Citation: 2011 TCC 515
Date: 20111108
Docket: 2009-2973(IT)I
BETWEEN:
KAREN ROSS,
appellant,
and
HER MAJESTY THE QUEEN,
respondent.
REASONS FOR JUDGMENT
Jorré J.
Introduction
[1]
Karen Ross, the
appellant, appeals determinations made by the Minister of National Revenue (Minister)
and takes the position that she is entitled to receive the Canada Child Tax Benefit
and the Goods and Services Tax Credit (GST Credit) with respect to her daughter
and her son during the period from July 2006 to June 2009 inclusively.
[2]
This appeal was heard
under the informal procedure and the hearing lasted almost one day and a half.
The original version of these reasons is in English.
[3]
The Minister allowed
the father, John Ross, to claim both the Canada Child Tax Benefit and GST
Credit.
[4]
This case turns
primarily on the following question: Who was the parent who primarily fulfilled
the responsibility for the care and upbringing of the daughter and son, Karen
Ross or John Ross?
[5]
This requirement is in paragraph
(b) of the definition of “eligible individual” in section 122.6 of the Income
Tax Act (Act); it requires that the “eligible individual in respect
of a qualified dependant at any time . . .” be the:
(b) . . . parent of the qualified dependant who
(i) . . . primarily fulfils the responsibility for the
care and upbringing of the qualified dependant . . . .
[6]
The test, “primarily
fulfils the responsibility for the care and upbringing”, requires an overall
assessment.
This test can be referred to as the primary caregiver’s test.
[7]
In paragraph (h)
of the definition of “eligible individual”, it says that “prescribed factors
shall be considered in determining what constitutes care and upbringing”.
[8]
Section 6302 of the Income
Tax Regulations (Regulations) prescribes factors to be considered:
6302 For the purposes of paragraph (h) of the definition
“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 hygienic 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.
These factors are not exclusive.
[9]
The required
determination is essentially a question of fact.
[10]
Generally, the Minister
did not argue that the other conditions for eligibility were not met by the
appellant.
[11]
In particular, apart
from a brief period in the summer of 2007 and 2008, the Minister did not
dispute that the children resided with the appellant; this is no doubt because
on the evidence before me the facts justify a finding that the children resided
with both parents.
I shall discuss later the issue of residence in that brief disputed period.
[12]
This case, like many
before this Court, involves two caring parents who are both very involved in
their children’s lives.
[13]
Recently, but after the
period in issue here, Parliament amended the legislation to allow the Canada
Child Tax Benefit to be split in certain circumstances where there is shared
custody.
[14]
Those changes do not
apply to the period in question here and the law is often difficult to apply in
cases such as this because the Canada Child Tax Benefit cannot be split.
[15]
However, the Canada
Child Tax Benefit is paid on a monthly basis and the determination of one
eligible parent must be made for each month; similarly the GST Credit is paid
on a quarterly basis and the determination must be made for each quarter.
The Facts
[16]
The appellant, Janet
LeBlancq and John Ross testified; numerous exhibits were filed.
[17]
I accept the testimony
of both the appellant and John Ross; I am satisfied that they were both trying
to state the facts as best they could recall them. I am also satisfied that
they have a different perception of events; this is not surprising given that
each of them was with the children at different times.
[18]
Overall, I give somewhat
more weight to the appellant’s evidence, which evidence was more detailed. It
may be that this is the result of the appellant having better memory; with
respect to the time the children spent with her in 2006 and, to a lesser
extent, 2007, her evidence was more detailed because she made an effort at that
time to record with whom the children were.
[19]
The appellant’s
daughter was born in October 1989 and her son was born in September 1991.
[20]
The parents separated
in 1998 and divorced in 2000.
[21]
The separation
agreement
between the appellant and John Ross provided that they would have joint custody
of the children and consult each other on all significant issues regarding the
children.
