REASONS
FOR JUDGMENT
Smith J.
[1]
This is an appeal from a decision of the
Minister of National Revenue (“Minister”) with respect to the
Appellant’s entitlement to the Canada Child Tax Benefit (“CCTB”) for the
2011 Base Year.
[2]
The Appellant also refers in his Notice of
Appeal to consequential determinations made for benefits arising under
provincial legislation, over which this Court has no jurisdiction. While
consequential adjustments to provincial taxes owing may occur as a result of
this appeal, the issue over which the Court has jurisdiction is the application
of the relevant federal tax credit to the facts of this case.
[3]
In her decision, the Minister denied the Appellant’s
entitlement to the CCTB for the months of May and June 2013, and did so
primarily on the basis that the Appellant’s three children were not residing
with him. This appeal concerns that period of time only.
[4]
In support of its decision to deny the CCTB benefits,
the Minister made a number of assumptions that I would paraphrase as follows:
1.
The Appellant is the father of three children,
namely:
M,
a son who at the time was about 12 years old;
V, a daughter who at the time was about 13 years old; and
M, a daughter who at
the time was about 17 years old.
2. The Appellant and the mother have been living separate and apart
since at least 2004 as a result of the breakdown of their marriage;
3. At all relevant times until May 2013, the three children resided
with the Appellant in the family home located in the City of Barrie;
4. In April 2013, the eldest daughter moved out of the family home and
the 2 other children were removed by the Children’s Aid Society of Simcoe
County;
5. None of the 3 children lived in a settled and regular way of life
with the Appellant at any time during May and June 2013;
And finally:
6. At all relevant times during the months of May and June 2013, the
Appellant did not perform a primary role in fulfilling the responsibility for
the care and upbringing of the three children.
The assumptions set out at points 4, 5 and 6, above, are in dispute.
Factual Background
[5]
The Appellant testified at the hearing and there
were no other witnesses.
[6]
By way of background, he explained that he was
in receipt of a disability pension as a result of a serious fire accident that
took place in 2010. He had undergone various treatments, including skin grafts
and those treatments were ongoing in 2013.
[7]
In January 2013, he slipped on an icy surface at
a bus stop and broke his right ankle. He required an operation and was
hospitalized for a week. He suffered a loss of mobility and required crutches.
[8]
Turning to the relevant period (May and June
2013), the Appellant explains that in mid-April 2013 he was involved in a
dispute with his eldest daughter. The dispute escalated, the eldest daughter
pushed him and he broke his right ankle again. She left the family home.
[9]
A short time later, as a result of a complaint
made by his eldest daughter, a case worker from the local Children’s Aid
Society (“CAS”) attended the family home, accompanied by two
constables.
[10]
According to the Appellant, the complaint filed
by his eldest daughter lead to an investigation. When asked if the CAS had
removed his children at that time, he maintained that it was only an
investigation.
[11]
The Appellant’s evidence is that, with a fresh
injury to his right ankle, he realized he would not be able to properly care
for his two youngest children and decided to ask a family friend to take care
of them. He had known DR for the last 10 years or so. She was familiar with the
Appellants’ children since her own children attended the same school and they
shared activities together.
[12]
According to the Appellant’s testimony, DR took
care of his two youngest children for the latter part of April as well May and
June 2013. As a result of his ongoing physical difficulties including surgery,
they remained in her care for July and August 2013.
[13]
For the months of September through to December
2013, the Appellant’s son returned to live with him at the family home while
the youngest daughter chose to remain with DR. As indicated above, the eldest
daughter moved out of the family home following the incident in April 2013,
eventually moving in with her mother over the summer months but not returning
to the family home.
[14]
According to the Appellant’s testimony, he saw
his children as often as he could during the subject period, sometimes as often
as 2-3 times a week. When possible, he would prepare meals or lunches for
school, to be picked up by DR or another friend, described as DJ. He paid for a
family membership at the local YMCA. As often as possible, he would take the
children to the movies. Asked whether the children, including the eldest
daughter, had moved their furniture and personal effects out of the family
home, he indicated that they had not since the move was temporary. There was no
change to their school. He indicated that the children were well taken care of
and that were it not for his medical condition, he would have taken care of
them. He also maintained contact with his eldest daughter and gave her money.
[15]
Although I am not without some doubts as to the
Appellant’s credibility, on balance I found him to be honest and forthright. His
testimony was consistent even when challenged in cross-examination.
Documentary Evidence
[16]
The Appellant produced copies of two receipts
for $600, dated May 17 and June 20, 2013, signed by DR as well as three
receipts for $300, dated April 19, May 17 and June 20, 2013, purportedly
signed by his eldest daughter, though the signature is illegible. All receipts
bear the notation “Child Tax Benefit Support” and the Appellant’s evidence was
that the money was to be used by DR for the support of his two children and by
his eldest daughter for her support.
