Date:
20030109
Docket:
2002-1058-IT-I
BETWEEN:
ELLIS L.G.
BAREFOOT,
Appellant,
and
HER MAJESTY
THE QUEEN,
Respondent.
Reasons
for Judgment
Lamarre,
J.T.C.C.
[1]
This is an appeal under the informal procedure from an assessment
made under the Income Tax Act ("Act") by
the Minister of National Revenue ("Minister") for the
2000 taxation year.
[2]
In computing his non-refundable tax credits for the 2000 taxation
year, the appellant included an equivalent-to-spouse amount in
respect of Samuel, one of his children. In assessing the
appellant, the Minister denied the
equivalent-to-spouse amount for that year.
[3]
The facts may be summarized as follows. The appellant and his
former spouse were separated on August 1, 2000. There were two
children from the marriage: Samuel, born August 21, 1996, and
Maria Annette, born November 13, 1999. After the separation,
the appellant's former wife kept the matrimonial home and the
children lived primarily with their mother. The mother started to
work, two days on, two days off. When she was at work, the
children would be in day care and the appellant would pick them
up, bring them back to the matrimonial home, feed them and take
care of them until the mother returned from work. I understand
from the appellant's testimony that when the mother worked on
weekends, the children would come to the appellant's
apartment and stay over.
[4]
Without entering into a formal agreement, the appellant agreed to
pay $857 per month in support for the children from the first day
of separation to the end of October 2000. The support payments
were increased to $887 per month beginning November 1, 2000. The
appellant also paid $400 monthly in support for his former spouse
from the date of separation onwards.
[5]
In filing his tax return for 2000, the appellant relied on the
General Income Tax and Benefit Guide 2000 to claim an
equivalent-to-spouse amount. That guide contains the
following:
Line 305 -
Equivalent-to-spouse amount
You may be
able to claim an equivalent-to-spouse amount if, at any time in
the year, you met all of the following conditions:
·
you were single,
divorced, separated, or widowed;
·
you supported a
dependant; and
·
you lived with the
dependant (in most cases, in Canada) in a home that you
maintained.
To qualify,
at the time you met the above conditions, the dependant also must
have been either:
·
your parent or
grandparent, by blood, marriage, or adoption (legal or in fact);
or
·
your child,
grandchild, brother, or sister, by blood, marriage, or adoption
(legal or in fact) and either under 18, or mentally or physically
infirm.
. .
.
Even if all
of the preceding conditions have been met, you cannot claim this
amount if any of the following applies:
·
The dependant's
net income (line 236 of his or her return, or the amount that it
would be if he or she filed a return) is $6,754 or
more.
·
You are claiming a
spousal amount (see line 303).
·
The person for whom
you want to claim this amount is your common-law spouse. However,
you may be able to claim the spousal amount on line
303.
·
Someone else in
your household is making this claim. Each household is allowed
only one claim for the equivalent-to-spouse amount, even if there
is more than one dependant in the household.
·
The claim is for a
child for whom you were required to make support payments.
However, if you were separated for only part of 2000, due to a
breakdown in your relationship, you have a choice. You can claim,
for that child, either the equivalent-to-spouse amount (plus any
allowable amounts on lines 306, 315, and 318) or the support
amounts paid for the year (if they are deductible) whichever is
better for you.
[6]
At the hearing, the appellant testified that his former spouse
did not claim the equivalent-to-spouse amount in 2000. He also
said that since the support he paid in 2000 was not paid pursuant
to a court order or written agreement and therefore was not
deductible as support in accordance with section 60 of the
Act, it was clearly in his best interests to claim the
equivalent-to-spouse amount in accordance with the Canada Customs
and Revenue Agency ("CCRA") guide referred to
above.
[7]
The respondent denied the equivalent-to-spouse amount on the
basis that the appellant did not support either of his children
in the home in which he resided after his separation, a condition
required by paragraph 118(1)(b) of the Act in order
for there to be entitlement to the equivalent-to-spouse
amount.
[8]
The relevant part of paragraph 118(1)(b) read as follows
for the taxation year at issue:
SECTION
118: Personal credits.
(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) Married
status
. .
.
(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 an
unmarried person or a married person who neither supported nor
lived with the married person's spouse and is not supported
by the spouse, 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 . . . .
[9]
The French version states the following:
ARTICLE
118: Crédits d'impôt personnels.
