REASONS
FOR JUDGMENT
Russell J.
[1]
The Appellant Michael Furlan (Michael) has
appealed, electing the informal procedure, four redeterminations made by the
Minister of National Revenue (Minister) under the federal Income Tax Act
(Act). Two redeterminations, both made July 18, 2014, denied him the Canada
Child Tax Benefit (CCTB) for the respective periods November 2012 to June
2013 monthly, and July 2013 to June 2014 monthly. Two other redeterminations, both
made August 5, 2014, denied him the Goods and Services Tax/Harmonized
Sales Tax Credit (GST/HSTC) for the respective periods January 2013 to April
2013 quarterly and July 2013 to April 2014 quarterly. The Appellant
objected to these four redeterminations. On February 18, 2016 the Minister
confirmed them, hence this appeal.
[2]
In its Reply, the Respondent Crown pleaded various
assumptions of fact the Minister had made in raising these redeterminations.
The main assumptions were that Michael and his former common-law partner
Brittany together had a son, born August 2010, whose initials are DF; the
parents Michael and Brittany separated in October 2012; since October 2012 DF
has resided with Brittany and DF merely visits Michael; and since October 2012
Michael had not been the primary caregiver or shared-custody parent of DF.
[3]
At the hearing Michael’s representative, his
mother Mrs. Furlan, testified on his behalf. Michael was diagnosed in 2010 with
multiple sclerosis (MS) and since then his condition has worsened. He was
present in court throughout the hearing.
[4]
Mrs. Furlan testified that DF was born in 2010
to parents Michael and Brittany, the same year Michael was diagnosed with MS.
Michael and Brittany separated in November 2012 and resided separately, both in
Kingston, Ontario. Their agreement then was that DF would live with Michael
Monday to Wednesday and alternate weekends, and he would live with Brittany
Wednesday to Friday and alternate weekends. Relations between the two parents
were strained. Michael engaged a housekeeper to assist with local driving of
himself and DF, as well as with housekeeping and assisting Michael in caring
for DF. In early 2013 the housekeeper returned to her home abroad, and
Michael’s mother temporarily relocated from her home in Thornhill, Ontario to
Michael’s Kingston residence and helped Michael care for DF during the days and
nights each week when DF lived with Michael.
[5]
In June 2013, with his MS worsening, Michael
moved from Kingston to his parents’ home in Thornhill. Likewise at that time Brittany
moved from Kingston to her parents’ home in Aurora, Ontario. Michael and
Brittany then agreed that Michael would have custody of DF for each Friday
(drop-off after school), Saturday and Sunday (drop-off Sunday evening, after
dinner, earlier if bad weather), and Brittany would have DF the remainder of
each week, with her parents’ assistance, recognizing that for certain of the daytime
week-day hours DF was in attendance at school and thus during those times not
requiring Brittany’s direct supervision. In February 2014 when Michael’s MS was
continuing to worsen, Brittany unilaterally changed this weekly schedule to
Michael merely visiting with DF in a municipal park for one hour each week.
[6]
In cross-examination Mrs. Furlan testified that
from November 2012 to February 2014 Michael and Brittany had shared custody of
DF but major responsibilities were handled by Brittany, due to Michael’s MS
condition. She said that commencing later in June 2013, DF weekly had 40% of
time with Michael and with Brittany 60%. Brittany drove DF to and from school
in Aurora. Brittany did not share with Michael problems or issues concerning
DF. Michael, at his residence with his parents, had a separate set of clothes
for DF from what Brittany had (they did not share one set of clothes for DF), a
separate room for DF and a separate bed for DF. Ever since Michael had called
police in Kingston about Brittany in the winter of 2013 and she was escorted from
Michael’s premises (had been invited, argument ensued, see Exhibit A-7, police
report) these parents’ ability to communicate constructively with each other
had deteriorated. Michael has completed or almost completed a PhD in Engineering
at Queen’s University. No other persons (such as Brittany) testified.
[7]
Documentary evidence included (Exhibit A-5) a
letter dated July 30, 2014 to Michael per his request from Family and
Children’s Services in Kingston advising that due to that agency having had no
involvement since early 2013 with DF and parents, the agency could not comment
about who had maintained primary care of DF. Exhibit A-6 is a legal brief filed
on Brittany’s behalf in Ontario Superior Court of Justice (Family Court) for an
April 2013 case conference. The brief understandably is partial to Brittany but
does state that the two parents then had “approximately
equal time” with DF.
