[OFFICIAL ENGLISH TRANSLATION]
Date: 20020128
Docket: 2001-1043(IT)I
BETWEEN:
RAYMOND LAVOIE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
For the Appellant: The Appellant himself
Counsel for the Respondent: Stéphanie
Côté
REASONS FOR JUDGMENT
(read at the end of the hearing on
January 18, 2002, at Québec, Quebec)
Garon, C.J.T.C.C.
[1] This is an appeal from an income
tax assessment for the 1999 taxation year. Through that
assessment, the Minister of National Revenue disallowed the
$5,718 tax credit for a wholly dependent person claimed by the
appellant. That credit is equivalent to the credit for a married
person.
[2] The Minister of National Revenue
relied on the allegations of fact set out in paragraph 5 of the
Reply to the Notice of Appeal. Paragraph 5 reads as follows:
[TRANSLATION]
(a) two children,
Frédéric Lavoie-Néron and Emmanuel
Lavoie-Néron, were born of the union of the
appellant and Marjolaine Néron (hereinafter his
"former spouse");
(b) during the 1999
taxation year, the appellant lived separate and apart from his
former spouse;
(c) for the 1999
taxation year, the appellant claimed $5,718 for his son
Frédéric, who was born on April 30, 1984, as an
equivalent-to-spouse amount;
(d) at all relevant
times, Frédéric and Emmanuel were minor
children;
(e) in 1995, the
appellant brought a motion in the Superior Court to vary the
provisional measures provided for in a judgment of April 26,
1994, and claimed, inter alia, custody of the
children;
(f) in an
evaluation order and interim order made by the Superior Court on
November 3, 1995, the Honourable Mr. Justice Robert Lesage
ordered a psychosocial evaluation in order to assess the
children's wishes and the parent-child relationship
context;
(g) in the meantime,
the Honourable Mr. Justice Robert Lesage varied the judgment
confirming the provisional measures agreement and declared that
the former spouse would have custody of the children pending
judgment on the appellant's motion;
(h) in the same
order, the Honourable Mr. Justice Lesage ordered, inter
alia, that the appellant pay his former spouse $1,500 a month
for the children as of July 1, 1996, to be payable in advance on
the 15th of each month, with the exception of $750 to be paid on
July 1, 1996;
(i) there are
no documents in the appellant's file showing that the
agreement was varied by an order, judgment or written agreement
between him and his former spouse.
[3] The appellant admitted all the
subparagraphs of paragraph 5 of the Reply to the Notice of
Appeal.
[4] The appellant was the only person
who testified on his behalf.
[5] The appellant struck me as an
entirely credible witness. There is no reason to doubt his
testimony.
[6] He testified that his former
spouse did not leave their former common residence on July 1,
1996, as she was required to do by the order of
November 3, 1995. According to the appellant, his son
Frédéric was forced by his mother to leave the
couple's former residence in November 1995. He went to live
with his father at his father's home. The time
Frédéric lived in his father's home included
all of 1999, and he was wholly dependent on his father that
entire year.
[7] The appellant testified that he
had asked his former spouse to consent to variations to the order
of November 3, 1995, but she refused to accept any such
variations. The appellant did not want to apply to the Superior
Court of Quebec to have the order of November 3, 1995, varied
because of the legal expenses and other outlays that this would
have entailed.
[8] The appellant also testified that
in 1999 he paid, inter alia, the municipal and school
taxes and the telephone bills for his former residence.
[9] The appellant also admitted that
he did not make the payments provided for in the order of
November 3, 1995, since his former spouse was not complying with
that order.
Analysis
[10] Entitlement to the
equivalent-to-spouse tax credit for a wholly
dependent person is provided for in paragraph 118(1)(b) of
the Income Tax Act:
(1) For the purpose of computing the tax payable
under this Part by an individual for a taxation year, there may
be deducted an amount determined by the formula
A x B
where
A is the appropriate percentage for the
year, and
B is the total of,
. . .