(1) Le produit de la
multiplication du total des montants visés aux
alinéas a) à e) par le taux de base
pour l'année est déductible dans le calcul de
l'impôt payable par un particulier en vertu de la
présente partie pour une année
d'imposition;
a)
Crédit de personne mariée ou vivant en union de
fait
[. . .]
b)
Crédit équivalent pour personne entièrement
à charge - la
somme de
[. . .]
si le particulier ne demande pas de déduction pour
l'année par l'effet de l'alinéa
a) et si, à un moment de l'année
:
(i)
d'une part, il n'est pas marié ou, s'il
l'est, ne vit pas avec son conjoint ni ne subvient aux
besoins de celui-ci, pas plus que son conjoint ne subvient
à ses besoins,
(ii)
d'autre part, il tient, seul ou avec une ou plusieurs autres
personnes, et habite un établissement domestique autonome
où il subvient réellement aux besoins d'une
personne qui, à ce moment, remplit les conditions
suivantes :
(A) elle
réside au Canada, sauf s'il s'agit d'un enfant
du particulier,
(B) elle
est entièrement à la charge soit du particulier,
soit du particulier et d'une ou plusieurs de ces autres
personnes,
(C) elle
est liée au particulier,
(D) sauf
s'il s'agit du père, de la mère, du
grand-père ou de la grand-mère du particulier, elle
est soit âgée de moins de 18 ans, soit à
charge en raison d'une infirmité mentale ou
physique.
[10] The
appellant argued first of all that the conditions required by
paragraph 118(1)(b) of the Act need not be met
simultaneously, provided that each condition is met at some time
in the year. If the appellant finds the English version
ambiguous, there is definitely no ambiguity in the French
version. It says that to be entitled to claim the credit for a
wholly dependent person, the taxpayer at some time in the year
must, first, be an unmarried person or, if married, not be
supporting or living with their spouse and, second, maintain a
self-contained domestic establishment and actually support in
that establishment a person who, at that time (meaning at the
same point in time as that at which all the other conditions are
met), is wholly dependent for support on the taxpayer.
[11] I do not
find any ambiguity in the wording of paragraph 118(1)(b)
with respect to the fact that all the conditions must be met at
the same time in the course of the year.
[12]
Furthermore, it is also clear that only one individual may claim
the equivalent-to-spouse amount in respect of a particular
dependant. Indeed, paragraph 118(4)(b) states:
(4) Limitations re s.
(1). For the purposes
of subsection (1), the following rules apply:
. . .
(b)
not more than one individual is entitled to a deduction under
subsection (1) because of paragraph (b) of the description
of B in subsection (1) for a taxation year in respect of the same
person or the same domestic establishment and where two or more
individuals otherwise entitled to such a deduction fail to agree
as to the individual by whom the deduction may be made, no such
deduction for the year shall be allowed to either or any of
them.
[13]
Here, the evidence showed that only the appellant made a claim
for that amount. The question to be resolved, therefore, is
whether at any time in the year 2000 the appellant was
simultaneously:
(1) an
unmarried person or, if married, not supporting or living with
his spouse (the respondent did not dispute the fact that the
appellant met this condition);
(2)
maintaining a self-contained domestic establishment in which he
was living (the respondent did not dispute the fact that the
appellant met this condition);
(3) and
actually supporting in that establishment a person who at that
time was wholly dependent on him for support.
[14] The
respondent took issue with the appellant regarding the fulfilment
of this last condition. Counsel for the respondent referred to
Jankowska-Kamac v. Canada, [2001]
T.C.J. No. 281 (Q.L.), and St-Jacques v. Canada, [1995]
T.C.J. No. 1496 (Q.L.), in submitting that the appellant's
son, Samuel, did not live in the establishment maintained by the
appellant and that the appellant did not wholly support his son
in that establishment at any time in the year.
[15] In
Jankowska-Kamac, Judge Hershfield of this Court referred
to Narsing et al. v. The Queen, 98 DTC 6176, a case in
which the Federal Court of Appeal found that for a supported
person to be "wholly dependent" on a supporting
taxpayer, the supported person and the supporting taxpayer both
must live in the same establishment. This is surely true, but one
must keep in mind that this requirement can be met at any time in
the year (in French, "à un moment de
l'année"). In Jankowska-Kamac, the taxpayer
immigrated to Canada and her child was living outside Canada in
the year for which the taxpayer claimed the credit. In
St-Jacques, the taxpayer lived in Australia and had no
residence in Canada, and his son, with respect to whom the credit
was claimed, lived in Canada with his mother. In neither case did
the child live at any time in the year in the same establishment
as the supporting person claiming the credit.
