Date: 20020607
Docket:
2002-62-IT-I
BETWEEN:
ELIZABETH J.
IRWIN-KENYON,
Appellant,
and
HER MAJESTY THE
QUEEN,
Respondent.
Reasonsfor
Judgment
McArthur J.
[1]
The issue in this appeal is whether the amount of $4,846 paid by
the Appellant's former spouse is to be included in the
Appellant's income for the 1999 taxation year. The Minister
of National Revenue (the Minister) relies on paragraph
56(1)(b) and subsection 56.1(1) of the Income Tax
Act (the Act) which read as follows:
56(1)
Without restricting the generality of section 3, there shall be
included in computing the income of a taxpayer for a taxation
year,
...
(b)
the total of all amounts each of which is an amount determined by
the formula
A - (B +
C)
where
A
is the total of all amounts each of which is a support amount
received after 1996 and before the end of the year by the
taxpayer from a particular person where the taxpayer and the
particular person were living separate and apart at the time the
amount was received,
B
is the total of all amounts each of which is a child support
amount that became receivable by the taxpayer from the particular
person under an agreement or order on or after its commencement
day and before the end of the year in respect of a period that
began on or after its commencement day, and
C
is the total of all amounts each of which is a support amount
received after 1996 by the taxpayer from the particular person
and included in the taxpayer's income for a preceding
taxation year;
56.1(1) For the
purposes of paragraph 56(1)(b) and subsection 118(5),
where an order or agreement, or any variation thereof, provides
for the payment of an amount to a taxpayer or for the benefit of
the taxpayer, children in the taxpayer's custody or both the
taxpayer and those children, the amount or any part
thereof
(a)
when payable, is
deemed to be payable to and receivable by the taxpayer;
and
(b)
when paid, is deemed to have been paid to and received by the
taxpayer.
The parties agree that the pertinent
question is whether the Appellant is deemed to have received the
child support payments pursuant to paragraph 56.1(1)(b) of
the Act, and specifically, whether the Appellant had
custody of her two daughters during the relevant
period.
Facts
[2]
The Appellant was the only witness. She was married to Steve J.N.
Galianos in 1977. They had two children, Jessica born February 9,
1977 and Christina born September 23, 1981. They entered into a
domestic contract (separation agreement) dated June 15, 1993. The
Appellant was granted custody of the two girls and contracted to
pay $300 per month per child with a cost of living escalation
clause. The agreement provided in paragraph 7(i) that:
a.
The payments shall be the full sum of Three Hundred Dollars
($300.00) each, payable on the fifteenth and thirtieth of each
and every month commencing June 15, 1993, payable directly to
Elizabeth Galianos and thereafter commencing June 30, 1993
payable to the Court of Queens Bench, Family Division, Justice
Building, Queen Street, Fredericton, New Brunswick until one or
more of the following occur:
i.
the child ceases to reside with the Wife. (The child shall be
deemed to reside with the Wife notwithstanding that the child
lives away from home while pursuing or enjoying a reasonable
holiday, attending an educational institution, or engaging in
summer employment.);
ii.
the child becomes 19 years of age and ceases to be in attendance
at an educational institution;
iii.
the child obtains her first post secondary degree, diploma or
certificate;
iv.
the child marries;
v.
the child dies;
vi.
the Husband dies;
[3]
The following facts set out in the Notice of Appeal are
accurate:
...
The support payments to my two children went directly to them in
their names. For Jessica Galianos, my eldest daughter, this was
done effective September 1997. I paid income tax on her support
payments until she left home at 22 years of age and went away to
University of Montreal. For Christina, the payments went to her
as of September 1999, in her name. She was 18 at the time and
living in Montreal attending University. Each time I spoke to my
Family Support enforcement officer, Arnold Crawford, who directed
me to send him a faxed copy of my request and the Court of
Queen's Bench Support Services would change who the payments
went to without having to go back to court. Under Section 60.1(1)
of the Act regarding adult childrens' support
payments, I feel I am not responsible for the support payments,
that I never received, never used and from which I received no
benefit. I had no control over this money, and my adult children
do, therefore why I should have to pay income tax on it? This
money was exclusively for my two adult children. My daughters
have submitted a written statement corroborating my claims in
this matter. My ex-spouse knew very well that our daughters were
getting the support payments, made out to them for their use only
and that I did not receive or use these funds.
[4]
The Appellant included in her income the proportionate amount
paid for Christina's support
while she was living at home with her mother. In 1999, Jessica
was 22 years old and Christina turned 18 on September 23, 1999.
About September 1, 1999, Christina left her mother's home to
reside in Montreal and attend Concordia University. At this time,
the Appellant feels she no longer had custody of Christina. To
illustrate this, the Appellant recalled that she became aware
shortly after Christina left home, that her older daughter
Jessica was no longer residing in Montreal attending Concordia
but had moved to Toronto to work as a stewardess for Air Canada.
