Citation: 2010TCC121
Date: 20100302
Docket: 2009-2773(IT)I
BETWEEN:
ROBERT A. DUBIS,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Sheridan, J.
[1] The issue in
this appeal is whether the Appellant, Robert Dubis, was entitled to an “amount
for an eligible dependent” credit in respect of his daughter for the 2007
taxation year.
[2] In 2007, the
Appellant and his former spouse were separated and not residing together. Their
two daughters, N. and E. were residing with the former spouse. Pursuant to a
court order dated December 19, 2006[1]
(“Temporary Support Order”), it was ordered that:
1. The
[Appellant] shall pay the [former spouse] child support of $1,330.00 per month
for the [two] children of the marriage … on a temporary temporary basis
commencing January 1, 2007, payable directly between the parties.
2. Unless
the support order is withdrawn from the Office of the Director of the Family
Responsibility Office, it shall be enforced by the Director and amounts owing
under the support order shall be paid to the Director, who shall pay them to
the person to whom they are owed.
3. This
order bears interest at the rate of 6 per cent per annum on any payment or
payments in respect of which there is a default from the date of default.
[3] Pursuant to a subsequent order dated January 18, 2007
(“Continuing Child Support Order”), the Appellant’s child support obligations
in the Temporary Support Order were continued.
[4] Some nine months later, in September 2007, their daughter N. decided to live
with the Appellant. This was not a contentious matter; the only question was
how to adjust the payment of child support to reflect the new custodial
arrangements. As of October 2007, the Appellant stopped paying child support in
respect of N. who, by that time, was residing with him. Because he was now her de facto
custodial parent, the Appellant claimed an “amount for an eligible dependent”
credit for N. under paragraph 118(1)(b) of the Income Tax Act.
[5] The Minister of
National Revenue disallowed the credit on the basis that the Temporary Support
Order required the Appellant to pay a “support amount” for N. during the 2007
taxation year; accordingly, he did not meet the requirements of subsection
118(5) of the Act:
(5) Support
– 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. [Emphasis added.]
[6] Furthermore,
because his former spouse was not required, at any time during 2007, to pay a
support amount in respect of N., either by written agreement or order of a
competent tribunal, the Appellant could not rely on subsection 118(5.1) to
avoid the prohibition imposed under subsection 118(5):
(5.1) Where
subsection (5) does not apply. 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.
[7] By way of
background, the Technical Notes to subsection 118(5.1) show that this
provision was added to the Act to correct the unintended consequences[3] of the application of subsection 118(5):
Oct. 2007
TN (budget/technical): Presently, subsection 118(5) precludes a person from
claiming a credit in respect of a child under paragraph (b) or (b.1) of the
description of B in subsection 118(1) if that person also pays child support in
respect of the child. Where, in the same taxation year, two persons pay child
support in respect of a child, neither person is eligible for the credit.
New subsection
118(5.1) corrects this unintended result by providing that, in such a case, the
Act is to be read without reference to subsection 118(5). This ensures that one
of the persons may claim the credit.
[8] The Appellant
represented himself at the hearing of this appeal and was the only witness to
testify. He explained that after N. moved in with him in September 2007, he and
his former spouse continued negotiations[4]
to sort out their respective child support obligations. By June 2008, they had
agreed to the terms of draft Minutes of Settlement[5] which were ultimately incorporated into a court order
dated June 9, 2008 (“Final Support Order”). Pursuant to the Final Support
Order, the Appellant and his former spouse had joint custody of their
daughters; E. resided with his former spouse and N., with the Appellant.
[9] Paragraphs 4, 7
and 11 of the Final Support Order touch on the issue raised in the present
appeal; the relevant portions of these terms are set out below:
4. Commencing June 1, 2008, and on the 1st day of
each month thereafter, the [Appellant ] shall pay to [his former spouse] for
Child Support, the sum of $475.00 per month. This sum represents the set-off of
the $867.00 per month that the [Appellant] would pay for the support of [the
daughter living with his former spouse] … and the amount of $392.00 per month
that the [former spouse] would pay for the support of [N.] …
7. The [former spouse] may claim the Canada Child Tax Benefit
including the National Child Benefit Supplement and the eligible dependent
credit (formerly, equivalent-to-spouse credit) for [the child residing with
her] and the [Appellant] may claim the Canada Child Tax Benefit including the
National Child Benefit Supplement and the eligible dependent credit (formerly,
equivalent-to-spouse credit) for [N.]. These benefits will not affect the Child
Support.
…
11. All Child Support is deemed to be paid to date and no Child
Support arrears exist. The [Appellant] is not entitled to any refund or
adjustment of Child Support paid to [his former spouse] from September 2007 to
the date of this agreement.
[10] The Appellant
also insisted that paragraph 13 of the Final Support Order was relevant to his
appeal; in my view, it sheds little light on his entitlement to an “amount for
an eligible dependent” credit, since it deals primarily with the Appellant’s
obligations in respect of the payment of spousal, rather than child, support:
13. All Spousal Support shall be deemed as having been paid to
date and no arrears are owing, specifically, the [Appellant’s former spouse] is
deemed to have received Spousal Support for the year 2007 in the amount of
$650.00 per month for a total of $7,800.00. The [Appellant’s former spouse]
shall include this Spousal Support as income and the [Appellant] may claim the
Spousal Support as a deduction from his income. The [Appellant] will provide
the [Appellant’s former spouse] 12 post-dated cheques of $885.00 each, dated
for the 1st and the 15th day of each month from July to
December 2008 and so on, thereafter, for Child and Spousal Support payments.
[11] Briefly stated,
the Appellant’s position is that because he stopped paying child support in
October 2007 and paragraphs 11 and 13 of the Final Support Order of June 2008
retroactively released him from any liability for spousal or child support arrears
that might have accrued in 2007, it cannot be said that he was “required to pay
a support amount (within the meaning assigned by subsection 56.1(4))” as
contemplated by subsection 118(5); accordingly, he ought to be entitled to an
“amount for an eligible dependent” credit under that provision.
[12] Given the reality
of his situation in the last three months of 2007, I can understand the Appellant’s
unhappiness with the Minister’s disallowance of his claim. The weakness of his
argument, however, is that it fails to address the legislative criteria
governing his eligibility for an “eligible dependent” credit; in particular,
the definition of “support amount” in subsection 56.1(4), and the clear and
unambiguous language used in subsections 118(5) and 118(5.1).
[13] Notwithstanding
the negotiations which occurred between the Appellant and his former spouse or
the fact that N. resided with the Appellant after September 2007, the fact
remains that throughout that year, the Temporary Support Order was in full
force and effect. From this it follows that in the 2007 taxation year, the
Appellant was required by the order of a competent tribunal to pay an amount as
an allowance on a periodic basis for the maintenance of N., the discretion for
the use of which lay with his former spouse. As a result, the Appellant was
clearly “required to pay a support amount” in respect of N. and accordingly, is
unable to meet the criteria in subsection 118(5) of the Act. Further, as
nothing in either the Temporary Support Order (or, for that matter, the Continuing
Child Support Order or the Final Support Order) imposed on the Appellant’s
former spouse a requirement to pay child support in respect of N. in 2007, the
relief provided under subsection 118(5.1) is equally unavailable to him.
Accordingly, the appeal must be dismissed.
Signed at Ottawa, Canada, this 2nd day of March, 2010.
“G. A. Sheridan”
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