REASONS
FOR JUDGMENT
V.A. Miller J.
[1]
The Minister of National Revenue (the
“Minister”) issued Notices of Re-Determination to the Appellant for the 2011,
2012, and 2013 base taxation years in which he was denied the Canada Child Tax
Benefit (“CCTB”), the Goods and Services Tax Credit (“GSTC”) and several
Ontario tax credits. The Minister determined that the Appellant was not the
“eligible individual” with respect to his daughter to receive the CCTB and she
was not his “qualified dependant” for the purposes of the GSTC. The
Re-Determinations were made on the basis that the Appellant’s daughter did not
reside with him after March, 2013.
[2]
The Minister also reassessed the Appellant’s
2013 taxation year (“the 2013 Reassessment”) on the basis that he was not
entitled to claim the credit for a wholly dependent person and the credit for
an eligible child (collectively, “the Credits”) under paragraphs 118(1)(b)
and 118(1)(b.1), respectively, of the Income Tax Act (“the Act”).
[3]
The witnesses at the hearing were the Appellant;
Havzeta Kadric, who is a friend of the Appellant; Sajeda Zaman, the Appellant’s
former spouse (“former spouse”); and, Heather Johnston, an Appeals Officer with
the Canada Revenue Agency (“CRA”).
Preliminary Objections
[4]
The Respondent argued that this Court has no
jurisdiction over certain amounts in the Re-Determinations because they arise
under Ontario statutes. I agree. This Court does not have jurisdiction to make
a decision with respect to provincial statutes. Consequently, the only amounts
properly before me are the CCTB, the GSTC, and the Credits.
[5]
The parties did not agree which periods were
under appeal with respect to the CCTB and GSTC. The Appellant’s position was
that the relevant period was from March 2013 to December 2013. This would
mean that he appealed from the Re-Determinations for the 2011 and 2012 base
taxation years only. The Minister’s position was that the period under appeal
was actually March 2013 to November 2014, meaning that the Appellant appealed
from the Re-Determinations for all three base taxation years.
[6]
The Notice of Appeal did not state which
Re-Determinations were being appealed. The Appellant used the Notice of
Objection form as his Notice of Appeal. Under the space marked “Tax Year”, the
Appellant wrote “2013”.
[7]
However, there was evidence that the Appellant
objected to more than just the 2013 Reassessment and two of the three
Re-Determinations. The Notice of Confirmation dated August 26, 2015 (Exhibit
R-5) stated that in the Notice of Objection, the Appellant objected to the Re-Determinations
for all three base taxation years. It also stated that the basis of the
Appellant’s objection was that he should be entitled to these amounts for the
period from March 2013 to November 2014. I note that the Notice of
Confirmation was also attached to the Appellant’s Notice of Appeal.
[8]
Moreover, the CRA Appeals Working Papers-T2020
(Exhibit R-4) showed that on August 20, 2015, Heather Johnston explained to the
Appellant that the period under review was March 2013 to November 2014. This
entry in Exhibit R-4 was confirmed by Ms. Johnston at the hearing.
[9]
I have concluded that the Appellant objected and
appealed from all three Re-Determinations so that, consequently, the relevant
period for the CCTB and GSTC is March 2013 to November 2014.
Facts
[10]
The Appellant and his former spouse have one
daughter who was 13 years old at the start of the relevant period. The
Appellant testified that he, his former spouse and his daughter lived together
at his apartment until March 2013. After March, the former spouse and his
daughter moved out. The Appellant stated that he thought it would be good for
his daughter, who was a teenager, to sleep at her mother’s place.
[11]
A Divorce Order, dated December 12, 2013 was
tendered as Exhibit A-1. It did not set out any parameters for custody.
[12]
The former spouse testified that in March 2013,
she and her daughter moved to a two-bedroom apartment in a building which was
several blocks from the Appellant. In 2014, they moved to a one-bedroom
apartment in the same building.
[13]
Despite the move, the Appellant was still very
involved in his daughter’s life. On school days, he drove her to and from
school and her mother’s place. He drove her to extracurricular activities, and
volunteered at her school. He submitted letters from the school and called a
witness, Ms. Kadric, to corroborate this. He arranged his work hours to
accommodate his daughter’s activities. The Appellant also drove his daughter to
medical appointments. On school days, the Appellant brought lunch to his
daughter. However, the daughter ate dinner at her mother’s place.
[14]
The Appellant submitted evidence that his
daughter still used his address on some medical and school forms. The parties
to the appeal agreed that the daughter communicated her daily needs to the
Appellant and received emotional support from him. According to the former
spouse, when her daughter fell ill, she stayed with the former spouse’s mother
or other relatives.
[15]
The Appellant testified that he always reserved
a room in his apartment for his daughter so that, if she wanted, she could stay
with him. However, the Appellant agreed that his daughter has not actually
slept there since March 2013. Moreover, his daughter’s furniture, including her
bed, had all been moved to her mother’s home. The Appellant’s daughter
sometimes did her homework at the Appellant’s apartment.
