Mujawamariya v. The Queen, docket 2000-1632-IT-I (Informal Procedure)

Date: 20000316

Docket: 2000-1632-IT-I

BETWEEN:

DONATILLE MUJAWAMARIYA,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for Judgment

Lamarre, J.T.C.C.

[1]      This is an appeal from an assessment made by the Minister of National Revenue (the "Minister") for the 1998 taxation year denying the appellant an equivalent-to-spouse credit for a wholly dependent person in the amount of $5,380 pursuant to paragraph 118(1)(b) of the Income Tax Act (the "Act").

[2]      In assessing the appellant, the Minister relied on the following facts set out in paragraph 11 of the Reply to the Notice of Appeal:

          [TRANSLATION]

(a)                 in computing her tax payable for the 1998 taxation year, the appellant claimed an amount of $5,380 as an equivalent-to-spouse credit for a wholly dependent person in respect of her daughter, Gisèle Uwawe (the "child");

(b)         during the 1998 taxation year, the appellant maintained a self-contained domestic establishment at Apartment 404, 10 Henderson Avenue, Ottawa, Ontario;

(c)         during the 1998 taxation year, the appellant lived in the self-contained domestic establishment referred to in subparagraph 11(b) above;

(d)         during the 1998 taxation year, the child lived in Rwanda;

(e)         during the 1998 taxation year, the child lived in a dwelling belonging to her grandparents;

(f)          during the 1998 taxation year, the child did not live with the appellant in the self-contained domestic establishment referred to in sub-paragraph 11(b) above;

(g)         during the 1998 taxation year, the child was not wholly dependent on the appellant in the self-contained domestic establishment referred to in subparagraph 11(b) above; and

(h)         the appellant is not entitled to the equivalent-to-spouse credit for a wholly dependent person in respect of the child for the 1998 taxation year.

[3]      Paragraph 118(1)(b), on which the Minister relies in disallowing the deduction, read as follows during the year in issue:

SECTION 118: Personal credits.

            (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,

            . . .

              (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 of the dependent person.

[4]      The respondent does not dispute that the child, Gisèle, was a minor and wholly dependent on the appellant and that the appellant did not live with a spouse during the 1998 taxation year. The respondent denied the appellant the equivalent-to-spouse credit for a wholly dependent person on the basis that the other conditions for entitlement to this credit had not been met. More specifically, the respondent argued that, because the child, Gisèle, was living with her maternal grandparents in Rwanda during the 1998 taxation year, the condition required in subparagraph 118(1)(b)(ii) was not met. In other words, the respondent argued that, since the child did not live with the appellant (her mother) in 1998 in the self-contained domestic establishment that the latter maintained in Canada, the appellant was not entitled to the credit in question for that year.

[5]      The evidence shows that the appellant had been allowed that credit for the 1996 and 1997 taxation years. During those two years, the child, Gisèle, had come to spend a few months in Canada and had stayed with her mother during that time.

[6]      In 1998, it was the appellant who went to Rwanda to spend a month with her daughter. During that visit, they both lived with the child's maternal grandparents in Rwanda in a domestic establishment financed by the appellant. According to a document from the Embassy of the Rwandese Republic in Canada, filed as Exhibit A-2, the appellant financially supported her parents and her daughter.

[7]      To be entitled to the credit claimed under paragraph 118(1)(b) for 1998, the appellant must prove, inter alia, that, at some time in the year, she maintained, alone or jointly with one or more other persons, and lived in a self-contained domestic establishment where she actually supported a wholly dependent person. The Act provides that, if the dependent person is a child, this child is not required to reside in Canada. In Narsing v. Canada, [1998] F.C.J. No. 156 (Q.L.), in paragraph 2, the Federal Court of Appeal stated the following:

. . . It is clear under the Act that the credit claimed is available only with respect to an impaired family member who is "wholly dependent" on the taxpayer, which requires, under the provision, that they both live "in the same establishment".

[8]      I see no indication in paragraph 118(1)(b) that the domestic establishment must be in Canada. That it need not be is, moreover, clear from Interpretation Bulletin IT-513R, dated February 24, 1998, paragraph 18 of which reads as follows:

18. An individual who is factually resident in Canada is not entitled to the equivalent-to-spouse tax credit in respect of a non-resident person, except for a non-resident child of the individual. In most cases, however, the equivalent-to-spouse tax credit will not be available for a non-resident child. This is because the child usually is not supported in a residence in which both the individual and the non-resident child live.

