Lafrance v. The Queen, docket 2000-2860-IT-I (Informal Procedure)

Date: 20010817

Docket: 2000-2860-IT-I

BETWEEN:

LUC LAFRANCE,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for Judgment

Lamarre Proulx, J.T.C.C.

[1]            This is an appeal by way of the informal procedure concerning the 1998 taxation year. The question at issue is whether the Appellant is entitled to a non-refundable tax credit in the amount of $5380 for the equivalent to spouse amount, pursuant to paragraph 118(1)(b) of the Income Tax Act (the "Act"), where during the same year, the Appellant was entitled and claimed a deduction under paragraph 60(b) of the Act in respect of the same child.

[2]            The Minister of National Revenue made the following assumptions of fact described at paragraph 6 of the Amended Reply to the Notice of Appeal (the "Amended Reply") as follows:

(a)            during the 1998 taxation year, the Appellant was required to pay a support amount, in respect of the Child, in the total amount of $8,916 to Julie-Christine Houle, his former spouse, pursuant to an Order from the Superior Court in the province of Québec, dated November 16, 1996;

(b)            throughout he 1998 taxation year, the Appellant and his former spouse lived separate and apart;

(c)            in computing his net income for the 1998 taxation year, the Appellant was entitled to a deduction under paragraph 60(b) of the Income Tax Act (the "Act") in respect of said support amount;

(d)            the said support amount of $8,916 was deducted by the Appellant in computing his net income for the 1998 taxation year pursuant to paragraph 60(b) of the Act; and

(e)            the Appellant is not entitled to an equivalent-to-spouse amount in the computation of his non-refundable tax credits and tax payable for the 1998 taxation year.

[3]            The reasons given by the Appellant for his appeal are described in his Notice of Appeal as follows:

...

From May 1993 to June 1998, I had shared custody of my daughter, Maripierre Lafrance (now 8 years old), whereby every second week she was living with me, for the entire week. This shared custody arrangement made it such that my daughter would spend 50% of her time with myself, while the other 50% of her time was spent with her mother. Under this arrangement, I had to maintain a residence that would accommodate both myself and my daughter. Furthermore, in July 1998, my daughter's mother relocated to Toronto, Ontario, and in October 1998, I was finally granted the full custody of my daughter.

In late 1996, a judgment was rendered which ordered me to make child support payments to my daughter's mother, even though the custody arrangement between myself and my daughter's mother, remained shared on a 50% - 50% basis.

When I prepared my 1998 Income Tax Declaration, I declared support payments of $8,916.00 (line 220 of my declaration) as a deduction to my gross income (as the judgment governing these payments were rendered prior to the establishments of the Child Support Guidelines that came into effect in May 1997). These support payments were for the period of January 1, 1998, until the official superseding judgment was rendered in October 1998.

Because I declared the support payments made during that year, Canada Customs and Revenue Agency is disallowing me to claim my daughter as "Equivalent-to-spouse" (line 305 of my declaration). I understand that in most cases, the "Equivalent-to-spouse" deduction should not be allowed when support payments are made, since most people paying child support, do not have a significant percentage of their child(ren) custody. However, this is not my case. I had to maintain residence for my daughter as my daughter spent between 65% to 75% of her time with me in 1998 (50% from January to June and almost 100% from July to December 1998), even though I did pay a very significant amount of support to my daughter's mother. ...

[4]            The Appellant testified. He admitted subparagraphs 6(a) to 6(d) of the Amended Reply.

[5]            Exhibit R-1 is the judgement of the Superior Court of Quebec referred to in subparagraph 6(a) of the Amended Reply. It granted to the parents the joint legal custody. The physical custody of the child was granted to the mother until January 1st, 1997 and there was a provision for an alimony pension of $950 per month. There was to be an alternate physical custody from January 1, 1997. From January 1, 1997, the alimony pension payable to the mother for the benefit of the child was reduced to $600 per month.

[6]            Exhibit A-1 is a judgement of the Superior Court of Quebec, dated October 15, 1998. The parents will keep the joint legal custody of the child. The physical custody will go to the father and no alimony pension was further granted.

[7]            Exhibit R-2 is the Appellant's income tax return for the year 1998. It shows that the Appellant had claimed a support payment to the mother of his child in the amount of $8,916.

[8]            Counsel for the Respondent referred to the decisions of this Court in: Sherrer v. The Queen, [1998] 2 C.T.C. 3209; Peeck v. The Queen, [1998] 4 C.T.C. 2279; and Nixon v. The Queen, 1999 CarswellNat 2693. He also referred to the decision of the Federal Court of Appeal in Nelson v. The Queen, [2000] 4 C.T.C. 252 and more particularly to the two following passages of this decision:

... There are court orders granting Mr. Nelson and his ex-wife joint custody of both children and requiring Mr. Nelson to pay child support to his ex-wife for both children. ...

...

The Tax Court Judge was correct to conclude that subsection 118(5) precluded Mr. Nelson from claiming the "equivalent to married" tax credit. ...

[9]            The Appellant's argument was to the same effect as that expressed in his Notice of Appeal.