[17]
While the receipts are the most cogent evidence
presented to the Court, other documents were produced. Some pre-date the
subject time period, while others are dated several months later. While they
provide context, none provide any direct evidence on the time period in
question.
[18]
With respect to the son M, the Appellant
produced a hand-written note (the “note”) from a staff lawyer at the
Ontario Legal Aid. It refers to Minutes of Settlement and a draft CAS Order.
Also attached is a draft Order from the Ontario Superior Court of Justice,
Family Court.
[19]
A review of the note suggests that the Minutes
of Settlement were likely completed in May 2014, while the CAS Order,
presumably implementing that settlement, was prepared in November 2014, almost
18 months after the incident in question.
[20]
Attached to the note is a draft Order dated May
7, 2014 from the Superior Court of Justice, Family Court. It is unsigned and
incomplete but clearly refers to the Appellant’s youngest son M. It suggests
that M is to be placed in the care and custody of his mother. There is no
effective date.
[21]
The Appellant also produced a final signed Order
of the Superior Court of Justice, Family Court dated January 23, 2015, that
grants care and custody of M to him. The Order notes that he has had primary
care and custody of M for all of 2014. There is no mention of 2013.
[22]
The Crown challenged the Appellant’s credibility
insofar as he did not produce the Minutes of Settlement, which would have
confirmed the apprehension of the children by the CAS. The Appellant denied
this and explained that it took a long time to obtain any documents from either
the CAS or his Legal Aid lawyer. In any event, I have already concluded that
the Minutes of Settlement were likely prepared in May 2014, a full year after
the incident in question. As such, they are not directly relevant to the time
period in question.
[23]
With respect to the youngest daughter V, the
Appellant produced what purports to be a final Order of the Superior Court of
Justice, Family Branch dated December 13, 2013. The Order grants custody of V
to DR subject to access by the parents upon request.
[24]
Similarly, with respect to the eldest daughter
M, the Appellant produced what purports to be a final Order of the Superior
Court of Justice, Family Court dated December 13, 2013. The Order declares that
M shall be made a Ward of the Crown and placed in the care and custody of the
Children’s Aid Society subject to access by the parents upon request.
[25]
It is important to note that both draft Orders
are not actually signed by the judge though a hand-written notation indicates
they were approved as to form and content by the Appellant’s lawyer on August
8, 2014.
[26]
Since both draft Orders are dated December 13,
2013, it is apparent that legal proceedings relating to V and M had been
instituted by the CAS sometime in 2013. However, without further evidence, I am
unable to reach any conclusion as to the commencement date of those
proceedings.
[27]
During cross-examination, the Appellant was
shown a type-written letter (the “letter”) from DR dated October 19,
2011 and addressed “to whom it may concern”. It reviews the Appellant’s family
situation, the connection between their respective children and paints a rather
glowing picture of the Appellant’s role and dedication as a father while
acknowledging his physical challenges.
[28]
The letter also refers to the due diligence
required for a placement and suggests that if the two youngest children were
allowed to return to live with their father, DR would be available for short stays
should that be necessary. This suggests to me that the CAS has been involved
with the Appellant since at least October 2011, the date of the letter.
[29]
However, the letter refers to a situation that
predates the subject period by well over 18 months, and the Minister has
admitted that the Appellant had care and custody of his three children until at
least April 2013.
[30]
In terms of probative value, the letter
certainly confirms the Appellant’s description of DR as a good family friend
and provides context as to why the children would have moved with her after the
incident of 2013.
[31]
The next document that was put before the
Appellant during his cross‑examination was his hand-written Notice of Objection
prepared in June 2014. It refers to the incident with his eldest daughter in
April 2013 and states:
. . . Although I did the right thing, I am being punished by
arrogant and conceited people at the Children’s Aid Society who upper-handed [sic]
my children without proof and evidence and they did not even talk to me to ask
what had happened between me and my oldest daughter. They put the case to the
court.
[32]
The Crown has taken the position that the word
“upper-handed” must be taken to mean “apprehended” and that this is an
admission that the children were in fact removed by the CAS. The Appellant
denied this interpretation, maintaining that at that point it was only an
investigation.
[33]
The Appellant has no legal training and I am
reluctant to conclude on the basis of the wording used in the Notice of
Objection, that there was an actual removal order. At that point, it could have
been an intervention by the CAS as opposed to an actual apprehension and
removal.
[34]
The Appellant was badly injured. He realized
that he would have difficulty attending to all the children’s needs. Did the
CAS case worker insist or even strongly insist that the children be temporarily
placed with DR or elsewhere? Was he given any choice?
[35]
On the basis of the letter of October 19, 2011,
I am able to conclude that DR had an existing relationship with the Appellant
and his children and that she was known to CAS. A temporary placement with her
would likely have been acceptable to the CAS. There is no evidence that it was
not acceptable.
