Laing v. R., [1998] 3 CTC 2252

Beaubier T.C.J.:

This appeal pursuant to the Informal Procedure was heard at Winnipeg, Manitoba on March 2, 1998.

The Appellant was reassessed for her 1991, 1992, 1993 and 1994 taxation years to disallow her claim for a child tax credit respecting her daughter, Sarah Burch, who was born in 1980.

The Appellant was the only witness. Her testimony was objective and entirely credible. The conduct of Mr. Mark Burch and Ms. Laing in dealing with and raising their children was exemplary. That conduct and the children are a credit to them both in what were difficult circumstances for them and for their children.

The chronology is as follows:

(1) 16 August, 1969 - Mark and Mary Kay are married.

(2) 7 July, 1978 - Their son Aaron is born.

(3) 18 October, 1980 - Their daughter Sarah is born.

(4) June 1986 - Mark and Mary Kay separate.

(5) 23 January, 1987 - (Exhibit A-1) They execute a separation agreement. Paragraph 9 of Exhibit A-1, the separation agreement, provided for joint custody. They arranged that the two children would spend Monday and Tuesday with Mark, Wednesday and Thursday with Mary Kay, and would alternate the rest of the week with each parent at their parents’ respective homes in Brandon, Manitoba.

(6) 2 March, 1989 - (Exhibit A-3) They amend their separation agreement. Paragraph 2 of Exhibit A-3 reads,

2. While the parties agree they shall continue to have joint custody of the children of the marriage, it is agreed the Husband shall be entitled to receive the family allowance payment for Aaron Christopher Burch and the Wife shall continue to receive the family allowance payment for the child Sarah Lynn Burch and, further, the Husband shall be entitled to the spousal equivalency deduction and the child tax credit in relation to the child, Aaron Christopher Burch, and the Wife shall be entitled to the spousal equivalency deduction and the child tax credit in relation to the child, Sarah Lynn Burch.

(7) 23 June, 1989 - (Exhibit A-2) Judgment issues for the divorce of Mark and Mary Kay, continuing joint custody as before. Exhibit A-2 reads in full as follows,

The parties hereto having been divorced by divorce judgment pronounced the 23rd day of June, 1989;

1. THIS COURT ORDERS AND ADJUDGES that:

a) Mark Alan Burch and Mary Katherine Justine Burch have joint custody of the following children of the marriage:

Aaron Christopher Burch

Sarah Lynn Burch

with the said children residing alternately with the Petitioner and the Respondent according to a schedule which shall be mutually agreed upon from time to time.

2. THIS COURT ORDERS AND ADJUDGES that Mark Alan Burch pay to Mary Katherine Justine Burch for the support of the child, Sarah Lynn Burch, the sum of $150.00 per month by means of bi-weekly payments of $69.23, commencing on the 23rd day of June, 1989.

3. THIS COURT ORDERS AND ADJUDGES that a copy of this order shall be served by ordinary mail addressed to the Respondent at 357 16th Street, Brandon, Manitoba, R7A 4X7, within 20 days of signing.

A number of clear inferences follow from Exhibit A-2. They include:

1. The word “residing” in paragraph 1(a) is a misnomer since Mary Kay is to receive support for Sarah according to paragraph 2.

2. From a tax point of view, the word “residing” in paragraph 1(a) should have been “sojourn”.

3. Mark is to pay Mary Kay support for Sarah. Such support has to be paid because of Sarah’s residence with Mary Kay. It also indicates that Mary Kay is the primary custodian of Sarah.

4. The order obviously is based on the custodial and residential arrangements already put in place by Mark and Mary Kay.

(8) 1992 - The children begin to spend more time at their father’s home in Brandon, where they each have a room. Mary Kay continues to maintain a room for each of them in her home in Brandon and the two children come and go. They all speak daily. Both parents go to school events. Both parents agree on and supervise curfews, companions and activities of their children. Mary Kay makes the medical and dental appointments, but either parent takes the children to them. Both parents shop for the children and contribute to purchases for them. The children are in and out of both parents’ homes freely. Sarah has sleep overs with other girls at both homes. Sarah’s music lessons are at Mary Kay’s home. Both children sleep much more often at Mark’s home.

(9) June, 1995 - Mary Kay moves to Winnipeg to take a job at Stony Mountain Penitentiary. The children stay in Brandon.