Conclusion

[10]          Subparagraph 118(1)(b) and subsection 118(5) of the Act applicable for the year 1998 read as follows:

118(1) For the purpose of computing the tax payable under this Part by an individual for a taxation year, there may be deducted an amount determined by the formula

A x B

where

A is the appropriate percentage for the year, and

B is the total of,     ...

(a)            Married status — ...

(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 an unmarried person or a married person who neither supported nor lived with the married person's spouse and is not supported by the spouse, 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) $6,000, and

(iv) an amount determined by the formula

$5,000 - (D - $500)

where

D              is the greater of $500 and the income for the year for the dependent person,

...

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 (as defined in subsection 56.1(4)) to the individual's spouse or former spouse in respect of the person and the individual

(a)            lives separate and apart from the spouse or former spouse throughout the year because of the breakdown of their marriage; or

(b)            claims a deduction for the year because of section 60 in respect of a support amount paid to the spouse or former spouse.

[11]          The definition of "support amount" in subsection 56.1(4) of the Act for the year 1998 read as follows:

support amount" means an amount payable or receivable as an allowance on a periodic basis for the maintenance of the recipient, children of the recipient or both the recipient and children of the recipient, if the recipient has discretion as to the use of the amount, and

(a)            the recipient is the spouse or former spouse of the payer, the recipient and payer are living separate and apart because of the breakdown of their marriage and the amount is receivable under an order of a competent tribunal or under a written agreement; or

(b)            the payer is a natural parent of a child of the recipient and the amount is receivable under an order made by a competent tribunal in accordance with the laws of a province.

[12]          The extended meaning of "spouse" in subsection 252(4) of the Act for the year 1998 read as follows:

252(4)      In this Act,

(a)            words referring to a spouse at any time of a taxpayer include the person of the opposite sex who cohabits at that time with the taxpayer in a conjugal relationship and

(i)             has so cohabited with the taxpayer throughout a 12-month period ending before that time, or

(ii)            is a parent of a child of whom the taxpayer is a parent

and, for the purposes of this paragraph, where at any time the taxpayer and the person cohabit in a conjugal relationship, they shall, at any particular time after that time, be 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;

(b)            references to marriage shall be read as if a conjugal relationship between 2 individuals who are, because of paragraph (a), spouses of each other were a marriage;

(c)            provisions that apply to a person who is married apply to a person who is, because of paragraph (a), a spouse of a taxpayer; and

(d)            provisions that apply to a person who is unmarried do not apply to a person who is, because of paragraph (a), a spouse of a taxpayer.

[13]          The judgements produced as Exhibits A-1 and R-1 indicate that the Appellant and the mother's child lived in a conjugal relationship from June 1, 1991 to May 1, 1993. The Appellant was not married to the mother's child. Therefore she would not be his spouse or his former spouse as mentioned in subsection 118(5) of the Act. However, subsection 252(4) of the Act extends the definition of spouse to include the person of the opposite sex who has cohabited with the taxpayer in a conjugal relationship.

[14]          Subsection 118(5) of the Act states clearly that no amount may be deducted under subsection 118(1) of the Act for a person where the taxpayer is required to pay a support amount as defined in subsection 56.1(4) of the Act to the former spouse in respect of that person. The Appellant was required to pay such a support amount to his former spouse in respect of the child. He also claimed it. The case law is constant and the law is clear that in these circumstances the Appellant cannot deduct any amount under subsection 118(1) of the Act which includes subparagraph 118(1)(b) which is the tax credit for the wholly dependent person.

[15]          The appeal is dismissed.

Signed at Ottawa, Canada, this 17th day of August, 2001.

"Louise Lamarre Proulx"

J.T.C.C.

COURT FILE NO.:                                                 2000-2860(IT)I

STYLE OF CAUSE:                                               Luc Lafrance and Her Majesty the Queen

PLACE OF HEARING:                                         Ottawa, Canada

DATE OF HEARING:                                           July 26, 2001

REASONS FOR JUDGMENT BY:                      The Hon. Judge Louise Lamarre Proulx

DATE OF JUDGMENT:                                       August 17, 2001

APPEARANCES:

For the Appellant:                                                 The Appellant himself

Counsel for the Respondent:                              Gatien Fournier

COUNSEL OF RECORD:

For the Appellant:                

Name:                     

Firm:                       

For the Respondent:                                             Morris Rosenberg

                                                                                Deputy Attorney General of Canada

                                                                                Ottawa, Canada

2000-2860(IT)I

BETWEEN:

LUC LAFRANCE,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Appeal heard on July 26, 2001 at Ottawa, Canada, by

the Honourable Judge Louise Lamarre Proulx

Appearances

For the Appellant:                                         The Appellant himself

Counsel for the Respondent:                         Gatien Fournier

JUDGMENT

          The appeal from the assessment made under the Income Tax Act for the 1998 taxation year is dismissed, in accordance with the attached Reasons for Judgment.

Signed at Ottawa, Canada, this 17th day of August, 2001.

"Louise Lamarre Proulx"

J.T.C.C.