(b) in the case of an individual who does not
claim a deduction for the year because of paragraph (a)
and who, at any time in the year,
(i) is
(A) a person who is unmarried and who does not live in a
common-law partnership, or
(B) a person who is married or in a common-law
partnership, who neither supported nor lived with their spouse or
common-law partner and who is not supported by that spouse
or common-law partner, and
(ii) whether alone or jointly
with one or more other persons, maintains a self-contained
domestic establishment (in which the individual lives) and
actually supports in that establishment a person who, at that
time, is
(A) except in the case of a child of the individual,
resident in Canada,
(B) wholly dependent for support on the individual, or the
individual and the other person or persons, as the case may
be,
(C) related to the individual, and
(D) except in the case of a parent or grandparent of the
individual, either under 18 years of age or so dependent by
reason of mental or physical infirmity,
an amount equal to the total of
(iii) $7,131, and
(iv) the amount determined by the
formula
$6,055 - (D - $606)
where
D is the greater of $606 and the dependent person's
income for the year.
[11] What must be determined, therefore, is
whether the appellant met each of the conditions set out in
paragraph 118(1)(b).
[12] The respondent has admitted that the
appellant met all the conditions set out in paragraph
118(1)(b) of the Income Tax Act. The evidence is
clear on this point.
[13] The only other applicable provision
here is subsection 118(5) of the Income Tax Act, which
states that the amounts referred to in subsection 118(1),
including paragraph 118(1)(b) to which we have just made
reference, may not be deducted in computing tax payable where the
individual "is required to pay a support amount" to,
inter alia, the individual's spouse or former
spouse and the individual lives separate and apart from the
spouse or former spouse because of the breakdown of their
marriage or the individual claims a deduction for the year in
respect of a support amount paid to the spouse or former
spouse.
[14] In short, subsection 118(5) of the
Income Tax Act applies if two conditions are met.
[15] The first condition concerns
individuals who are required to pay a support amount. It is not
necessary under this condition that the individual have actually
paid the support amount. What is necessary is that the individual
be required to pay such an amount. This first condition has been
met here, since the appellant was required to pay a support
amount by the order of November 3, 1995.
[16] The second condition involves two
alternatives. The first part of the alternative condition is
relevant here, since the appellant lived separate and apart from
his former spouse throughout 1999 because of the breakdown of
their marriage. The second part of the alternative condition need
not be considered.
[17] Subsection 118(5) of the Income Tax
Act is therefore applicable in this case. It follows that the
appellant is not entitled to the tax credit for a wholly
dependent person provided for in paragraph 118(1)(b) of
the Income Tax Act.
[18] The application of subsection 118(5) of
the Income Tax Act in this case seems unfair to me.
[19] Given the facts of this appeal, I would
think that the appellant should normally be entitled to the tax
credit in question, since his son Frédéric lived
with him in 1999 and was wholly dependent on him that entire year
and since neither party complied with the order of November 3,
1995.
[20] The only reproach that can be levelled
at the appellant is that he did not apply to the Superior Court
of Quebec to have the order of November 3, 1995, varied. The
appellant gave reasons for this which are quite understandable in
the circumstances.
[21] In light of those circumstances, I
recommend that the tax authorities take the necessary steps to
grant a remission of tax under subsection 23(2) of the
Financial Administration Act, with the basis for
calculation being that the appellant is entitled, inter
alia, to the tax credit provided for in paragraph
118(1)(b) of the Income Tax Act. Subsection 23(2)
of the Financial Administration Act reads as follows:
(2) The Governor in Council may, on the recommendation
of the appropriate Minister, remit any tax or penalty, including
any interest paid or payable thereon, where the Governor in
Council considers that the collection of the tax or the
enforcement of the penalty is unreasonable or unjust or that it
is otherwise in the public interest to remit the tax or
penalty.
[22] For these reasons, I am obliged to
dismiss the appeal.
Signed at Ottawa, Canada, this 28th day of January 2002.
C.J.T.C.C.
Translation certified true
on this 1st day of May 2003.
Erich Klein, Revisor
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