Angulo v. The Queen, docket 2002-2467-IT-I (Informal Procedure)

Date: 20030115

Docket: 2002-2467-IT-I

BETWEEN:

BARBARA M. ANGULO,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for Judgment

Beaubier, J.T.C.C.

[1]            These appeals pursuant to the Informal Procedure were heard at Vancouver, British Columbia on January 10, 2003. The Appellant did not testify. Her agent, Gregory Smith, testified on her behalf. The Respondent called Robert Hackney, telephone agent of Canada Customs and Revenue Agency ("CCRA") and Ann Trembath, appeals officer of CCRA on this file.

[2]            The particulars of these appeals are set out in paragraphs 1 to 9 of the Reply to the Notice of Appeal. They read:

A.             STATEMENT OF FACTS

1.              He admits that the Respondent determined that the Appellant was in a common-law relationship with Gregory Smith.

2.              He has no knowledge of a Scott Bartlett.

3.              He can discern no further relevant allegations of fact to admit or deny in the remainder of the Notice of Appeal.

4.              The Appellant filed income tax returns for the 1999 and 2000 taxation years and the Minister subsequently:

a)              paid Canada Child Tax Benefits ("CCTB") to the Appellant in the amounts of $2,991.00 and $1,278.81 respectively;

b)             paid General Sales Tax Credits ("GSTC") to the Appellant in the amounts of $867.00 and $392.25 respectively; and

c)              initially assessed the 2000 taxation year on June 14, 2001 to allow a Dependent Tax Credit on behalf of the Appellant's child of $6,140.00.

5.              By Notice dated January 15, 2002, the Minister notified the Appellant for the 1999 and 2000 taxation years that the amounts of GSTC to which she was entitled had been recalculated and requested that overpayments of $867.00 and $392.25 respectively, be repaid.

6.              By Notice dated January 19, 2002, the Minister notified the Appellant for the 1999 and 2000 taxation years that the amounts of CCTB to which she was entitled had been recalculated and requested that overpayments of $2,853.72 and $1,236.06 respectively be repaid.

7.              By Notice dated January 21, 2002, the Minister notified the Appellant for the 2000 taxation year that the amount of Dependent Tax Credit ("DTC") to which she was entitled had been recalculated and reduced to nil.

8.              In so assessing the Appellant, the Minister relied on the following assumptions:

a)              the facts stated and admitted above;

b)             Gregory Smith ("Smith") lived with the Appellant at #105 - 19241 Ford Road, Pitt Meadows from 1996 until 2001;

c)              on May 28, 2001, the Appellant and Smith purchased a home together at 21012 - 121st Avenue, Maple Ridge, BC. where they lived together;

d)             Smith identified himself as the Appellant's spouse when providing the Respondent with the Appellant's change of address;

e)              Smith was not living separate and apart from the Appellant in 1999 and 2000;

f)              Smith was a qualified relation of the Appellant during 1999 and 2000;

g)             Smith was a common-law partner of the Appellant during 1999 and 2000;

h)             in the 1999 and 2000 taxation years the Appellant's net incomes were $16,654.00 and $25,044.00 respectively;

i)               in the 1999 and 2000 taxation years Smith's net incomes were $52,019.00 and $49,926.00 respectively; and

j)               the adjusted incomes of the Appellant for the purposes of the GSTC and CCTB for the 1999 and 2000 taxation years were $68,673.00 and $74,970.00 respectively as defined in subsection 122.5(1) and section 122.6 respectively of the Income Tax Act (the "Act") as amended for the 1999 and 2000 taxation years.

B.             ISSUES TO BE DECIDED

9.              The issues are whether the Appellant is entitled to:

a)              CCTB in the amounts of $2,853.72 and $1,236.06;

b)             GSTC in the amounts of $867.00 and $392.25; and

c)              a DTC in the amount of $6,140.00.

[3]            Assumptions 8 e), f) and g) are in dispute. The remaining assumptions were not refuted.

[4]            The question between the parties is whether Ms. Angulo and Mr Smith were living in a common-law relationship in 1999 and 2000 whereby Mr. Smith and Ms. Angulo were spouses within the meaning of the Income Tax Act and the Excise Tax Act in those years.

