskatoon establishment. In any event the opening few lines to
paragraph 118(1)(b) specify that an individual
"at any time in the year" must maintain and live in a
self-contained establishment where he supports a wholly dependent
person.
[10] I conclude that the
Appellant fully satisfies the requirements of this section. He
supports his children; he resides in a self contained domestic
establishment with his children for a substantial portion of each
year and certainly for all of the periods when he is not working;
he jointly maintains this establishment with his parents and he
pays to the parents additional amounts over and above the
required basic support payment to assist his parents in
maintaining this establishment in which his children reside.
[11] The appeal is allowed
and the assessment is referred back to the Minister for
reconsideration and reassessment on the basis that the Appellant
is entitled, pursuant to paragraph 118(1)(b) of the
Act, to an equivalent-to-spouse credit for a wholly
dependent person in the amount of $6,140.00 for the 2000 taxation
year.
Signed at Ottawa, Canada this 7th day of
March 2003.
J.T.C.C.
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