(10) September 20, 1995 - The Minister of National Revenue disallows Mary Kay’s child tax benefits.

(11) 9 January, 1996 - (Exhibit A-4) A consent custody order is signed granting Mark primary care and control of the children, but both parents retain joint custody.

The question is whether Mary Kay was an “eligible individual” and whether Sarah was a “qualified dependant” in 1991, 1992, 1993 and 1994. Those portions of section 122.6 of the Income Tax Act respecting this question read,

“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 primarily fulfils the
	responsibility for the care and upbringing of the qualified dependant,
(c)	is resident in Canada,
(d)	is not described in paragraph 149(1)(a) or (b), and
(e)	is, or whose cohabiting spouse is, a Canadian citizen or a person who
	(i)	is a permanent resident (within the meaning assigned by the
		Immigration Act),
	(ii)	is a visitor in Canada or the holder of a permit in Canada
		(within the meanings assigned by the Immigration Act) who
		was resident in Canada throughout the 18-month period
		preceding that time, or
	(iii)	was determined before that time by the Convention Refugee
		Determination Division of the Immigration and Refugee Board
		to be a Convention refugee,

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 circumstances set out in regulations made by the Governor in Council on the recommendation of the Minister of National Health and Welfare,

and

(h) factors to be considered in determining what constitutes care and upbringing may be set out in regulations made by the Governor in Council on the recommendation of the Minister of National Health and Welfare;

“qualified dependant” at any time means a person who at that time

(a) has not attained the age of 18 years,

(b) is not a person in respect of whom an amount was deducted under paragraph (a) of the description of B in subsection 118(1) in computing the tax payable under this Part by the person’s spouse for the base taxation year in relation to the month that includes that time, and

(c) is not a person in respect of whom a special allowance under the Children’s Special Allowances Act is payable for the month that includes that time.

Regulation 6302 is applicable after 1992. It reads,

6302. For the purposes of paragraph (h) of the definition of ‘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 hygenic 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.

Reviewing the facts, the Court finds that both parents were equal in respect to (a) and (b). In particular, while the children may have slept more at Mark’s, each had a room at Mary Kay’s and each had a room at Mark’s. At all times they had full access to both homes. Sarah and her friends had sleep overs in both homes. Sarah’s sleeps at Mark’s were sojourns. Aaron’s sleeps at Mary Kay’s were sojourns. Mary Kay arranged the medical and dental appointments, but both parents transported the children to them and provided equal care when they were sick. Mary Kay did more in respect to Sarah’s music lessons; otherwise, both parents provided equally in respect to (d), (e), (f) and (g). The court order of June 23, 1989 confirmed the agreement of March 2, 1989 and complied with (h).

It is noted that the tests for residence are essentially common law tests. They are not statutory. Considerations include time spent, motives or reasons, dwelling establishment, background, mode or routine of life and connections with homes and family.

Here we have two infant children. Sarah was only 14 in 1994. In these circumstances and facts respecting an infant, the parents’ intention is very important. In light of the other evidence described, including having her own bedroom at Mary Kay’s home, Sarah’s residence was where her parents jointly intended that she reside. That was at Mary Kay’s home.

Once Sarah’s residence is found to be at Mary Kay’s home, section 122.6, “eligible individual”, paragraph (f) presumes that Mary Kay is the eligible individual and this Court so finds.

During very difficult years, the children were successfully adjusted to a routine and their parents were consensual in that and in the residence which they each established for one child. The parents did not upset or disrupt the children. The parents both did their best for their children. Their conduct was exemplary and successful. Together they changed Sarah’s residence by the January, 1996 consent order.

This assessment was not caused by a claim from Mark. It occurred at the Minister of National Revenue’s volition. There are times when public bodies should stay out of a family’s affairs. This is one of them.

The appeal is allowed. This matter is referred to the Minister of National Revenue for reconsideration and reassessment in accordance with these reasons.

The Appellant’s counsel came to Winnipeg from Brandon to conduct this appeal with good reason. She appears to have been the Appellant’s counsel in many of the legal proceedings chronicled. The weather in which counsel travelled over 160 kilometres each way was difficult and an overnight stay was required of counsel because of blizzard contingencies. The Appellant is awarded party and party costs, which includes the estimated disbursements of counsel, according to the Informal Tariff in the amount of $950.00.

Appeal allowed.