[5]            Ms. Angulo and her daughter began living in Mr. Smith's two bedroom, 1400 square foot, condominium when Ms. Angulo helped Mr. Smith put together $7,800 to fix up the leaky condominium. Then Mr. Smith sold it at a substantial loss. (Mr. Smith's condominium expense was a common one in Vancouver where it is general public knowledge that about 10,000 such leaky condominiums were badly built, inspected by government authorities, and sold to consumers around the time of Vancouver's World Fair in the late 1980's.) Mr. Smith testified that Ms. Angulo's daughter slept in the condominium's den and Ms. Angulo and Mr. Smith each occupied separate bedrooms.

[6]            Mr. Smith was then living apart from his wife. He has children from that marriage who live with their mother. His estate goes to those children at present. He was divorced from his wife on March 21, 2001.

[7]            Mr. Smith's proceeds from the condominium sale were $17,000. He and Ms. Angulo contributed equally to purchase their home in Maple Ridge as tenants in common when they moved from the condominium. Ms. Angulo owns title to 90% of it and Mr. Smith owns the other 10%. They share the mortgage and house expenses 50-50. Mr. Smith pays all of the telephone and cable TV fees.

[8]            Mr. Smith testified that he lives in the basement suite of their Maple Ridge home and has a separate entrance, stove, refrigerator and all amenities. Ms. Angulo lives the same way on the main floor. There is no laundry; they take their laundry out.

[9]            Mr. Smith testified that he and Ms. Angulo have not had sexual intercourse and live separate social lives. But the household arrangement is so that two people with modest incomes can have decent housing, own a home, and realize a gain on it in expensive Vancouver.

[10]          Generally, everything Mr. Smith testified to would be perfectly acceptable and adopted by this Court. But there are a number of flaws in the case put forward.

[11]          The flaws are:

1.              The Court believes that Mr. Smith told Mr. Hackney by telephone on June 22 or 25, 2001 that he was Ms. Angulo's "common-law spouse of two years". Mr. Hackney had no reason to lie. When Mr. Hackney followed up on that statement Mr. Smith hung up. A number of Ms. Angulo's tax benefits are at stake. As a "spouse" that would also benefit Mr. Smith.

2.              Ms. Angulo never dealt with Canada Customs and Revenue Agency ("CCRA"), nor did she testify in Court. Mr. Smith did everything on her behalf. That is a husband-like occurrence.

3.              Respondent's counsel asked the Court to draw an adverse inference from the fact that Ms. Angulo did not testify. The Court draws an adverse inference. If Ms. Angulo was independent of Mr. Smith, she would have contacted and dealt with CCRA and testified in Court. She did not do either act.

4.              The Maple Ridge home is 90% owned by Ms. Angulo, but she only pays 50% of its' costs and mortgage.

[12]          Because of these flaws, Mr. Smith is not believed.

[13]          In these circumstances, none of the assumptions are refuted and these appeals are dismissed.

                Signed at Saskatoon, Saskatchewan, this 15th day of January, 2003.

"D. W. Beaubier"

J.T.C.C.

COURT FILE NO.:

2002-2467(IT)I

STYLE OF CAUSE:

Barbara M. Angulo v. The Queen

PLACE OF HEARING

Vancouver, British Columbia

DATE OF HEARING

January 10, 2003

REASONS FOR JUDGMENT BY:

The Honourable Judge D. W. Beaubier

DATE OF JUDGMENT

January 15, 2003

APPEARANCES:

Agent for the Appellant:

Gregory C. Smith

Counsel for the Respondent:

Amy Francis

COUNSEL OF RECORD:

For the Appellant:

Name:

Firm:

For the Respondent:

Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada

Date: 20030115

Docket: 2002-2467(IT)I

BETWEEN:

BARBARA M. ANGULO,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

_______________________________________________________________

Appeals heard on January 10, 2003 at Vancouver, British Columbia

Before: The Honourable Judge D. W. Beaubier
Appearances:
Agent for the Appellant:	Gregory C. Smith
Counsel for the Respondent:	Amy Francis

_______________________________________________________________

JUDGMENT

                The appeals from the assessments made under the Income Tax Act for the 1999 and 2000 taxation years are dismissed in accordance with the attached Reasons for Judgment.

Signed at Saskatoon, Saskatchewan, this 15th day of January, 2003.

"D. W. Beaubier"

J.T.C.C.