[22]
It provided that both
were to have reasonable and generous access to the children and that the
children’s time would be divided between the parents on a schedule to be agreed
upon.
[23]
The agreement also
provided that the children would live primarily with the appellant, but that it
was anticipated that the children would live with their father not less than
40% of the time.
[24]
Among other provisions,
the agreement provided that the appellant was to receive “any child tax
credits”.
[25]
The children grew up on
Hornby Island and went to elementary school there.
[26]
However, after
elementary school the children had to go to school in Courtenay on Vancouver Island. The daughter started going to school in Courtenay
in mid-2002, and the son, in May 2004.
[27]
John Ross acquired a
house in Courtenay in mid-2005.
[28]
Prior to that time, the
general pattern was for the children to spend four days a week with their mother
and three days a week with their father. The father and mother’s houses were
across the road from each other.
[29]
That pattern changed
after John Ross acquired the house in Courtenay.
[30]
John Ross kept his
house on Hornby Island after he bought his house in Courtenay.
[31]
To travel from Hornby Island to school in Courtenay, one must take the
ferry from Hornby Island to Denman
Island, cross Denman Island, take a ferry from Denman Island to Vancouver Island and,
finally, travel 20 to 25 km from the ferry terminal to school.
[32]
The departure time of
the last ferry back was such as to make it impractical to participate in some
late after-school activities.
[33]
Friday was different
from the other week days because it was possible to take a later ferry home.
[34]
In particular, while
certain sports with early practices right after school finished in time for the
children to take the “late” school bus home and make it to the last ferry, this
was not true for other sports which had later practices.
[35]
In general, the sports
with early practices corresponded to grades 8 to 10 and those with later
practices corresponded to grades 11 and 12.
[36]
Apart from staying with
their father, sports were not the only reason for the children to sometimes want
to stay late in Courtenay. Sometimes the children wanted to stay there so they
could be with friends; sometimes they stayed overnight with friends in Courtenay
even before the father had a house there.
[37]
The daughter started
going to university in Victoria in September 2007. As a result, from then
on during the school year she was not with either parent most days.
[38]
The following table
summarizes the grade each child was in for each school year:
|
School Year
|
Grade (Daughter)
|
Grade (Son)
|
|
2002-2003
|
8 C
|
6 H
|
|
2003-2004
|
9 C
|
7 H
|
|
2004-2005
|
10 C
|
8 C
|
|
2005-2006
|
11 C
|
9 C
|
|
2006-2007
|
12 C
|
10 C
|
|
2007-2008
|
University V
|
11 C
|
|
2008-2009
|
University V
|
12 C
|
Periods in issue are italicized and in bold.
C = Courtenay
H = Hornby Island
V = Victoria
[39]
The appellant and John
Ross owned a resort on Hornby Island. It is not entirely clear, but it appears that as a
result of the separation agreement, John Ross became the sole owner of the
resort.
[40]
In 2005, the same year
he bought a house in Courtenay, John Ross sold the resort to a local community
group. Unfortunately, that group ran into serious difficulties and as a result
it hired him for four months in the summer of 2006 to run the resort.
[41]
Efforts to turn the
resort around came to an end when the first mortgage holder put the resort into
foreclosure.
[42]
In 2007, John Ross,
together with others, reacquired the resort which he then ran.
[43]
From 2007 on, the
resort was open seven days a week in the summer, Thursday to Sunday from,
approximately, the May long weekend until Thanksgiving and two nights a week
during the winter season.
[44]
The consequence is that
during the period in issue John Ross spent a certain amount of time on Hornby Island where he still had a house, particularly
during the summer.
[45]
With respect to the
factors to be considered that are enumerated in section 6302 of the Regulations,
the following general picture emerges from the evidence:
(a) Factors 1 and 2:
supervision of daily activities and needs and maintenance of a secure
environment
When the children were with one parent or the
other, that parent provided a house for the children to reside, meals and
lunches for school as well as supervision. Of course, given that in the years
in question the children are teenagers, supervision is less frequent and often more
indirect than with young children.