[16]
The Appellant testified that he paid for his
daughter’s glasses and medical needs, and he submitted invoices to support his
testimony (Exhibits A-4 and A-6). However, the former spouse testified that,
while the Appellant paid for the glasses upfront, she paid him back when she
was reimbursed by her insurance company.
[17]
I should also briefly mention a letter tendered
as Exhibit R-3. Purportedly from the former spouse, this letter stated that the
daughter spends most of her time with the Appellant and that the “child support
money” should go to him. However, I cannot attribute any weight to this letter.
It was unclear whether this letter was sent to the CRA. More importantly, this
letter was written by the Appellant (as was the practice between him and his
former spouse) and was not signed by his former spouse. In contrast, a
different letter authorizing the Appellant to act on behalf of his former
spouse in tax matters was signed by the former spouse. See Exhibit R-2.
Issues
[18]
The issues are whether the Appellant is entitled
to the CCTB, GSTC, and the Credits.
Analysis
A. The
CCTB and GSTC
[19]
To qualify for the CCTB, the Appellant must be
an “eligible individual” under section 122.6 in respect of his daughter, who is
a qualified dependant under this section. The relevant requirements are that
he:
(a)
resides with the qualified dependant,
(b) is a
parent of the qualified dependant who
(i) is the parent who primarily fulfils the responsibility for the
care and upbringing of the qualified dependant and who is not a shared-custody
parent in respect of the qualified dependant,…
[…]
and for the
purposes of this definition,
(f) where
the qualified dependant resides with the dependant’s female parent, the parent
who primarily fulfils the responsibility for the care and upbringing of the
qualified dependant is presumed to be the female parent,
(g) the
presumption referred to in paragraph 122.6 eligible individual (f) does not
apply in prescribed circumstances, and
(h)
prescribed factors shall be considered in determining what constitutes care and
upbringing.
[20]
To be entitled to receive the GSTC, the
Appellant’s daughter must be his “qualified dependant” under section 122.5.
Paragraph (b) of that definition requires that she reside with the
Appellant.
[21]
Consequently, to qualify for both the CCTB and
GSTC, the daughter must have resided with the Appellant during the relevant
period. I find that she did not.
[22]
The Appellant argued that the concept of
residence in this context should be interpreted flexibly. He put forth that,
because his daughter had a room in his apartment available to her at all times,
the Court can find that she resided with him. He also contended that because
his former spouse’s residence was only several blocks away from his own, the
Court should not require or focus too heavily on the fact that his daughter did
not sleep at his apartment. He noted that it is possible for his daughter to
have had two residences: one with him and one with his former spouse.
[23]
The Respondent argued that the concept of
residence here required, or should require, the Appellant’s daughter to have
actually slept at the Appellant’s home.
[24]
The Appellant brought to my attention cases in
which a child resided with his or her parent despite not living under the same
roof: Grenier v The Queen, 2010 TCC 234 and Penner v The Queen,
2006 TCC 413.
[25]
In Grenier, the taxpayer’s son lived with
another party, at first to help babysit, and afterward so he could attend a
particular school. The son moved back to live with the taxpayer after about 5
months. In Penner, the taxpayer paid expenses akin to room and board
fees for his daughter to stay with another family during the school year so she
could attend a particular school. She lived with the taxpayer at all other
times. I would also mention Bouchard v R, 2009 TCC 38, where the
residence requirement was met despite the child living with other families for
20 months while her father was incarcerated. Her father paid rent and other expenses
to these families. Taxpayers have also been successful, despite not living with
their children, in extraordinary circumstances: see Jhanji v R, 2014 TCC
126 and Charafeddine v R, 2010 TCC 417.
[26]
In my view, the Grenier, Penner,
and Bouchard cases are distinguishable from the present case. In these
cases, there was an understanding at all times that the separation was a
temporary measure, possibly imposed for reasons outside the taxpayer’s control.
It could still be said that the child’s “settled and usual abode” was at the
parent’s residence: R(S) v R, 2003 TCC 649. In the case at bar, the
evidence suggested that the family as a whole agreed that the Appellant’s
daughter would live with her mother permanently.
[27]
Ultimately, the interpretation of “reside”
should further the purpose of the CCTB. In R(S), Bonner J. said that the
purpose of the CCTB is to provide a single non-taxable monthly payment to the
custodial parent of a child. In Bouchard, Woods J. wrote that the
legislation imposes a residence requirement in addition to a care requirement
to clarify that the benefit is intended for the custodial parent in a divorce
situation. Although, in this case, the Divorce Order does not address custody,
it is my view that the former spouse is the party envisioned by the legislation
to satisfy the residence requirement.
[28]
While the Appellant was a significant part of
his daughter’s life and supported her greatly, for example by transporting her
on a daily basis, these factors go towards the care requirement, not the
residence requirement: Weidenfeld v The Queen, 2010 FCA 333.
[29]
While I agree with the Appellant that a child
can simultaneously reside with both parents separately, that was not the case
here. The Appellant’s daughter resided only with his former spouse.
[30]
Though this finding disposes of the CCTB and
GSTC issues, I will say a few words about whether the Appellant was the primary
caregiver since the parties argued this point before me.
