O'Brien – Tax Court of Canada declines to apply the ITA’s literal wording in order to avoid an absurdity

Although the family income for purposes of computing an individual’s entitlement to the Canada child benefit (CCB) is computed on a lagged basis, s. 122.62(5)(b) provides relief by stipulating that effective almost immediately after the death of the individual’s spouse, that family income is computed based only on the individual’s income for the relevant pre-death period, i.e., the income of the deceased spouse during that period is excluded.

Thus, when the taxpayer’s husband died, she rightfully expected that her family income for the relevant pre-death period would not include her husband’s income under the Ontario Disability Support Program (the ODSP payments). Unfortunately, s. 56(1)(u)(ii) deemed the ODSP payments to be the income of the higher-income spouse (herself) – so that on a literal reading of the combined effect of s. 122.62(5)(b) and s. 56(1)(u)(ii), her family income included not only her actual income but also the income attributed to her under s. 56(1)(u)(ii).

Russell J found that the Explanatory Notes suggested that this result was unintended and quoted from Villa Ste-Rose in stating:

Analogously [to that case], in the present case there is “a literal interpretation which may produce illogical or absurd results [and so] must be set aside”.

CRA was ordered to recompute her CCB on the basis of excluding the deemed s. 56(1)(u)(ii) income from her income.

Neal Armstrong. Summary of O'Brien v. The King, 2023 TCC 132 under s. 122.62(5)(b).