(b) Factors 3 and 5:
arrangement for medical care at regular intervals and, as required, attendance
to the needs of the child when ill or otherwise in need of the attendance of
another person
Generally the children were in good health
but, again, when something came up suddenly, the parent with the child was the
one who dealt with the need.
It was the appellant who took care of
making medical and dental appointments. It appears that the appellant paid for
almost all the dental appointments and, as well, the appellant is the one who
obtained supplemental medical insurance. Given that the children were pretty
healthy, the time involved in taking care of health needs was not great.
(c) Factors 4 and 6:
arrangement of, participation in, and transportation to, educational,
recreational, athletic or similar activities, and provision of guidance and
companionship
While both parents were involved in these
factors, the appellant was more involved, particularly with respect to trips
away.
(d) Other
considerations not in the enumerated factors
Overall, one can generalize that the
appellant appears to have made more efforts to try to be involved with her
children when they were away from her than was the case for the father.
During the period the appellant took the
children on vacations, but the father did not due to the conflict between
school term and the necessity for him to be present during the peak season at
the resort.
[46]
Finally and importantly,
one must consider the time spent with each parent. From the earlier evidence
that I described, once the father bought the house in Courtenay one would
expect an increase in time spent with the father. Potentially, during regular
school weeks one might expect a reversal of the previous pattern of four days
with one and three days with the other to three days with one and four days
with the other.
[47]
However, the actual
time spent with each is not only affected by the availability of the father’s
house, activities with friends, and sports practices, but also by the existence
of long weekends, school holidays around Christmas and in the spring, the
presence of the father on Hornby Island in the summer, etc.
[48]
The father testified
that once he had the house in Courtenay the children were with him most of the
time. He also testified that he was concerned with the frequency with which his
daughter stayed with friends in Courtenay prior to his having a house in Courtenay.
[49]
His testimony was
somewhat more detailed with respect to the summer period. In the summer of 2006
the children were between the two houses on Hornby
Island as they had been before he had a house in Courtenay.
[50]
The father’s testimony
was that in the summer of 2007 the children worked at the resort and the
daughter stayed with him while the son stayed with both, but that the son stayed
primarily with him.
[51]
In the summer of 2008
his testimony was that the daughter went back and forth between the parents
during May and June, but after she stayed primarily with him. Prior to August
the son went back and forth; after August the son took over the role of chef at
the resort and because he was working so many hours he stayed with him
full-time until the end of the summer.
[52]
I should note that
while the appellant had her house during all the summer of 2006, in the summer
of 2007 she rented out her house for about six weeks from mid‑July
through the end of August. She acquired a small trailer referred to as the “fifth
wheel” to live in during the period when the house was rented out. Because it
was small she also had a tent for the children to stay in.
[53]
In 2008 the appellant
rented out her house for all of July and August and again made use of the “fifth
wheel” to stay in.
[54]
Both parents agreed
that the daughter was not keen on staying in the tent, but the appellant
testified, and I accept her testimony, that her daughter would sometimes stay
with her.
[55]
The appellant also
testified about the time spent by the children with each parent and she
produced Exhibit A‑34, with respect to 2006, and Exhibit A‑35, with
respect to 2007. These two exhibits gave a detailed monthly breakdown of the
number of days spent with each parent as well as the number of days spent away
from both parents.
[56]
Exhibit A‑34 was
based on a record which she kept at the time whereas in 2007 the appellant had
major surgery in January and as a result did not keep the same records as for
2007. The appellant had to reconstruct the time spent in 2007 in order to
produce Exhibit A-35.
[57]
I would note that the
appellant testified that some of the nights that the children were with her
were nights that she stayed in the father’s house in Courtenay, on those nights
when the father was not at home.
[58]
All the evidence that I
have described prior to Exhibits A‑34 and A‑35 strongly suggests
that the time spent with each parent is likely to be relatively close and that
the parent who spent the most time with each child in a given month could
easily vary on a monthly basis based on particular circumstances.
