Date: 20000316
Docket: 2000-2293-IT-I
BETWEEN:
CARLENE SATCHWELL,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Rip, J.T.C.C.
[1]
Carlene Satchwell appeals income tax assessments for 1996, 1997
and 1998 taxation years.[1] She claimed equivalent-to-spouse amount for her son
pursuant to paragraph 118(1)(b) of the Income Tax
Act ("Act") in each of the three years. For
1996 and 1997 she claimed child tax benefits and goods and
services tax ("GST") credits. The Minister of National
Revenue ("Minister") denied the claims on the basis
that the appellant was married to her spouse and was not living
separate and apart from him during the relevant years in
appeal.
[2]
The appellant, Carlene Satchwell, was married to Barrington
Satchwell on January 23, 1993. They had one child of the
marriage. She stated that she separated from Mr. Satchwell on
August 4, 1994 when she moved out of the apartment unit they were
sharing with their son and her daughter from a previous
relationship. The appellant moved into a unit in the same
apartment building (unit No. 703), which was rented by a friend.
Sometime in December 1, 1995, the appellant and her children
moved back into her husband's apartment (unit No. 711),
"but not as husband and wife".
[3]
The apartment (unit No. 711) contained two bedrooms, a den, one
and one-half bathrooms, a living and dining room and a
kitchen. Mrs. Satchwell and her daughter slept in one bedroom,
her son slept in the den and her husband slept in the other
bedroom.
[4]
The rent, including utilities, for unit No. 711 was $923.00 per
month, of which the appellant contributed $400.00, she said. The
tenants were both her and her husband. Although they lived in the
same unit, Mrs. Satchwell testified she and her husband had
nothing to do with each other. They slept in separate beds and
did not socialize with each other. Mrs. Satchwell testified that
she and Mr. Satchwell have not had sexual relations since their
separation. "He" she said, "was going to bed with
other women". She had no idea where he ate his meals; she
never saw him in the kitchen. Her children would eat weekday
dinners with their grandmother, the appellant's mother, who
also lived in the same apartment building (unit No. 1203). The
appellant dined with her children on weekends. She did not
prepare meals for her husband nor did she launder any of his
clothes. He did not join the children to watch television. As far
as Mrs. Satchwell is concerned, her husband only slept and
took showers in the apartment.
[5]
Occasionally Mr. Satchwell would take his son out for ice cream.
It was she, Mrs. Satchwell testified, who attended to the
necessities of life for their son.
[6]
Mr. Satchwell got along "very well" with his wife's
family. They knew him since he was a child in Jamaica. However,
he always turned down their dinner invitations.
[7]
Mr. and Mrs. Satchwell visited Mr. Satchwell's parents in
Jamaica. Their common friends in Jamaica knew the status of their
relationship. Mrs. Satchwell does not know if Mr. Satchwell's
mother knew they were separated, but thinks she had "an idea
of the separation".
[8]
In 1997 Mrs. Satchwell's brother suggested that they purchase
a house. Together they could not obtain a mortgagee in an amount
necessary to purchase a house. Mr. Satchwell was a friend of the
appellant's brother and he offered to participate in the
acquisition of the house. The appellant, her brother and her
husband acquired the house as joint tenants. Each of the three of
them is liable as mortgagor ("Chargers") of the
property. In the mortgage deed (charge of land),
Mrs. Satchwell stated that she and Mr. Satchwell are spouses
of one another. On October 24, 1997 the appellant, her brother
and their parents moved into their new residence.
[9]
In 1997, Mrs. Satchwell's income was approximately
$20,000.00. The cost of the house was $191,000. The apparent
modest down payment for the house was paid by
Mrs. Satchwell. The mortgage on the house was $194,647.00.
The mortgage payments were $1,357.00 per month, including
principal, interest and tax. When the gas bill was high, Mr.
Satchwell and the appellant's brother would contribute extra
funds. Mrs. Satchwell said she incurred the costs of repairs and
maintenance.
[10] The new
residence contained a furnished basement with two entrances, a
full bathroom, living room and bedroom. A kitchen living and
dining room and powder room were on the main floor. Three
bedrooms and a bathroom were on the second floor. A third floor
contained a bedroom and bathroom.
