|
Citation: 2006TCC260
|
|
Date: 20060523
|
|
Docket: 2004-2179(IT)G
|
|
BETWEEN:
|
|
MICHEL PELLETIER,
|
|
Appellant,
|
|
and
|
|
|
|
HER MAJESTY THE QUEEN,
|
|
Respondent.
|
REASONS FOR JUDGMENT
Bédard J.
[1] This
is an appeal under the informal procedure from an assessment made against the appellant
by the Minister of National Revenue (the "Minister") under the Income
Tax Act (the "Act") for 2002 taxation year.
[2] In
his income tax return for the 2002 taxation year, the appellant claimed a
credit for a wholly dependent person of $1,037.12 ($6,492 x 16%) with
respect to his daughter Merlyne. In making the assessment dated June 12, 2003,
the Minister denied the appellant the credit for a wholly dependent person.
[3] The
evidence showed the following:
(i) the appellant and Manon Gravel were married in 1988;
(ii) the appellant and Ms. Gravel have lived separate and apart since
1999;
(iii) from the appellant and Ms. Gravel's union four children were
born: Manuel, Mélodie, Monika and Merlyne;
(iv) during the year in question, the appellant lived separate and apart
from Ms. Gravel;
(v) a judgment by the Superior Court of Quebec dated June 4, 2002
(Exhibit I‑1, Tab 10) ordered the appellant and Ms. Gravel to adhere to
an agreement on interim relief concluded that day between the parties (Exhibit
I-1, Tab 9) in which they agreed they would have joint custody of the four
children, [translation]
"from week to week with the exchange taking place every Friday after
school starting with the mother on Friday, June 7, 2002." The judgment
also ordered the appellant to pay Ms. Gravel support for the four children in
the amount of $2,600 per year starting June 21, 2002.
[4] Only
the appellant testified in support of his position. During his testimony, he
essentially restated the arguments raised in his notice of appeal, which states:
[translation]
(c) The appellant submits
that section 118 of the Act is being interpreted in a simplistic and biased fashion
by the Canada Customs and Revenue Agency, which is denying him the right to
claim amounts for a dependent person of whom the appellant had custody from
January 1, 2002, to June 4, 2002, in the dwelling declared as the main family
residence, and for whom the custody terms have been amended and changed to
joint custody from week to week as of that date, and of whom the appellant had
custody on December 31, 2002, as will be more fully demonstrated at the hearing.
(d) The CCRA maintains that,
under subsections 118(1) and (5), by virtue of the fact that the appellant is
required as of June 4, 2002, to pay support within the meaning of subsection
56.1(4) of the Act, even though he has shared custody of his four children, no
amount in respect of a dependent person (equivalent to married) can be claimed,
as stated in a letter from the CCRA dated February 18, 2004, in response to the
appellant's notice of objection of June 27, 2003, which position was confirmed
on August 4, 2003, by the Appeals Division of the CCRA.
(e) The appellant is of the
opinion that paying support under subsection 56.1(4) of the Act does not deprive
him of his single‑parent-family status, he being the main custodial
parent for the period from January 1, 2002, to June 4, 2002, and having shared
custody from week to week at the declared main family dwelling for the period from
June 4, 2002, to December 31, 2002, and that the two elements of support and
custody should be considered separately. The appellant affirms that he is the
main supporting person given that he maintains the safe residence declared as the
main family residence and attends to his children's various needs, in
particular regarding medical services, and that the other parent has neglected
to provide medical assistance to the children on several occasions. Moreover,
the appellant is of the opinion that the administrative principle whereby the
situation that is more advantageous to the client must be favoured in cases
where there are two situations is applicable in the present case.
(f) The appellant intends to
rely on the principles stated above in paragraphs c, d, and e of this document,
and to show that the presumption that eligible dependents are the mother's
responsibility, as set out in the Income Tax Act, constitutes unlawful
discrimination, in particular, discrimination based on sex under the Canadian
Charter of Rights (s. 15).
[5] The
relevant provisions for the purposes of the present case are as follows:
118. (1) Personal credits – 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) Wholly dependent person—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,
(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.
56.1 (1) Support—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.
. . .
(4) Definitions—The definitions in this subsection apply in
this section and section 56.
"child support amount" means any support amount that is not
identified in the agreement or order under which it is receivable as being
solely for the support of a recipient who is a spouse or common-law partner or
former spouse or common-law partner of the payer or who is a parent of a child
of whom the payer is a natural parent.
. . .
"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 natural 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.
[6] Subsection
118(5) of the Act states that an individual cannot claim an amount under
subsection 118(1) of the Act in respect of a person where the individual is
required to pay a support amount to the individual's spouse or former spouse in
respect of that person and where the individual lives separate and apart from
the spouse throughout the year because of the breakdown of their marriage, or claims
a deduction in respect of support. Thus, an individual who is required to pay a
support amount for a taxation year following the year of the breakdown of the
marriage is not entitled to a tax credit under subsection 118(1) of the Act in
respect of his spouse or child, even in cases where no payment of this type is
made or is deductible.
[7] The
sole issue is whether the appellant is entitled to claim a tax credit for a
wholly dependent person in respect of his daughter Merlyne. It should first be
noted that, although he was advised to do so by the Court during the status hearing
held by conference call on February 9, 2006, the appellant did not serve on the
attorneys general of Canada, the provinces and the territories a notice of a constitutional
question challenging the constitutionality of subsection 118(5) of the Act
in light of section 15 of the Canadian Charter of Rights and Freedoms
(the "Charter"). I point out that, at the
hearing, the appellant definitively abandoned his section 15 constitutional challenge
of subsection 118(5) of the Act. In this case, the appellant was required to
pay in 2002 a support amount within the meaning of subsection 56.1(4) of the Act and he lived separate
and apart from his spouse throughout that year because of the breakdown of
their marriage. As a result, the appellant could not deduct an amount under
subsection 118(1) of the Act with regard to his daughter Merlyne.
[8] It
is clear that, as the appellant mentioned, the application of
subsection 118(5) of the Act results in differential treatment: a taxpayer
who is separated and has joint custody of his children, but who does not pay
any child support, is entitled to the credit for a wholly dependent person,
while such is not the case for a taxpayer in the same situation who does not
pay child support. However, before determining whether on that basis subsection
118(5) of the Act violates section 15 of the Charter, the Court must answer
these two questions:
(i) Is the differential treatment based on one or more of the enumerated
grounds or on similar grounds?
(ii) Does subsection 118(5) of the Act have a purpose or effect that
is discriminatory as contemplated by the equality guarantee?
[9] Although
I do not need to address these questions because the appellant did not serve a notice
of a constitutional question and furthermore, at the hearing, he abandoned his constitutional
challenge of subsection 118(5) of the Act under section 15 of the Charter, I
note that in Frégeau, where the facts were similar to those of the
present case, I answered both these questions in the negative and I held that
subsection 118(5) of the Act did not violate section 15 of the Charter.
[10] For these reasons, the appeal is dismissed.
Signed at Ottawa, Canada, this 23rd
day of May 2006.
Bédard
J.
Translation
certified true
on this 31st day of
July 2008.
Erich Klein, Revisor
Email this Content