[59]
The time allocation
shown in Exhibits A‑34 and A‑35 is consistent with that evidence. I
accept that A‑34 is accurate and, while A‑35 cannot be as accurate,
I accept that A‑35 is broadly accurate.
[60]
With respect to the
months from July to December 2006, Exhibit A‑34 shows the son to have
been with the appellant more than the father in five of the six months whereas
the reverse was true for one of the six months. In the case of the daughter, it
shows the daughter as having been with the father more than the appellant
during four of the six months; the reverse is true for two of the six months.
[61]
Exhibit A-35 with
respect to 2007 shows the son as having been more with the father than the
appellant during seven months of the year, whereas the reverse was true during five
months.
[62]
In the case of the daughter,
prior to the daughter going to university in September the exhibit shows the
daughter as having been with the father more than the appellant during six of
the eight months; the reverse is true during two of the eight months. For three of
the four months beginning in September, it shows the daughter as having spent
more time with the mother; the reverse is true for the month of December.
However, I note that after October the daughter is over 18 and is no longer
eligible for the Canada Child Tax Benefit.
[63]
There is nothing in the
evidence that provides anything like the same level of detail as Exhibits A‑34
and A‑35 in respect of calendar year 2008 and the first six months of
2009.
[64]
With one exception,
there is nothing in the evidence that would suggest the situation was
substantially different with respect to 2008 and the first half of 2009 as
compared to 2007. Subject to that one qualification I conclude that the time
distribution in 2007 continued on in the same way in the following 18 months.
[65]
The one difference is
that the parents would alternate having the children for Christmas and the
following week.
In 2007 it was the father’s turn to have the children for Christmas whereas in
2008 it was the appellant’s turn. From this I conclude that the appellant would
have had more time with the son than the father in December 2008, unlike
December 2007.
[66]
As a result, the son
spent more time with the father than the appellant during six months of 2008;
the reverse was true during the other six months. For the six months of 2009
relevant to this appeal the son spent four months primarily with the father and
two months primarily with the mother.
Evidence of Janet LeBlancq
[67]
Ms. LeBlancq is a
friend of the appellant who lives on Hornby Island and who
has known the appellant and the father for over 20 years; she has also known
the children since they were born.
[68]
The evidence of Ms. LeBlancq
was, in essence, that from her perspective the appellant was the parent who was
the most involved with the children.
Analysis
Residence ― July and August 2007 and 2008
[69]
As I mentioned earlier,
the respondent accepted that the children resided with both parents or, put
another way, had dual residence, through almost the entire period in issue.
[70]
The one exception was
the period where the appellant rented out her home during the peak summer
season, specifically six weeks beginning in mid-July 2007 and the months of
July and August in 2008.
[71]
The respondent’s
position, as I understood it, was that during these periods, because the
daughter did not like sleeping in a tent, the daughter did not in fact stay
with the appellant, and that in August 2008 the son did not stay with the
appellant.
[72]
The appellant’s
evidence was that her daughter did stay with her from time to time. I accept
that evidence and, as a result, I am satisfied that the daughter resided with
the appellant throughout the period in issue.
[73]
As for the son’s
situation in August 2008, it does not matter whether the son stayed or not with
the appellant insofar as I am satisfied, as will be explained below, that in
August 2008 the father was the primary caregiver.
[74]
Consequently, I am
satisfied that the son resided with the appellant at all times that are
material to this appeal.
