Gage] (M.V.) v. Canada, [1995] 2 CTC 2182

These informal procedure appeals concern Ms. Gagel’s 1989, 1990 and 1991 taxation years, which deal with whether she is entitled to a child tax credit pursuant to section 122.2 of the Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1 (the ’’Act"), and more particularly whether she was, during each such year, an an individual who had an "eligible child" within the meaning of paragraph 122.2(2)(a) of the Act. This latter provision defines

"eligible child” thusly:

"Eligible child" of an individual for a taxation year means a child in respect of whom the individual is entitled

(i) in January of the following taxation year....

to receive a family allowance under the Family Allowances Act, 1973;

The children in this case were born April 26, 1986 and June 3, 1987 respectively. Their parents, the appellant and her husband, separated on April 28, 1989 and each retained lawyers respecting this unfortunate event. The following events and court orders ensued and I recite them chronologically for greater ease of understanding.

On May 26, 1989 the appellant obtained interim custody and her husband was to pay $150 per month per child. On August 29, 1989 the children were to reside with the appellant during the week and with her husband during weekends.

On October 4, 1989 joint guardianship of each child was ordered in favour of both parents (exhibit R-1). The husband was to have custody during the week and his payment for support was to drop to $50 per month per child, and the appellant was to have custody for the weekends plus Tuesdays and Thursdays to 7:00 p.m. subject to some conditions.

Then in January of 1990 it was agreed the appellant’s access was to be supervised, ostensibly to preclude the husband from alleging unfounded and untrue accusations of violence by the appellant against the children. By court order dated October 10, 1990 (exhibit R-2), the appellant’s supervised Wednesday access was to be at the husband’s cost, and it specifically provided that the family allowance cheques she was receiving were to be applied toward the supervisor’s Sunday access cost; if not so applied she was to pay it to her husband. If Sunday’s access cost exceeded the family allowance amount the excess was to be borne by the husband.

On December 20, 1991 sole custody of each child was granted to the husband, with supervised specified access being given to the appellant.

Ms. Gagel’s father testified that he had acted as a supervisor once it was agreed a family member could do it. He confirmed his daughter’s testimony that she maintained a two-bedroom apartment for herself and the two children, that she expended moneys for their care and support, and that the supervision was helpful and protective against any unfair allegations being levied against her respecting her parenting abilities.

Ms. Gagel testified that throughout 1989, 1990 and 1991 the types of expenditures made by her for the support of the two children included food, clothing and accommodation. It is notable that since October of 1989 her husband’s support obligation had dropped to $50 per month per child under the aforementioned order of joint guardianship. In my view such a modest contribution inherently recognizes and mandates a joint support obligation being expected to be borne by the children’s mother, the appellant, from that time on until at least December 20, 1991, which is when her husband obtained sole custody.

In my opinion, and having regard to the case of Canada v. Sirois (1988), 90 N.R. 39 (F.C.A.), and particularly for the reasons expressed in paragraph 11 at page 44, Ms. Gagel was entitled to receipt of the family allowance under the Family Allowance Act and its Regulations for her 1989 and 1990 taxation years. She testified she received those moneys notwithstanding her husband’s repeated requests to have them paid to him and that there are or have been no formal proceedings instituted against her under that legilation for their return.

The case of Canada v. Rexer (1990), 111 N.R. 362, 27 R.F.L. (3d) 73 (F.C.A.), is authority for the proposition that Family Allowance Regulation 9(3)(b) grants the Minister a discretion that an allowance be paid either in whole or in part to a father notwithstanding the mother’s refusal to consent. However no such exercise of Ministerial discretion has been shown to have transpired in the appeal before me.

Counsel for the respondent advised the Court that the overall factual situation may well have been shown to be different if Mr. Gagel had been called to testify. However there was no such evidence, and he was not joined as a party. Further there is no reason here as to why the appellant’s testimony should be considered as other than fully credible.

With respect to the appellant’s 1991 taxation year, the definition of "eligible child" in paragraph 122.2(2)(a) of the Income Tax Act requires athat her entitlement to family allowance exists in January of 1992. As Pratt J. held in the Sirois case, supra, at page 44, it is only where two parents are living apart, with the male parent having exclusive custody of the child or children, that the female parent will lose the right to the family allowance under that legislation. Ms. Gagel lost that right by virtue of the December 22, 1991 court order. Because of paragraph 122.2(2)(a) the Income Tax Act requires her entitlement to exist "in January of the following year" (in this case being January of 1992), and because that entitlement was lost in December of 1991, the two children were not "eligible children" for 1991 and Ms. Gagel loses her fiscal child tax credit entitlement for the 1991 year. Unlike the family allowance legislation as interpreted in the Rexer case, supra, the income tax legislation does not provide for split entitlements for 1991 in the absence of actual exercise of Ministerial discretion pursuant to Family Allowance Act authority.

Conclusion

The appeals for the taxation years 1989 and 1990 are to be allowed. The appeal for the 1991 taxation year is dismissed.

The measure of the appellant’s success here entitles her to an award of costs for the 1989 and 1990 appeals. Ms. Gagel testified she is financially unable to repay the $1,056 she received in November of 1991 as a prepay- ment in respect of the child tax credit for the children for her 1991 taxation year. Having regard to all of the circumstances of this case I would urge the Minister of National Revenue to consider application of the "fairness provisions" within subsection 220(3.1) of the Income Tax Act as to interest, and penalty if any, respecting Ms. Gagel’s liability for repayment of the child tax credit for 1991. I say this gratuitously as this Court is without jurisdiction to order this to be done, it having been authoritatively determined that this remedy rests solely within the discretion of the Minister of National Revenue.

Appeal allowed in part.