If an individual is not factually resident in Canada, but, under subsection 250(1), is deemed to be resident in Canada, and the other requirements to claim the equivalent-to-spouse tax credit are met, the individual will be entitled to the equivalent-to-spouse tax credit for:

            • the individual's child; or

            • a qualified relative (see 13 above) who is also deemed to be resident in Canada under subsection 250(1).

[9]      It is thus specified that an individual who does not in fact reside in Canada but is deemed to be resident in Canada under subsection 250(1) of the Act may be entitled to the equivalent-to-spouse tax credit for a wholly dependent person provided the other conditions for eligibility are met. These include the condition that the dependent person live with the individual who claims the credit in a dwelling maintained by the individual. However, if the individual is not factually resident in Canada, he must necessarily live in a domestic establishment located outside Canada and live there with a dependent person who is his child in order to be entitled to the credit.

[10]     On a reading of paragraph 118(1)(b), entitlement to the credit for an individual who maintains and lives in a self-contained domestic establishment outside Canada does not appear to be limited to the situation where the presumption of residence in Canada applies. In my opinion, the credit can just as well be granted to an individual who is factually resident in Canada (as is the case with the appellant) but who, at some time in the year, maintains and lives in an establishment abroad where the individual supports his child. There is nothing to prevent the individual from maintaining more than one self-contained domestic establishment. The Act specifies that "at any time in the year" or, in the French version, "à un moment de l'année", the individual must maintain and live in a self-contained domestic establishment where he supports the wholly dependent person. In my opinion, that establishment does not necessarily have to be in Canada, even if, factually, the individual resides in Canada during the remainder of the year.

[11]     In the case at bar, the appellant, who is resident in Canada, lived for one month in Rwanda with her daughter in a domestic establishment maintained by the appellant and her parents and financed by the appellant. In my opinion, the appellant meets the conditions of paragraph 118(1)(b) of the Act since, at some time in the year, she maintained, with her parents, and lived in a self-contained domestic establishment where she supported her child, Gisèle, who was wholly dependent on her at the time. The fact that she also maintained a self-contained domestic establishment in Canada does not, in my opinion, affect her entitlement to the equivalent-to-spouse tax credit for a wholly dependent person.

[12]     The decisions of this Court to which counsel for the respondent referred, namely, Baltazar v. Canada, [1995] T.C.J. No. 67 (Q.L.) and Ruzicka v. Canada, [1993] T.C.J. No. 820 (Q.L.), do not, in my view, run counter to this conclusion. In those two cases, there was no evidence that the dependent person had lived at any time in the year with the individual who claimed the tax credit. In the circumstances, the credit was denied.

[13]     For these reasons, I would allow the appeal and refer the assessment back to the Minister for reconsideration and reassessment on the basis that the appellant is entitled to an equivalent-to-spouse credit for a wholly dependent person in the amount of $5,380 for the 1998 taxation year pursuant to paragraph 118(1)(b) of the Act.

Signed at Ottawa, Canada, this 16th day of March 2001.

"Lucie Lamarre"

J.T.C.C.

Translation certified true

on this 31st day of July 2002.

Erich Klein, Revisor

[OFFICIAL ENGLISH TRANSLATION]

2000-1632(IT)I

BETWEEN:

DONATILLE MUJAWAMARIYA,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Appeal heard on February 6, 2001, at Ottawa, Ontario, by

the Honourable Judge Lucie Lamarre

Appearances

For the Appellant:                      The Appellant herself

Counsel for the Respondent:      Pascal Tétrault

JUDGMENT

          The appeal from the assessment made under the Income Tax Act ("Act") for the 1998 taxation year is allowed, with costs, if any, and the assessment is referred back to the Minister of National Revenue for reconsideration and reassessment on the basis that the appellant is entitled to an equivalent-to-spouse credit for a wholly dependent person in the amount of $5,380 for the 1998 taxation year pursuant to paragraph 118(1)(b) of the Act.

Signed at Ottawa, Canada, this 16th day of March 2001.

"Lucie Lamarre"

J.T.C.C.

Translation certified true

on this 31st day of July 2002.

Erich Klein, Revisor

[OFFICIAL ENGLISH TRANSLATION]