GST Credit
[75]
Where a child resides
with more than one parent, the rules relating to eligibility for the GST Credit
are somewhat different from those relating to the Canada Child Tax Benefit. In Fraser
v. The Queen,
Woods J. sets out clearly those differences:
49 The caregiver test is imported into the GSTC provisions as
part of a series of rules that are designed to prevent the payment of multiple
benefits in respect of a child. The relevant provision is subsection 122.5(6),
which provides:
(6) If a person would, if this Act were read without reference to
this subsection, be the qualified dependant of two or more individuals, in
relation to a month specified for a taxation year,
(a) the person is deemed to be a qualified dependant, in
relation to that month, of the one of those individuals on whom those
individuals agree;
(b) in the absence of an agreement referred to in paragraph (a),
the person is deemed to be, in relation to that month, a qualified dependant of
the individual, if any, who is, at the beginning of that month, an eligible
individual within the meaning assigned by section 122.6 in respect of the
person; and
(c) in any other case, the person is deemed to be, in
relation to that month, a qualified dependant only of the individual that the
Minister designates.
50 The legislative scheme that is contemplated by clause (a)
of s. 122.5(6) enables a dual residence situation to be resolved by the
agreement of the parties. It is only where there is no agreement that the
caregiver test applies by virtue of clause (b).
[76]
In Fraser, the
parties had made an agreement and, accordingly, that agreement was applied.
[77]
In the present appeal,
the parties had agreed that the appellant would receive “any child tax credits”
in the separation agreement.
I am satisfied that the words “any child tax credits” (emphasis added)
include any portion of the GST Credit arising in respect of the children.
[78]
Consequently, it is
unnecessary to determine who the primary caregiver is for the purpose of the
GST Credit and the appellant is entitled to that credit for both children
throughout the period in issue.
Primary Caregiver
[79]
The question of who is
the primary caregiver is, as I said earlier, essentially a question of fact.
[80]
Generally, not
surprisingly, when a child resides with both parents, but a child spends most
of one month with a particular parent, it is likely that that parent is the primary
caregiver in that month. That parent is the one who is present and has the
immediate responsibility for dealing with ongoing needs, whether they be issues
that suddenly arise or the day-to-day routines such as meals, seeing to it that
the children leave on time for school, etc.
[81]
However, the closer the
time a child spends with each parent is to equal time the more difficult the
question becomes.
[82]
In this case, the broad
picture is one of the involvement of both parents. Some months are clearly to
one side or the other. Other months are much closer. Furthermore, at a trial it
is not always easy to reconstruct exactly what happened in the past.
[83]
Considering all the
evidence as to the roles of the respective parents and considering, in
particular, the detailed evidence with respect to time spent by the children
with each parent, I have reached the following conclusions.
[84]
The appellant was the primary
caregiver of the son in the months of July, August, September, October and
November in 2006, the months of April, June, July, September and October in
2007, the months of April, June, July, September, October and December in 2008
and the months of April and June in 2009.
[85]
The appellant was the primary
caregiver of the daughter in the months of September and October in 2006 and
the months of March, June, September and October in 2007.
Conclusion
[86]
For these reasons, the
appeal will be allowed and the matter will be referred back to the Minister for
reconsideration and redetermination on the basis that:
(a) the appellant is
entitled to the Canada Child Tax Benefit
(i) in respect of the
son, for the months of July, August, September, October and November in 2006,
the months of April, June, July, September and October in 2007, the months of
April, June, July, September, October and December in 2008 and the months of
April and June in 2009;
(ii) in respect of the
daughter, for the months of September and October in 2006 and the months of
March, June, September and October in 2007;
(b) the appellant is
entitled to the GST Credit with respect to both children throughout the period
in issue.
[87]
The appellant incurred
a number of out-of-pocket disbursements from the filing of the notice of appeal
until the conclusion of the hearing; these included two nights’ accommodation,
meals and the cost of ferries.
To cover these disbursements, the appellant is awarded a lump sum of $600 in
costs.
[88]
Before I conclude, I
wish to say that both parents care about their children very much and that they
each, in their own way, contribute to the development of their children.
[89]
Finally, I wish to
thank both the appellant and counsel for the respondent for their presentation
of the case.
Signed at Ottawa, Ontario, this 8th day of November 2011.
“Gaston Jorré”
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