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Date: 20030121
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Docket: 2002-436(IT)I
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BETWEEN:
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BARBARA BENSON,
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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
O'Connor, J.T.C.C.
[1] The basic facts are set forth in
the following paragraphs of the Reply to the Notice of
Appeal:
9. In respect
of the 1997, 1998 and 1999 base taxation years, the Appellant
claimed and received a CTBC in respect of one eligible child,
Stephen, who was born in November, 1982. The Appellant's
reported income for the 1997, 1998 and 1999 taxation years was
used to calculate the Appellant's CTBC entitlement from July,
1998 to June, 1999, from July, 1999 to June, 2000 and from
July, 2000 to November, 2000 (the "Periods"),
respectively. The Appellant also claimed the Goods and Services
Tax Credit ("GSTC") in respect to the Periods and the
personal credit for wholly dependant persons in respect to the
1998 and 1999 taxation years.
10. By Child Tax Benefit
Notices dated January 19, 2001 the Minister of National Revenue
(the "Minister") recalculated the "adjusted
income" for the 1997, 1998 and 1999 base taxation years
to include the income of the Appellant's "cohabiting
spouse" thereby reducing the Appellant's CTBC for
the Periods. By Goods and Services Tax Credit Notices dated
December 13, 2000 the Minister recalculated and reduced the
Appellant's entitlement to the GSTC for the Periods. By
Notices of Reassessment dated March 8, 2001 the Minister
disallowed the personal credit for wholly dependant persons for
taxation years 1998 and 1999.
FURTHER FACTS
[2] The further principal facts are as
follows:
The Appellant married her second husband, Roger in 1992. In
1994 they purchased a home together. Between July, 1998 and
September, 2000 the Appellant claims they were separated and had
signed a Separation Agreement notwithstanding the fact that they
continued to live under the same roof. The Appellant had two
children from a previous marriage as did her husband and all the
four children lived with the Appellant and her husband for a
period of time. It is only the Appellant's child, Stephen,
who is of concern in these appeals.
[3] The Separation Agreement provided
that Roger would pay the mortgage and utilities and that the
Appellant would pay for some groceries and certain household
expenses. The Appellant and her husband slept in different rooms
and did not have sexual relations. They usually ate separately.
She would cook, clean and do the shopping. She carried out
certain minor repairs but her husband took on the heavier duties
of maintenance and repairs. The Appellant clothed her children
and provided them with shelter and food.
[4] The Appellant had a health plan at
her work and it compensated Roger with respect to certain
expenses.
[5] The Appellant's claims are
made under the following provisions of the Income Tax
Act.
1. The
equivalent-to-spouse deduction (paragraph 118(1)(b));
2. The child tax benefit
credit, (section 122.6); and
3. The GST credit,
(section 122.5).
[6] The Appellant's right to claim
the deduction and those credits is dependent upon her living
separate and apart from Roger by reason of the breakdown of the
marriage. The Appellant testified that that was the case.
[7] In Molodowich v. Penttinen
(1980), 17 R.F.L. (2d) 376, Kirosko D.C.J. (Ont. Dist. Ct.) at
pages 381 and 382 developed the following seven questions or
criteria to determine when parties are or are not living separate
and apart:
1.
Shelter:
(a) Did the parties
live under the same roof?
(b) What were the
sleeping arrangements?
(c) Did anyone else
occupy or share the available accommodation?
2. Sexual
and Personal Behaviour:
(a) Did the parties
have sexual relations? If not, why not?
(b) Did they
maintain an attitude of fidelity to each other?
(c) What were their
feelings toward each other?
(d) Did they
communicate on a personal level?
(e) Did they eat
their meals together?
(f) What, if
anything, did they do to assist each other with problems or
during illness?
(g) Did they buy
gifts for each other on special occasions?
3.
Services:
What was the conduct and habit of the parties in relation
to:
(a) preparation of
meals;
(b) washing and mending
clothes;
(c) shopping;
(d) household
maintenance; and
(e) any other domestic
services?
4.
Social:
(a) Did they
participate together or separately in neighbourhood and community
activities?
(b) What was the
relationship and conduct of each of them toward members of their
respective families and how did such families behave towards the
parties?
5.
Societal:
What was the attitude and conduct of the community toward each
of them and as a couple?
6. Support
(economic):
(a) What were the
financial arrangements between the parties regarding the
provision of or contribution toward the necessaries of life
(food, clothing, shelter, recreation, etc.)?
