Docket: 2010-3399(IT)I
BETWEEN:
JAMES BETTS,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Appeal
heard on June 6, 2012, at Edmonton, Alberta
Before: The Honourable
Justice Wyman W. Webb
Appearances:
|
For the Appellant:
|
The
Appellant Himself
|
|
Counsel for the Respondent:
|
Gergely Hegedus
|
____________________________________________________________________
JUDGMENT
The Appellant’s appeal in relation to the
reassessment issued for the Appellant’s 2007 taxation year is dismissed,
without costs.
Signed at Toronto, Ontario,
this 21st day of June 2012.
“Wyman W. Webb”
Citation: 2012TCC224
Date: 20120621
Docket: 2010-3399(IT)I
BETWEEN:
JAMES BETTS,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Webb J.
[1]
This appeal in relation
to the reassessment of the Appellant’s 2007 taxation year arises as a result of
the claim by the Appellant for a tax credit as provided in paragraphs 118(1)(b)
and 118(1)(b.1) of the Income Tax Act (the “Act”) in
relation to his son. The Appellant’s claim was denied on the basis that the
Appellant was required to pay child support in 2007.
[2]
Subsections 118(5) and
(5.1) of the Act provide that:
(5) No amount may be deducted under subsection (1) in computing an
individual's tax payable under this Part for a taxation year in respect of a
person where the individual is required to pay a support amount (within the
meaning assigned by subsection 56.1(4)) to the individual's spouse or
common-law partner or former spouse or common-law partner in respect of the
person and the individual
(a) lives separate and apart from the spouse or common-law
partner or former spouse or common-law partner throughout the year because of
the breakdown of their marriage or common-law partnership; or
(b) claims a deduction for the year because of section 60 in
respect of a support amount paid to the spouse or common-law partner or former
spouse or common-law partner.
(5.1) Where, if this Act were read without reference to this
subsection, solely because of the application of subsection (5), no individual
is entitled to a deduction under paragraph (b) or (b.1) of the
description of B in subsection (1) for a taxation year in respect of a child,
subsection (5) shall not apply in respect of that child for that taxation year.
[3]
Subsection 56.1(4) of
the Act provides that:
“support amount” means an amount payable or receivable as an
allowance on a periodic basis for the maintenance of the recipient, children of
the recipient or both the recipient and children of the recipient, if the
recipient has discretion as to the use of the amount, and
(a) the recipient is the spouse or common-law partner or
former spouse or common-law partner of the payer, the recipient and payer are
living separate and apart because of the breakdown of their marriage or
common-law partnership and the amount is receivable under an order of a
competent tribunal or under a written agreement; or
(b) the payer is a legal parent of a child of the recipient
and the amount is receivable under an order made by a competent tribunal in
accordance with the laws of a province.
[4]
As a result of these
provisions, if the Appellant was required to pay an amount as an allowance on a
periodic basis for the support of his son in 2007 and his former spouse was not
required to also pay an amount as an allowance on a periodic basis for the
support of their son in 2007, the Appellant will not be entitled to claim the
tax credit as provided in paragraphs 118(1)(b) and 118(1)(b.1) of
the Act.
[5]
The Appellant and his
spouse started living separate and apart in 2004. There are two children of the
marriage – a son and a daughter. The daughter was living with Julie Betts and
the son was living with the Appellant. They were all living in Ontario. Pursuant to the Order of the Ontario Superior Court
of Justice dated June 21, 2006 (the “First Order”), the Appellant was required
to pay child support for their daughter (who was living with Julie Betts) but
Julie Betts (who was the Applicant under that Order) was not ordered to pay
child support for their son who was living with the Appellant. Paragraph 8 of
that Order stated as follows:
The Applicant [Julie Betts] shall not pay child support to the
Respondent [the Appellant] for [their son] based on the Applicant not having
any income presently.
[6]
In 2007 the Appellant
received an offer of employment in British Columbia.
However, the Appellant did not want to move his son to British Columbia as he was entering his last year of high school. As a
result, the Appellant moved to British
Columbia and his son moved in
with Julie Betts. By an Order of the Ontario Superior Court of Justice dated
November 1, 2007, paragraph 7 of the First Order was varied to provide that the
Appellant would, commencing September 1, 2007, be paying child support for both
his daughter and his son. Paragraph 8 of the First Order was also rescinded.
[7]
While the Appellant
clearly was required to pay child support in respect of his son for 2007
(commencing September 1, 2007), the Appellant’s argument was that his former
spouse would have been required to also pay child support in respect of their
son for the first eight months of 2007 if she would have had any income (other
than the spousal and child support amounts he was paying her). The Appellant
stated that it was his understanding that his former spouse was choosing to not
work so that she could continue to receive the support amounts he was paying
her and would not have to pay child support for their son.
[8]
Unfortunately for the
Appellant the provisions of subsection 118(5.1) of the Act will only be
applicable to remove the application of subsection 118(5) of the Act if
Julie Betts was required to pay a support amount in respect of their
son. Julie Betts was not required to pay any amount as an allowance
on a periodic basis for the maintenance and support of their son in 2007. Even
though she may have been required to pay such an amount if she would have had
other income, since she did not have any income (other than the spousal and
child support amounts he was paying her) she was not required to pay a support
amount in respect of their son in 2007.
[9]
As well, the provisions
of subsection 118(5) of the Act do not provide for a pro-ration based on
the portion of the year for which a support amount was required to be paid.
Subsection 118(5) of the Act provides that no amount may be claimed as a
tax credit under subsection 118(1) of the Act by an individual in
respect of another person if that individual is required to pay a support
amount to the individual’s spouse (or former spouse) in respect of that other
person. Since the Appellant was required to pay to his former spouse a support
amount in respect of their son in 2007 (albeit for the last four months of
2007), the Appellant cannot claim any tax credit under subsection 118(1) of the
Act in respect of his son for 2007.
[10]
As a result the
Appellant’s appeal in relation to the reassessment issued for the Appellant’s
2007 taxation year is dismissed, without costs.
Signed at Toronto, Ontario,
this 21st day of June 2012.
“Wyman W. Webb”
CITATION: 2012TCC224
COURT FILE NO.: 2010-3399(IT)I
STYLE OF CAUSE: JAMES BETTS AND HER MAJESTY THE QUEEN
PLACE OF HEARING: Edmonton,
Alberta
DATE OF HEARING: June 6, 2012
REASONS FOR JUDGMENT BY: The
Honourable Justice Wyman W. Webb
DATE OF JUDGMENT: June 21, 2012
APPEARANCES:
|
For the
Appellant:
|
The Appellant Himself
|
|
Counsel for the
Respondent:
|
Gergely Hegedus
|
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the
Respondent: Myles J. Kirvan
Deputy
Attorney General of Canada
Ottawa,
Canada
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