[11] Some time
about April 1998, Mrs. Satchwell recalled, her husband asked to
live in the basement. Mrs. Satchwell's brother agreed to
allow Mr. Satchwell to share the basement with him. The
appellant's brother slept in the bedroom and
Mr. Satchwell slept in the living room. Mrs. Satchwell and
her daughter shared the third floor bedroom. Her parents and son
slept in the second floor bedrooms.
[12] Mrs.
Satchwell reported rental income from the Weston Road property
for 1997 and 1998, as well as expenses. In her statement of
rental income she reported that her percentage of ownership of
the property was 100 per cent. For 1997, she reported $3,100.00
of rental income and $8,525.00 of rent expenses; in 1998 she
reported $9,000.00 of rent and claimed expenses of $13,845.00.
Her parents, her brother and Mr. Satchwell, once he moved into
the house in January 1998, each paid a rent of $300.00 per
month to Mrs. Satchwell even though, in the case of her brother
and Mr. Satchwell, they were also owners of the property. Before
Mr. Satchwell moved into the home, Mrs. Satchwell’s
parents, she stated, paid her $600.00 a month.
[13] During
the years in appeal Mr. and Mrs. Satchwell shared a joint bank
account which is still active. She deposits her paycheck to this
account and makes withdrawals. He also deposits and withdraws
money to and from the account.
[14] In 1993,
Mrs. Satchwell subscribed to a Visa credit card from the Toronto
Dominion Bank; she held this card jointly with Mr. Satchwell, but
was used by her. Mr. Satchwell has a Visa card with the Canadian
Imperial Bank of Commerce for his use. Mr. and Mrs. Satchwell
were jointly liable on both credit cards.
[15] The
beneficiaries of the insurance policy on the life of Mrs.
Satchwell are Mr. Satchwell and Mrs. Satchwell's
children.
[16] This
appeal concerns at least three provisions of the Act:
paragraph 118(1)(b) with respect to the
equivalent-to-spouse amount for Mrs. Satchwell’s son
for 1996, 1997 and 1998; section 122.5 with respect to the goods
and services tax credit for 1996 and 1997; and section 122.6 with
respect to the child tax benefit, also for 1996 and 1997.
[17] The
statutory provisions of the Act for each of these tax
credits require the individual spouse’s income be taken
into account in determining whether the individual is entitled to
any of the credits.
[18] One of
the conditions entitling a married individual to the
equivalent-to-spouse tax credit is that the
individual neither supported nor lived with his or her spouse and
is not supported by the spouse. In the appeal at bar it appears
that Mrs. Satchwell and her husband, as well as her brother
and parents, were mutually supporting each other.
[19] In 1996
and for most of 1997 both the appellant and her husband paid rent
for an apartment unit they both lived in.
Mr. Satchwell’s rent contribution was $523.00 per
month, Mrs. Satchwell’s contribution was $400.00 per
month. In the latter part of 1997 and during 1998
Mr. Satchwell contributed to the maintenance of the house,
together with Mrs. Satchwell’s brother and parents.
What was paid by Mr. Satchwell and
Mrs. Satchwell’s brother to her was not rent. These
were monies each payor made to ensure the mortgage interest and
principal for property they owned, as well as taxes and other
expenses of home ownership, would be paid.
[20] Mr. and
Mrs. Satchwell each paid into and withdrew money from the same
bank account and they were jointly liable on each other’s
credit card. Mrs. Satchwell designated her husband as one of
the beneficiaries of the life insurance policy.
[21] If Mr.
and Mrs. Satchwell were living lives otherwise independent
of each other, as Mrs. Satchwell claims, she did not offer any
credible reason why she and her husband were so financially
dependent on each other.
[22] That Mrs.
Satchwell accompanied her husband to visit his mother in Jamaica,
whether or not the visit was during the years in appeal, adds
some weight to the Minister’s position that she and her
husband were not living separate and apart.
Mr. Satchwell’s mother may have “guessed”
they were living apart, but Mr. and Mrs. Satchwell
never repeated to her that they were living separate and apart.
They travelled to Jamaica together and in Jamaica, it appears,
they socialized together with old friends. There is no evidence
that their relationship changed between 1995 and the date of
trial. Mr. Satchwell supported his wife during the years in
appeal and in my view they were not living separate and
apart.
[23] The
appeals are dismissed.
Signed at Ottawa, Canada, this 16th day of March
2001.
"Gerald J. Rip"
J.T.C.C.
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