[8]
Exhibit A-8 consists of six letters, one written
by the site director of DF’s Kingston nursery school advising that Michael and
a housekeeper usually would drop-off and pick-up DF by car daily during the
Wednesday to Friday period. The other letters in this exhibit similarly and
generally affirmed Michael’s care for DF on weekends within the period
September 2013 to February 2014.
[9]
In argument on Michael’s behalf it was submitted
that he had had care of DF 50% of the time while living in Kingston and 40% of
the time after June 2013 while living in the Toronto area, until February 2014.
Analysis:
[10]
I have considered the following jurisprudence
submitted by the Respondent – Van Boekel v. R., 2013 TCC 132; Brady
v. R., 2012 TCC 240 and D’Elia v. R., 2012 TCC 180.
[11]
The first issue is whether Michael is entitled
to the CCTB during the relevant periods (monthly from July 2012 to June 2013
and monthly from July 2013 to June 2014). The Respondent argues that
during these periods Michael was not the primary caregiver of DF nor a
shared-custody parent of DF, and also that Michael was not residing with DF.
The Respondent raised no other objections regarding Michael.
[12]
In respect of the CCTB the terms “eligible individual” and “shared-custody
parent” are defined at section 122.6 of the Act. The following is
partial text of the definition of “eligible individual”
and the full text of the definition of “shared-custody
parent.”
“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 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, or
(ii) is a shared-custody parent in respect of the qualified
dependant,
(c) is resident in Canada or, where the person is the cohabiting
spouse or common-law partner of a person who is deemed under subsection 250(1)
to be resident in Canada throughout the taxation year that includes that time,
was resident in Canada in any preceding taxation year,
(d) is not described in paragraph 149(1)(a) or 149(1)(b), and
(e) is, or whose cohabiting spouse or common-law partner is, a
Canadian citizen or a person who
(i) is a permanent resident within the meaning of subsection 2(1) of
the Immigration and Refugee Protection Act,
(ii) is a temporary resident within the meaning of the Immigration
and Refugee Protection Act, who was resident in Canada throughout the 18
month period preceding that time, or
(iii) is a protected person within the meaning of the Immigration
and Refugee Protection Act,
(iv) was determined before that time to be a member of a class
defined in the Humanitarian Designated Classes Regulations made under
the Immigration Act,
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 (f) does not apply in prescribed
circumstances, and
(h) prescribed factors shall be considered in determining what
constitutes care and upbringing;
- and -
“shared-custody parent” in respect of a qualified dependent [sic] at a particular
time means, where the presumption referred to in paragraph (f) of the
definition “eligible individual” does not apply
in respect of the qualified dependant, an individual who is one of the two
parents of the qualified dependant who
(a) are not at that time cohabitating spouses or common-law partners
of each other,
(b) reside with the qualified dependant on an equal or near equal
basis, and
(c) primarily fulfil the responsibility for the care and upbringing
of the qualified dependant when residing with the qualified dependant, as
determined in consideration of prescribed factors.
[13]
I find on the evidence, summarized above, that
for the earlier of the two pertinent periods - July 2012 to June 2013 - Michael
was a “shared-custody parent” and hence an “eligible individual”. That is, within that period Michael
was not cohabiting with DF’s mother Brittany, he did reside with the qualified
dependant DF on an equal or near equal basis relative to Brittany and he did
primarily fulfil responsibility for the care and upbringing of DF when residing
with DF Monday to Wednesday and every second weekend. In finding Michael was
residing with DF, I have concluded this was occurring on a “settled and usual basis” as referred to in D’Elia,
supra, para. 16.
[14]
For the finding that Michael had primary
responsibility for the care and upbringing of DF when residing with him, I
refer to the Income Tax Regulations, section 6302 (ITR 6302) which lists
factors as to “care and upbringing” per
paragraph (h) of the above section 122.6 definition of “eligible
individual.” ITR 6302 provides:
6302 For the
purposes of paragraph (h) of the definition “eligible
individual” in section 122.6 of the Act, the following factors are to be
considered in determining what constitutes care and upbringing of a qualified
dependant:
(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.
[15]
Regarding ITR 6302(a), I find on the
totality of the evidence that Michael did have supervision of the daily
activities and needs of DF when Michael was residing with DF. Likewise at such
times Michael, per ITR 6302(b), “maintain[ed] a secure
environment” in which DF resided, including providing a complete set of
clothing for him, providing him his own room and his own bed. Regarding ITR
6302(c), being “arrangement of, participation in, and
transportation to, medical care at regular intervals and as required for [DF]”,
there was evidence that in Kingston Michael had initiated a hearing test
medical appointment for DF, attended by both Michael and Brittany.