[16] Here,
counsel for the respondent argued that the fact that the
appellant's children stayed with the appellant in his
apartment on weekends was not sufficient to allow one to say that
the appellant supported his children in the establishment
maintained by him. She referred to Badger v. Canada,
[2001] T.C.J. No. 446 (Q.L.), in which it was determined that it
could not be said that the mother was supporting her child on
mere bi-weekly visits by the child when the father was making all
the decisions respecting the child's upbringing and was the
one who financially supported the child. It should also be noted
that, in Badger, the Court was faced with the problem that
both parents had claimed the equivalent-to-spouse
amount.
[17] In
Isaac v. Canada, [1994] T.C.J. No. 952 (Q.L.), this Court
decided that the phrase "at any time in the year" in
paragraph 118(1)(b) of the Act could mean
intermittent periods during the year and that the phrase
"wholly dependent" could relate to those intermittent
periods. In Isaac, the mother did not claim the
equivalent-to-married credit, and the taxpayer (the father) had
wholly supported his daughter for 145 days in the year in
question. For the balance of the year, the child lived with her
mother. The mother's contribution amounted to 20 per cent of
the overall calculation of all support given to the child. The
Court concluded:
¶ 11
I conclude from the case law and from a reading of the paragraph
that the phrase 'at any time in the year' can be
intermittent periods during the year, and that the phrase
'wholly dependent' can relate to those intermittent
periods. Thus in any period during the year where a person is
wholly dependent on the taxpayer and the other paragraph
118(1)(b) elements and other requirements are present, the
taxpayer is entitled to the 'equivalent-to-married'
credit.
[18] In my
view, the situation in the case before me is not significantly
different from that in Isaac.
[19] During the
weekends when the children were living with their father in his
apartment, they were wholly dependent on him and the appellant
supported them in the establishment maintained by him.
[20]
Furthermore, the appellant was contributing significantly to the
upbringing of his children in 2000. His former spouse did not
claim the credit.
[21] I am
therefore of the view that the appellant met the conditions of
paragraph 118(1)(b) of the Act at some time in the
year (or, to use the phrase found in the French version of that
provision, "à un moment de l'année").
He is therefore entitled to the credit pursuant to
paragraphs 118(1)(b) and 118(4)(b) of the
Act.
[22] The
restriction in subsection 118(5) does not apply here since, for
2000, the taxation year at issue, the appellant was not required
to pay a support amount within the meaning of subsection 56.1(4)
to his former spouse in respect of the children and he did not
live separate and apart from her throughout the year. Subsections
56.1(4) and 118(5) read as follows in the taxation year at
issue:
► 56.1(4)◄
(4) Definitions. The
definitions in this subsection apply in this section and section
56.
. .
.
"support amount" - "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 former spouse of the payer, the
recipient and payer are living separate and apart because of the
breakdown of their marriage 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.
► 118(5)◄
(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 (as defined in subsection 56.1(4)) to the
individual's spouse or former spouse 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.
Decision
[23] The appeal
is allowed, without costs, and the assessment is referred back to
the Minister for reconsideration and reassessment on the basis
that the appellant was entitled to include an
equivalent-to-spouse amount in respect of one of his children in
computing his non-refundable tax credits for the 2000 taxation
year.
Signed at
Ottawa, Canada, this 9th day of January 2003.
J.T.C.C.
COURT FILE
NO.:
2002-1058(IT)I
STYLE OF
CAUSE:
Ellis L.G. Barefoot v. The Queen
PLACE OF
HEARING:
Ottawa, Ontario
DATE OF
HEARING:
December 4, 2002
REASONS FOR
JUDGMENT BY: The Honourable Judge Lucie
Lamarre
DATE OF
JUDGMENT:
January 9, 2003
APPEARANCES:
For the
Appellant:
The Appellant himself
Counsel for
the
Respondent:
Marlyse Dumel
COUNSEL OF
RECORD:
For the
Appellant:
Name:
Firm:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2002-1058(IT)I
BETWEEN:
ELLIS L.G.
BAREFOOT,
Appellant,
and
HER MAJESTY
THE QUEEN,
Respondent.
Appeal heard
on December 4, 2002, at Ottawa, Ontario, by
the
Honourable Judge Lucie Lamarre
Appearances
For the
Appellant:
The Appellant himself
Counsel for
the
Respondent:
Marlyse Dumel
JUDGMENT
The appeal from the assessment made under the Income Tax
Act for the 2000 taxation year is allowed, without costs, and
the assessment is referred back to the Minister of National
Revenue for reconsideration and reassessment on the basis
that the appellant was
entitled to include an equivalent-to-spouse amount in respect of
one of his children in computing his non-refundable tax credits
for the 2000 taxation year.
Signed at
Ottawa, Canada, this 9th day of January 2003.
J.T.C.C.
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