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Citation:2003TCC224
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Date: 20030506
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Docket: 2002-3862(IT)I
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BETWEEN:
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SHARON LORENE ACTON,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Docket: 2002-3864(IT)I
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AND BETWEEN:
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ALLEN GRANT ACTON,
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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] These appeals were heard together
on February 7, 2003 at London, Ontario. In the appeal of Allen
Grant Acton since the assessment was a nil assessment and since
there can be no appeal from a nil assessment that appeal was
dismissed from the bench and that dismissal is confirmed.
[2] In the appeal of Sharon Lorene
Acton the Minister of National Revenue (the "Minister")
had for the 1999 taxation year disallowed her claim for the
equivalent-to-spouse amount in the calculation of non-refundable
tax credits. The Appellant had claimed an amount of $5,718 as the
equivalent to spouse amount in respect of her husband Allen Grant
Acton. Based on the assumptions of the Minister in the Reply to
the Notice of Appeal and the evidence submitted in the 1999
taxation year Sharon Lorene Acton and Allen Grant Acton lived
together in a self-contained domestic establishment maintained by
them.
[3] Further, in the 1999 taxation year
Allen Grant Acton, according to the Minister, earned income in
his capacity as trustee of the estate of his late father. Allen
Grant Acton contests this stating that although the lawyer
assisting him in handling the estate categorized the payment to
him as a trustee's fee nevertheless, this was not correct as
it should have been categorized as part of his inheritance which
would not be income and therefore not be subject to income tax
nor operate to affect his wife's claim for a non-refundable
tax credit.
[4] Paragraphs 118(1)(a) and
118(1)(b) of the Income Tax Act (the
"Act") provide as follows:
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,
118(1)(a)
(a) Married status
- in the case of an individual who at any time in the year is a
married person who supports the individual's spouse and is
not living separate and apart from the spouse by reason of a
breakdown of their marriage, an amount equal to the total of
(i) $6,000, and
(ii) an amount determined by
the formula
$5,000 - (C - $500)
where
C is the greater of $500 and the income of the individual's
spouse for the year or, where the individual and the
individual's spouse are living separate and apart at the end
of the year by reason of a breakdown of their marriage, the
spouse's income for the year while married and not so
separated,
118(1)(b)
(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
(iii) $6,000, and
(iv) an amount determined by
the formula
$5,000 - (D - $500)
D is the greater of $500 and the income for the year of the
dependent person.
[5] In the 1999 taxation year Sharon
Lorene Acton was married to Allen Grant Acton and they lived
together in a self-contained establishment maintained by
them.
[6] Moreover, the net income of Allen
Grant Acton in 1999 was $6,410 and in my opinion although Allen
Grant Acton maintains that that amount should not be
characterized as income or trustee's fees that is how it was
dealt with and paid and consequently that is how the amount
should be characterized.
[7] It is not entirely clear whether
Sharon Lorene Acton seeks to apply the credit in paragraph
118(1)(a) or paragraph 118(1)(b). The Reply however
refers to paragraph 118(1)(b). In my opinion neither
credit was available because the income of Allen Grant Acton in
1999 exceeded $6,290. Moreover, since Allen Grant Acton lived
with the Appellant in the 1999 taxation year in a self-contained
domestic establishment maintained by them, the equivalent to
spouse amount was properly disallowed within the provisions of
paragraph 118(1)(b) of the Act.
[8] Consequently for all of the above
reasons Sharon Lorene Acton was not entitled to claim the spousal
amount nor the equivalent-to-spouse amount in the 1999 taxation
year.
[9] Consequently her appeal is
dismissed.
Signed at Ottawa, Canada this 6th day of May 2003.
J.T.C.C.
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