[16]
There was little evidence relating specifically
to the remaining ITR 6302 factors. However I perceive, again based on totality
of the evidence (and noting the Respondent’s non-pleading of any assumptions
made by the Minister specific to these factors, thus putting an onus on the
Respondent to establish which if any of these factors did not apply in
Michael’s favour), that in general a balance of these factors was met by
Michael during the portion of each week that he resided with DF.
[17]
However, for the subsequent period of July 2013
to June 2014 - commencing when Michael moved to his parents’ Thornhill home,
and the weekly schedule then shifting to Michael having DF only from Friday
late afternoon to Sunday early evening, in my view Michael no longer lived with
DF on an equal or near equal basis. Thus he was no longer a shared-custody
parent. Nor was he DF’s primary caregiver. This weekly arrangement involved
only one full day (Saturday) of DF being with Michael versus four full days
(Monday, Tuesday, Wednesday, Thursday) each week during which DF was with his
mother, Brittany. Michael’s mother acknowledged that Brittany held primary
responsibility for DF during this period, in terms of school contact, etc., noting
also that Brittany did not “share” with Michael
relevant information re DF. Subsequently as of February 14, 2014
Brittany abruptly relegated Michael to a weekly share of time with DF of only a
single hour in a municipal park. Again, throughout this time Michael’s MS had continued
to worsen.
[18]
Thus, in this appeal Michael is entitled to the
CCTB, but only for the period July 2012 to June 2013 monthly.
[19]
Turning to the GST/HSTC entitlement issue, the
Minister denied Michael this tax credit on the assumption that DF did not
reside with Michael during the relevant period, thus DF was not a “qualified dependent” of Michael within the meaning of
subsection 122.5(1) of the Act, as follows:
“qualified dependant” of an individual, in relation to a month specified for a taxation
year, means a person who at the beginning of the specified month
(a) is the individual’s child or is dependent for support on the
individual or on the individual’s cohabiting spouse or common-law partner;
(b) resides with the individual;
(c) is under the age of 19 years;
(d) is not an eligible individual in relation to the specified
month; and
(e) is not a qualified relation of any individual in relation to the
specified month.
[20]
However, in respect of a qualified dependent of
two or more individuals, as here, paragraph 122.5(6)(b) provides that the
clause (b) requirement of the term “qualified dependent”,
i.e., that the child “resides with the individual”,
is met if the particular individual is an “eligible
individual” per section 122.6 except with the term “qualified dependent” in that section having its
subsection 122.5(1) meaning. Already I have found that for the period July 2012
to June 2013 monthly Michael was a section 122.6 “eligible
individual” by reason of being a “shared-custody
parent.” Thus, per paragraph 122.5(6)(b) and as required substituting the
subsection 122.5(1) meaning of “qualified dependent”,
in my view Michael is entitled to the GST/HSTC for the period January 2013 to
April 2013 quarterly, although not for the period July 2013 to May 2014
quarterly.
[21]
Accordingly, success is divided in this overall
appeal. Specifically, and the whole without costs:
i.
the appeal of the July 18, 2014 redetermination
as to the CCTB in respect of the period November 2012 to June 2013 monthly
(particularized at paragraph 3 of the Respondent’s Reply) is allowed, and that
redetermination is referred back to the Minister for reconsideration and
redetermination on the basis that Michael is entitled to the CCTB that per that
redetermination he had been required to repay;
ii.
the appeal of the August 5, 2014 redetermination
as to the GST/HSTC in respect of the period January 2013 to April 2013
quarterly (particularized at paragraph 5 of the Respondent’s Reply) is allowed,
and that redetermination is referred back to the Minister for reconsideration
and redetermination on the basis that Michael is entitled to the GST/HSTC that
per that redetermination he had been required to repay;
iii.
the appeal of the July 18, 2014 redetermination
as to the CCTB in respect of the period July 2013 to June 2014 monthly
(particularized at paragraph 7 of the Respondent’s Reply) is denied; and
iv.
the appeal of the August 5, 2014 redetermination
as to the GST/HSTC in respect of the period July 2013 to April 2014 quarterly
(particularized at paragraph 9 of the Respondent’s Reply) is denied.
Signed at Ottawa, Canada, this 25th
day of January 2018.
“B. Russell”
Email this Content