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Citation: 2004TCC14
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Date: 20040107
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Docket: 2002-4647(IT)I
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BETWEEN:
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TANYA PETERSEN,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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REASONS FOR JUDGMENT
Bowie J.
[1] Ms. Petersen brings this appeal
from her income tax assessment for the year 2000. When filing her
return for that year, she claimed a non-refundable tax
credit under paragraph 118(1)(b) of the Income Tax
Act (the "Act"), sometimes referred to as
the equivalent-to-spouse amount, in respect of her son. Initially
she was assessed according to the return she had filed, but the
Minister of National Revenue (the "Minister") has since
reassessed her to deny the claimed credit. Her appeal was heard
under the Court's informal procedure.
[2] Paragraph 118(1)(b) of the
Act, so far as it is relevant, reads:
118(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,
(a)
...
(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 ...
(the computation of the amount is not in dispute)
[3] The Appellant and Donald, the
father of her son, lived together in a common-law relationship
beginning in May 2000. On November 21 of that year she gave birth
to their son. Their common-law relationship came to an end on
December 28 that year when Donald left their home and went to
live elsewhere. They later reconciled and were married, but I am
satisfied that the breakdown of their relationship, as to which
they both testified, was genuine.
[4] The Appellant's position is
that for the three-day period between December 28 and
December 31, 2000 she maintained the apartment and actually
supported her son there, and that during those three days he was
wholly dependent upon her for support. The Minister's
position is that her son was not wholly dependent on her for
support during those three days.
[5] The Minister's position is
expressed this way in paragraphs 11 and 12 of the Reply to the
Notice of Appeal:
11. It is submitted that
the Appellant and Donald lived in a common-law partnership in the
2000 taxation year and that Donald was the Appellant's
spouse, pursuant to subsection 252(4) of the Act.
12. Furthermore, it is
submitted that the Appellant resided with Donald throughout the
2000 taxation year and that Donald supported her during that
time. In addition, from November 20, 2000, which is the day
Spencer was born, until December 31, 2000, inclusive, Donald also
supported Spencer.
Although subsection 118(4) of the Act is referred to in
paragraph 10, no argument based on that subsection was advanced
either in the Reply or by counsel at the hearing of the appeal. I
therefore will not consider whether it might have any
application. I propose to decide the appeal with regard only to
the issue actually addressed by the parties, namely, whether the
Appellant met the requirements of paragraph 118(1)(b). The
Minister says that she did not, and supports that position on the
basis of the following assumed facts, as found in paragraph 8 of
the Reply:
(a) at all material
times the Appellant lived in a common-law relationship with
Donald;
(b) the Appellant
and Donald leased an apartment at Westwinds Village in Calgary,
Alberta, from at least May 1, 2000 to April 30, 2001;
(c) since at least
May 1, 2000 to December 31, 2000, inclusive, the Appellant and
Donald resided together in the apartment;
(d) at all material
times the Appellant and Donald cohabitated;
(e) the Appellant
and Donald resided together at the end of the 2000 taxation
year;
(f) at all
material times the Appellant and Donald did not live separate and
apart by reason of a breakdown of their common-law
relationship;
(g) Spencer was born
on November 21, 2000;
(h) the Appellant
and Donald are the biological parents of Spencer;
(i) since at
least May 1, 2000, the Appellant and Donald shared the financial
responsibilities of the household in which they resided;
(j) since
November 21, 2000, the Appellant and Donald shared the parental
responsibilities for the care and upbringing of Spencer;
(k) in computing her
income tax liability for the 2000 taxation year the Appellant
reported net income $16,899 (rounded off to the nearest
dollar);
(l) in
computing her income tax liability for the 2001 taxation year the
Appellant reported that she was living common law with Donald;
and
(m) in computing her
income tax liability for the 2000 taxation year the Appellant
included $6,140 for equivalent-to-spouse when calculating her
non-refundable tax credits.
[6] It is clear from the evidence that
the Minister's assumptions 8(a), (c), (d), (e) and (f) are
incorrect. 8(j) is incorrect to this extent at least: for the
last three days of the year 2000 Donald did not live with the
Appellant and their son, and he did not share responsibility for
his care during that part of the year. The Minister appears to
have assumed, wrongly, although perhaps understandably, that
there was no interruption in the common-law relationship of the
Appellant and Donald during the year 2000. In fact, as I have
found, there was an interruption in it. For three days, at the
end of December 2000 the Appellant was neither married nor living
in a common-law relationship. She maintained a
self-contained domestic establishment in which she and her
son lived. The child was only five weeks old, and was breast-fed
by his mother. Clearly, she "actually supported" him
during that three-day period, and for much longer as well.
[7] I need not decide whether Donald
contributed to the maintaining of the apartment or the support of
their son. It is clear from the words "... whether
alone or jointly with one or more other persons ..."
and "... or the individual and the other person or
persons, as the case may be ..." appearing in
subparagraph 118(1)(b)(ii) that the Appellant's
right to the credit in question would not be negated by any such
finding. On the plain words of paragraph 118(1)(b),
the Appellant qualifies for the credit she claims.
[8] The appeal will therefore be
allowed, and the reassessment will be referred back to the
Minister for reconsideration and reassessment on the basis that
the Appellant is entitled to include an amount under paragraph
118(1)(b) of the Act when calculating her
non-refundable tax credits for the 2000 taxation year.
Signed at Ottawa, Canada, this 7th day of January, 2004.
Bowie J.
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