Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: An adult brother ("Individual A") and his adult sister ("Individual B") live in the same residence along with some other relatives. Individual B is the natural mother of a child (the "Child"). Clarification has been requested with respect to the requirements of paragraphs 252(1)(b) and (d), and whether the Child can be considered the "child" of Individual A for purposes of the Act.
Position: General comments provided on paragraphs 252(1)(b) and (d), and it does not appear that the Child can be the "child" of Individual A pursuant to these provisions.
Reasons: Limited facts provided; however, given that the Child lives with her natural mother (Individual B), and given the mother's financial situation, it is unlikely that the Child can be said to be a child of Individual A under the above note provisions. In our view, the fact that Individual A expends funds in respect of the maintenance of the residence and takes the Child to school, is not sufficient to fall within these provisions. We also note that there appears to be other relatives in the household and it is unclear as to what their role is in the above situation.
June 29, 2001
Winnipeg Tax Services Office HEADQUARTERS
Client Services M. Eisner
(613) 957-2138
Attention: Gail Kodak
2001-007724
Meaning of "Child"
This is in reply to your memo of March 27, 2001 to which you attached two letters dated January 30 and February 22, 2001 from a legal firm, regarding the above-noted subject. We also acknowledge our telephone conversation on May 25, 2001 (Eisner/Kodak) in which we obtained additional information.
In the scenario under consideration, a brother ("Individual A") and a sister ("Individual B") live in the same residence along with some other relatives. Each of Individual A and Individual B are described as being single in their 1999 T-1 income tax return. Individual B has a child (the "Child") of which she is the natural mother. The legal representative of Individual A has indicated that Individual A has been standing in the place of the father. The employment income of Individual A for 1999 was $XXXXXXXXXX, while the employment income of Individual B for that year was $XXXXXXXXXX. Individual A would like the Child to be considered as his "child" for purposes of the Income Tax Act (the "Act"), so that Individual A can claim certain credits and deductions in respect of the Child. In this regard, the legal representative has requested clarification with respect to the requirements of paragraphs 252(1)(b) and (d) of the Act.
Pursuant to paragraph 252(1)(b) of the Act, a child of a taxpayer includes a person who, inter alia, is wholly dependent on the taxpayer for support and is under the custody and control, in law or in fact, of the taxpayer. In general terms, custody involves the right of determining the residence, protection, care (physical and moral), education, and religion of a minor child. We would also emphasize that one of the requirements of paragraph 252(1)(b) is that the person be "wholly dependent" on the taxpayer for support. While it is a question fact whether the requirements of paragraph 252(1)(b) of the Act have been met, in the above situation, given that the Child lives with her natural mother (Individual B), and given the mother's financial situation, it is unlikely that the Child can be said to be "wholly dependent" on Individual A, and it is also questionable whether the Child can be said to be in the custody of Individual A. In our view, the fact that Individual A expends funds in respect of the maintenance of the residence and takes the Child to school, as noted in your memo, is not sufficient to fall within the purview of paragraph 252(1)(b) of the Act. We would also note that there appears to be other relatives in the household and it is unclear as to what their role is in the above situation.
As regards paragraph 252(1)(d) of the Act, it provides that a child of a taxpayer includes an adopted child of the taxpayer, while paragraph 251(6)(c) of the Act provides, inter alia, that persons are connected by adoption if one has been adopted, legally or in fact, as the child of the other. It is our understanding that a legal adoption has not taken place in the above situation.
Whether a factual adoption has occurred is a question of fact that can only be determined based on a consideration of the particular circumstances.
We note that there are a limited number of reported income tax cases dealing with de facto adoptions. This issue was considered with respect to the decisions rendered in Madigane v. MNR, 89 DTC 37 (Tax Court of Canada), No. 161 v. MNR, 54 DTC 201 (Tax Appeal Board) and Anderson V. MNR, 3 DTC 1030 (Exchequer Court).
In our view, the fact that an individual is appointed guardian of a child would not, in and of itself, constitute adoption in fact. Similarly, the fact that an individual occupies the same residence as a child is not, in and of itself, determinative that a factual adoption exists. Generally, the courts will not recognize a de facto adoption unless the "adoptive" parent exercised parental care and guidance on a continuing basis. The factors to look for in determining whether a certain relationship between a person and a child constitutes an adoption in fact are actual control and custody, an exercise of parental care and responsibility on a continuing basis, dependency, and proximity to each other. Again, based on the limited facts provided, and for the reasons noted above, in our view, it does not appear that there has been a de facto adoption of the Child by Individual A in the above situation.
For your information, a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the legislation Access Database (LAD) on the CCRA's mainframe computer. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the LAD version or they may request a copy severed using the Privacy Act criteria which does not remove client identity. Requests for this latter version should be made by you to Jackie Page at (613) 957-0682. The severed copy will be sent to you for delivery to the client.
We trust that these comments will be of assistance.
Milled Azzi, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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