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Citation: 2003TCC722
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Date: 20031015
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Docket: 2003-15(IT)I
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BETWEEN:
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GISELE NEIN (FORMERLY LEGARE),
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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
Beaubier, J.
[1] This appeal pursuant to the
Informal Procedure was heard at Regina, Saskatchewan on September
29, 2003. The Appellant and her husband Gregory Nein
testified. The Respondent called the Appellant's former
husband, Elwin Hanoski. All of the witnesses were intelligent and
literate.
[2] Paragraphs 1 to 5 inclusive of the
Appellant's Notice of Appeal were established by the evidence
and are true. They read:
1. The
Appellant hereby appeals to the Tax Court of Canada from the
reassessment of her 2000 T1 personal income tax return and the
confirmation thereof, after objection, on the 30th day of
September, 2002.
2. The
Appellant resides at Regina, in the Province of Saskatchewan.
3. Pursuant to
the said reassessment, the Minister has included in the
Appellant's income for 2000 certain child support payments
which both the Appellant and the payer of the support elected to
be non-taxable and non-deductible.
4. By court
order made prior to May 1997, Elwin Hanoski, was required to make
annual payments to the Appellant for child support.
5. In 2000, a
form T1157 "Election for Child Support Payments", duly
signed by both the Appellant and the payer was delivered to and
accepted by Canada Customs and Revenue Agency. The form evidences
the agreement of the parties thereto that they have elected that
the annual child support payments will be neither taxable or
deductible to the parties. By letter dated June 28, 2000, CCRA
confirmed receipt of the form and that the child support payable
under the Appellant's agreement with Elwin Hanoski would not
be taxable after January 1, 2000.
[3] The Respondent's response to
them is contained in sub-paragraphs 12(i) to (o) of the
Respondent's assumptions which read:
(i) in error,
the Election was forwarded by the Canada Customs and Revenue
Agency (the "CCRA") to the Appellant for her
signature;
(j) the
Election was erroneously accepted by the CCRA as a valid
election;
(k) the Spouse did
not intend to make the Election;
(l) the
Election is null and void;
(m) there is no valid
Election;
(n) during the 2000
taxation year, child support payments payable to the Spouse
pursuant to an order or agreement were $7,000.00; and
(o) there is no
commencement date in respect of the child support payments
received by the Appellant.
[4] Mrs. Nein's testimony is
believed. She made the following assertions, which the Court
accepts as true:
1. In 1992, 1996, 1997 and
2003 Mr. Hanoski tried to reduce his $700 per month child
maintenance payments to the Appellant for his son, Jason.
2. In 1999 she discussed
the possibility of requiring more maintenance due to Jason
needing braces and having other additional expenses.
3. When she received
Exhibit A-3, form T1157, from CCRA duly filled out and signed by
Mr. Hanoski, Mrs. Nein thought that it represented Mr.
Hanoski's method of dealing with Jason's additional
needs.
4. She discussed the
election with Mr. Hanoski by telephone on or about April 10,
1999, the day before Jason's birthday in the following
words:
Mr.
Hanoski:
"Did you sign that form yet?"
Mrs.
Nein:
"Do you know what it says?"
Mr.
Hanoski:
"Just stay out of my business!"
That was the beginning and end of that subject. That testimony
by Mrs. Nein carries the ring
of truth as to a customary conversation between two estranged
former spouses. Moreover, having seen both of them on the stand
it seems likely.
5. She sent the election,
which she had received from CCRA, back to CCRA in about June of
2000, because it would not apply until her taxes were calculated
after December 31, 2000.
6. She acted on the
election to her detriment in 2000 and thereafter by:
(a) Not buying her usual level
of RRSPs to offset her taxes from Jason's maintenance.
(b) Not saving money to pay her income
tax on the maintenance.
[5] Mr. Hanoski's testimony is not
accepted for the following reasons:
1. He filled out Exhibit
A-3.
2. He alleges that he
returned it as erroneous on the day he signed it, January 21,
2000, but:
(a) If he had found it to be in
error (as he says), why did he not tear it up and why did CCRA
keep it?
(b) Why is CCRA's stamp
"Delivered by hand February 29, 2000, Regina D.D./B.D."
dated February 29th? Mr. Hanoski gave his guess that they
misplaced it. But there is no testimony from any CCRA
representative who might have knowledge respecting CCRA's
date stamp.
(c) The form T1157 is clear and its
second paragraph states that by signing it Mr. Hanoski is
electing that his payments are not to be deductible.
(d) While Mr. Hanoski denied any
advantage from the election for him, in fact the evidence is that
by its completion, he did not have to face any further litigation
from Mrs. Nein for additional support.
[6] In the Court's view, this
litigation is not between Mr. Hanoski and Mrs. Nein. Rather,
it is between CCRA and Mrs. Nein. Mrs. Nein received the
completed election (Exhibit A-3) from CCRA. She completed it
pursuant to CCRA's instructions. She returned it to CCRA on
June 8, 2000 with Exhibit A-5, the following letter:
June 8, 2000.
H. Busby
Enquiries & Adjustments
Surrey BC V3T 5E1
re: Account # [deleted by the Court]
Dear H. Busby,
In March I received a letter from you stating that I needed to
sign form T1157 Election for Child Support Payments in order for
it to be valid. Therefore, enclosed please find the completed
form.
Please confirm back in writing receipt of this document. Also,
please indicate in writing, that in fact this form means that as
of the 2000 Taxation year I no longer should claim my maintenance
income as declared INCOME on line 128. Thank you in advance for
your attention to this matter.
Sincerely,
Giséle Légaré
110 Plant Cr.
Regina SK S4N 5C3
(306) 789-0426
In return on June 28, 2000 CCRA replied in Exhibit A-6 as
follows:
June 28, 2000
GISELE H LEGARE
Account Number
110 PLANT
CRES
[deleted by the Court]
REGINA SK S4N 5C3
Dear Madam:
Re: Form T1157,
"Election for Child Support Payments"
We received Form T1157, "Election for Child Support
Payments." We have updated our records with the information
provided on this form. Based on this information, the child
support payable under your order or agreement with Elwin Hanoski
will not be taxable after January 1, 2000.
If you need more information, you may call our General
Enquiries personnel at 1-800-959-8281.
Yours sincerely,
D. Drahovzal
T1 Client Services
[7] In the face of CCRA's actions
and the findings of this Court that Mr. Hanoski's
testimony is not credible and Mrs. Nein's evidence (including
the testimony of Mr. Nein contradicting Mr. Hanoski) is accepted,
the assumptions quoted are refuted.
[8] The appeal is allowed. This matter
is referred back to the Minister of National Revenue for
reconsideration and reassessment accordingly. The Appellant is
awarded party-and-party costs throughout which are fixed at
$700.
Signed at Saskatoon, Saskatchewan, this 15th day of October
2003.
Beaubier, J.
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