What
conclusions can I draw from the above?
[36]
Although it is clear that the complaint lodged
by the eldest daughter lead to an intervention by CAS, I am unable to conclude
that the children were apprehended or that there was an actual removal order at
that time.
[37]
As a result of his injury and likely at the
prodding of the CAS, the two youngest children were placed in the temporary
care of a good family friend during at least the relevant period. The Appellant
gave her money and remained as involved as he could despite his physical
impairments.
[38]
The eldest daughter, who was 17 years old at the
time, left the family home in April 2013 following the dispute with the
Appellant. She lived elsewhere, either with her boyfriend or with her mother,
but there was nothing permanent about her situation. The Appellant remained as
the custodial father and provided money directly to her, as evidenced by the
receipts provided.
[39]
On the basis of the above, I conclude that the
Appellant has established a prima facie case that the two youngest children had
not been removed by the CAS and that, while the eldest daughter had left the
family home, she was still in his care and custody during the relevant period.
The Appellant had not given up legal guardianship of his three children, even
on a temporary basis.
What are the legal issues?
[40]
The Minister asserts that the Appellant is not
entitled to the CCTB for the relevant period since he is not an “eligible
individual”.
[41]
Subsection 122.6 of the Income Tax Act (“ITA”)
provides as follows:
eligible
individual in respect of a qualified dependant at
any time means a person who at that time
(a) resides with the qualified dependant,
(b) is the parent of the qualified dependant who
(i) is the parent who primarily fulfills the
responsibility for the care and upbringing of the qualified dependant and who
is not a share-custody parent in respect of the qualified dependant, or
(ii) is
a shared-custody parent in respect of the qualified dependant.
[42]
Since there is no suggestion that the Appellant
was a shared-custody parent, only two issues need to be determined. In Loyer
v. Canada, [2002] 3 CTC 2304, Justice Lamarre (as she then was) explained
(at paragraph 14):
To satisfy the definition of “eligible individual”, a taxpayer must
meet two cumulative conditions: namely residing with the qualified dependent
and primarily fulfilling the responsibility for the care and upbringing of the
qualified dependent.
[43]
The Minister referred to the recent decision of Jhanjii
v. R. 2014 TCC 126, where Justice Hogan found that a child who was
attending a boarding school in India and remained there to complete his
schooling after his mother’s unexpected death and his father’s relocation to
Canada, was nonetheless still deemed to reside with his father for purposes of
subsection 122.6 of the ITA.
[44]
Justice Hogan reviewed several other cases involving
different factual situations and the definition of “reside”, and stated (at
paragraph 22):
The CCTB regime
was designed to support families in their efforts to meet their basic needs and
improve their economic circumstances. I do not believe that the legislative
intent behind the residency requirement was to exclude otherwise eligible
families who have had to adapt to unfortunate circumstances.
[My
emphasis.]
[45]
In this particular instance, it is clear that
the Appellant and his family had to adapt to unfortunate circumstances
resulting from his most recent physical injury. Even the dispute with his
oldest daughter and her decision to leave the family home should be viewed in
that context until it became clear that her departure was permanent.
[46]
Justice Hogan also referred to the decision of Bouchard
v. R., 2009 TCC 38, where Justice Woods awarded the CCTB to a single father
while he was incarcerated. In reaching that decision, she stated the following:
18. In my
view, the child tax benefit provisions should be interpreted in a
compassionate way in these types of circumstances so as not to frustrate
the obvious intention of Parliament to assist low income families.
19. Where
there is one parent who has custody of the child and takes care of the
child, generally that parent should be entitled to the child tax benefit
even though the parent may not be physically under the same roof as the child
for a period of time.
20. The
circumstances in which the daughter found herself in here are tough for a 17
year old. To deny the benefit to her custodial parent who took care of her
would be the antithesis of what Parliament had in mind in enacting the family
benefit regime.
[My
emphasis.]
[47]
On the basis of the above and on the particular
facts of this case, I find that the three children were residing with the
Appellant during the relevant period and that he was the parent who primarily
assumed responsibility for their care and upbringing.
[48]
In other words, I conclude that the Appellant
was an eligible individual in relation to the three children for the months of
May and June 2013 and therefore that he is entitled to the CCTB benefits for
that period.
[49]
For the reasons indicated above, I would allow
the appeal and refer this matter back to the Minister on the basis that the
Appellant was an eligible individual within the meaning of section 122.6 of the
ITA with respect to his three children during the period May 2013 to June 2013.
[50]
At the request of the Crown, I would seal the
Court file with access restricted to the Crown, the designated representatives
of the Crown, the Appellant, and judges and registry officers of the Tax Court
of Canada.
Signed at Ottawa, Canada,
this 22nd day of March 2016.
“Guy Smith”
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