This caused the Appellant considerable distress. While she had
lost custody and control of Christina, she hoped Jessica would be
close by to counsel and assist her younger sister to cope with
her anxiety. The Appellant sought counselling. Apparently, she
was advised to face reality and let go. Christina was 18 years
old, 500 miles away and on her own. Christina visited her mother
at Christmas, spending half of those holidays with her father.
She remained in Montreal during the summer of 2000 returning only
for Christmas.
[5]
The Appellant wrote the New Brunswick Court of Queen's Bench
in 1997 and 1999 requesting that the support payments be made
directly to Jessica and Christina, respectively. Such requests
were carried out and Jessica and Christina directly received the
support payments from this time on.
Analysis
[6]
Again the question is whether the Appellant had custody of
Christina and Jessica in 1999. I found the two cases submitted by
the Respondent, Robinson v. Canada
and Saddler v. The Queen
of assistance.
[7]
In Robinson, Rip J. was required to consider whether a
child was in a taxpayer's custody, pursuant to subsection
60.1(1) of the Act. In 1996, the appellant was ordered
by an Ontario Court to pay directly to his adult son, monthly
support payments of $300. In assessing the taxpayer for 1997, the
Minister disallowed the deduction of the $3,600 paid by him to
his son during 1997. The appellant appealed to the Tax Court of
Canada. Judge Rip dismissed the appeal and determined that by
virtue of subsection 60.1(1) of the Act, where an amount
has not been paid to the former spouse of the taxpayer, but to
the benefit of the child in that person's custody, the amount
is nevertheless deemed to have been paid to the spouse, so that
the taxpayer may deduct it under paragraph 60(b) of the
Act. The narrow question to be decided in the
Robinson case, therefore, was whether or not the son was
in his mother's custody during 1997, when the payments in
issue were made to him. Judge Rip examined the case Saddler,
supra, and various dictionary definitions, and deducted from
these examinations that custody implies that the child submit
himself or herself to parental control, and be dependent to a
certain extent. Such a determination is a question of fact, and
an adult child usually bears a greater onus than a minor child in
proving that he or she is under the custody of a parent. In the
Robinson case, no evidence was introduced as to whether
the son had continued to submit himself to his mother's
control.
[8]
In the Saddler case, Bell J. determined that the appellant
should be allowed to deduct child support payments made directly
to his adult children and not to his former spouse. Judge Bell
found that although the children attended university, they were
in their mother's custody because they gave a portion of the
child support payments to their mother, lived in their
mother's home and ate their meals there.
[9]
To support the position that the Appellant had custody of
Christina after August 1999, and of Jessica in 1999, counsel for
the Respondent relied on a Consent Order from the New Brunswick
Court of Queen's Bench dated April 10, 2001 and paragraph
7(i)(a)i of the separation agreement, as quoted above.
[10]
The Consent Order states that Steve Galianos would increase child
support payments to Christina to $452. The Appellant did not
believe that she initiated the proceedings resulting in the Court
Order. Paragraph 7(i)(a)(i) of the separation agreement states
that Steve Galianos must continue to make child support payments
even if the child is no longer residing with the Appellant
because she is attending school. Neither document supports the
notion that Christina or Jessica were within the custody of the
Appellant.
[11]
During the relevant
period in 1999, Jessica and Christina were living in Montreal and
Toronto and attending university and working. There is no need to
go beyond the ordinary meaning of the word "custody".
The Appellant did not have the care and control of her daughters.
Therefore, neither child was in the Appellant's custody and
accordingly subsection 56.1(1) does not deem the Appellant to
have received child support payments.
[12]
The appeal is allowed and the Appellant is entitled to costs in
the amount of $200.
Signed at Ottawa, Canada, this 7th day of
June, 2002.
"C.H. McArthur"
J.T.C.C.
COURT FILE
NO.:
2002-62(IT)I
STYLE OF
CAUSE:
Elizabeth Irvin-Kenyon and
Her Majesty the Queen
PLACE OF
HEARING:
Fredericton, New Brunswick
DATE OF
HEARING:
May 17, 2002
REASONS FOR JUDGMENT
BY: The Honourable Judge C.H.
McArthur
DATE OF
JUDGMENT:
June 7, 2002
APPEARANCES:
For the
Appellant:
--
The Appellant herself
Counsel for the
Respondent:
Christa MacKinnon
COUNSEL OF RECORD:
For the
Appellant:
Name:
--
Firm:
--
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2002-62(IT)I
BETWEEN:
ELIZABETH J. IRWIN-KENYON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on May 17, 2002, at Fredericton,
New Brunswick, by
the Honourable Judge C.H. McArthur
Appearances
For the
Appellant:
The Appellant herself
Counsel for the
Respondent:
Christa MacKinnon
JUDGMENT
The appeal from the assessment of tax made under the Income
Tax Act for the 1999 taxation year is allowed and the
assessment is referred back to the Minister of National Revenue
for reconsideration and reassessment on the basis that the amount
of $4,846 is not to be included in computing the Appellant's
income.
The Appellant is entitled to costs in the amount of
$200.
Signed at Ottawa, Canada, this 7th day of June,
2002.
J.T.C.C.
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