(b) What were the
arrangements concerning the acquisition and ownership of
property?
(c) Was there any
special financial arrangement between them which both agreed
would be determinant of their overall relationship?
7.
Children:
What was the attitude and conduct of the parties concerning
the children?
[8] It is well-accepted law, as
admitted in the Reply, that it is possible for spouses to live
separate and apart in the same residence (Rushton v.
Rushton (1969), 2 D.L.R. (3d) 25, 66 W.W.R. 764
(B.C.)).
[9] The most relevant cases analyzing
the meaning of "separate and apart" in the context of
the GSTC, CTBC and personal credit for a wholly dependent person
areKelner v. Canada, [1996] 1 C.T.C. 2687, (1995)
17 R.F.L. (4th) 288, [1995] T.C.J. No. 1130, Bowman, T.C.J.,
Rangwala v. Canada, [2000] 4 C.T.C. 2430, [2000]
T.C.J. no. 624, Campbell, T.C.J. and Roby v.
Canada, [2001] T.C.J. No. 801, Bowman, A.C.J.T.C.
[10] In Kelner, a marriage
disintegrated after the husband suffered a work-related injury
and fell into depression. He began living by himself in a
self-contained unit in the basement of the family home and
performed his own domestic duties. He did not have sexual
relations with the Appellant wife and only communicated with her
about child-related issues. Although the husband did not
contribute at all to the household expenses, Bowman T.C.J. (as he
then was) found that the couple was living separate and apart in
the same house, and granted the appeal to allow deductions for
child care expenses. In coming to his decision, Judge Bowman
reviewed the available case law and quoted Holland J. in
Cooper v. Cooper, (1973), 10 R.F.L. 184 (Ont. H.C.)
at 187 [hereinafter Cooper] with approval:
Can it be said that the parties in this case are living
separate and apart? Certainly spouses living under the same roof
may well in fact be living separate and apart from each other.
The problem has often been considered in actions brought under s.
4(1)(e)(i) of the Divorce Act and, generally speaking, a
finding that the parties were living separate and apart from each
other has been made where the following circumstances were
present:
(i) Spouses
occupying separate bedrooms.
(ii) Absence of
sexual relations.
(iii) Little, if any,
communication between spouses.
(iv) Wife performing no
domestic services for husband.
(v) Eating meals
separately.
(vi) No social activities
together.
[11] Kelner is among the extensive
case law canvassed by Campbell T.C.J. in Rangwala. There,
the facts also involved a couple allegedly separated but living
in the same house. After a separation agreement was signed, each
of the spouses kept completely separate premises from one
another, and shared neither meals nor domestic duties.
Communication was minimal, and finances were completely separate.
Since the two spouses shared custody, meal preparation and
expenses for their son would rotate between the two on a monthly
basis. At issue were the GSTC and the CTBC.
[12] In finding the two spouses were living
separate and apart, Judge Campbell determined there to be
"both physical and psychological separation", and wrote
that the two spouses "shared the same address and little
else". She therefore allowed the appeal. In her reasons,
besides citing Kelner, she also quotes Cooper with
approval and mentions the relevancy of the criteria listed in
Molodowich v. Penttinen.
[13] I accept the credibility of the
Appellant and based on all of the evidence, I am satisfied that
during the period in question, namely, July, 1998 to September,
2000 the Appellant and her husband, Roger, were living separate
and apart although under the same roof. All factors must be
looked at and no one factor is determinative. I do not consider
that separate finances before, during and after separation and
coverage of the husband under the health care plan of the
Appellant were sufficient factors to alter the foregoing
conclusion.
[14] Consequently since they were considered
to be living separate and apart, the Appellant was entitled to
the Child Tax Benefit Credit claimed as well as the Goods and
Services Tax Credit claimed. Those credits are not to be reduced
because of Roger's income.
[15] Further, in my opinion, the Appellant
was entitled to the deduction for a wholly dependent person under
paragraph 118(1)(b) since she was a person who was married
and who neither supported nor lived with her husband (since they
were considered to be living separate and apart) and she was not
supported by her spouse and moreover she, jointly with her
husband, maintained a self-contained domestic establishment (in
which she lived) and actually supported in that establishment a
person who at that time was her child, namely, Stephen, who was
under the age of 18.
[16] For all of the above reasons the
appeals are allowed, without costs.
Signed
at Ottawa, Canada, this 21st day of January, 2003.
J.T.C.C.
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