[31]
Firstly, I note that paragraph (f) of the
definition of “eligible individual” applies, meaning the former spouse is
presumed to be the primary caregiver. Although subsection 6301(1) of the Income
Tax Regulations (“the Regulations”) enumerates four circumstances in
which this presumption does not apply, none of these circumstances are found in
the present case.
[32]
However, this presumption is rebuttable: Cabot
v R, [1998] 4 CTC 2893, [1998] TCJ No 725 (TCC). In determining who is the
primary caregiver, the Court must consider, though is not limited to, the
factors in section 6302 of the Regulations: Pollak v R, [1999] 2
CTC 2225, 48 RFL (4th) 441 (TCC). These factors are:
(a) the
supervision of the daily activities and needs of the qualified dependant;
(b) the
maintenance of a secure environment in which the qualified dependant resides;
(c) the
arrangement of, and transportation to, medical care at regular intervals and as
required for the qualified dependant;
(d) the
arrangement of, participation in, and transportation to, educational,
recreational, athletic or similar activities in respect of the qualified
dependant;
(e) the
attendance to the needs of the qualified dependant when the qualified dependant
is ill or otherwise in need of the attendance of another person;
(f) the
attendance to the hygienic needs of the qualified dependant on a regular basis;
(g) the provision,
generally, of guidance and companionship to the qualified dependant; and
(h) the existence
of a court order in respect of the qualified dependant that is valid in the
jurisdiction in which the qualified dependant resides.
[33]
I find that the Appellant, rather than his
former spouse, provided the care referred to in (c) and (d). However, the
former spouse provided the care in factor (b) and likely provided the care in
factor (f). Factors (a), (e), and (g) appear to be balanced between the
Appellant and his former spouse. Factor (h) is inapplicable.
[34]
On the whole, I find that these factors and the
evidence do not point clearly to either the Appellant or his former spouse as
the primary caregiver. The difficulty in this analysis is that it requires a
comparative assessment of the care and upbringing offered by each parent, but
care and upbringing are not quantifiable values.
[35]
While I have no doubt that the Appellant is a
committed and loving father, and that he rebutted many of the Minister’s
assumptions, he has not rebutted the statutory presumption that his former
spouse was the primary caregiver.
B. The
Credits
[36]
The credit for a wholly dependent person under
paragraph 118(1)(b) requires, among other things, that the Appellant has
actually supported his daughter in the Appellant’s self-contained domestic
establishment, and for his daughter to have been wholly dependent on him for
support. The legislative provision requires that the Appellant:
(b)(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
[…]
(B) wholly
dependent for support on the individual, or the individual and the other person
or persons, as the case may be,
[37]
In Narsing v R, [1998] FCJ No 156 (FCA),
the Federal Court of Appeal found that, in order for someone to be “wholly
dependent” on the taxpayer, both parties should live in the same establishment.
This was applied by our Court in Pascual v R, 2008 TCC 41. However,
Rossiter J. (as he then was) in Bruno v R, 2007 TCC 360, found that the
supporting party (a father) met this requirement even though his son did not
sleep at his self-contained domestic establishment. However, I note that the facts
in Bruno are readily distinguished from ours. In that case, the taxpayer
and his spouse, though undergoing a marriage breakdown, resided in different
portions of the same matrimonial home. The evidence showed that the taxpayer
essentially did everything for his son, including dressing him, cooking all
meals, and doing his laundry, and that at night, the son would merely sleep in
the portion of the house occupied by the spouse.
[38]
In my view, the question of whether the
Appellant’s daughter slept at his domestic establishment (i.e. his apartment)
is not the proper question under this statutory provision. Instead, the
question is whether he supported her in that establishment. This would,
in my view, require the daughter to do more than just occasionally visit at the
Appellant’s apartment. Although the Appellant’s daughter did sometimes do her
homework at his apartment or visit on the weekends, this is insufficient for me
to find that he supported her in that apartment.
[39]
The credit for an eligible child under paragraph
118(1)(b.1) is available if either subparagraphs 118(1)(b.1)(i)
or 118(1)(b.1)(ii) is satisfied. Subparagraph 118(1)(b.1)(i) does
not apply because it requires the child to ordinarily reside throughout the
year with the claimant of the credit together with another parent of the child.
Subparagraph (ii) only applies if the claimant is entitled to the credit for a
wholly dependent person under paragraph 118(1)(b), which the Appellant
is not. Therefore, the credit for an eligible child is also unavailable.
[40]
I note that, in respect of the Credits, the
Respondent also pled paragraphs 118(4)(b) and (b.1) of the Act.
These paragraphs limit the Credits where two individuals who are both entitled
to the Credits fail to agree as to who will get the Credits. In that scenario,
neither party gets the Credits. It was unclear to me whether the former spouse
claimed the Credits. The Minister’s assumptions only state that the former
spouse applied for the CCTB starting March 1, 2013. In any event, it is moot
whether these limitations apply because I have found that the Appellant was not
otherwise eligible for the Credits.
[41]
In conclusion, the Appellant has not shown that
the Minister’s Re-Determinations and Reassessment were incorrect. The appeal is
dismissed.
Signed at Ottawa, Canada, this 13th day of April 2016.
“V.A. Miller”
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