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Citation: 2003TCC354
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Date: 20030520
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Docket: 2002-4789(IT)I
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BETWEEN:
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KENNETH RONALD HOWDLE,
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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
Beaubier, J.T.C.C.
[1] This appeal pursuant to the
Informal Procedure was heard at Saskatoon, Saskatchewan, on May
12, 2003. The Appellant was the only witness.
[2] Paragraphs 5 to 10 inclusive of
the Reply to the Notice of Appeal read:
5. In
computing income for the 2000 Taxation Year, the Appellant:
(a) deducted the
amount of $2400 as a spousal support payment in respect of his
former spouse, Amy Howdle (hereinafter "Amy"); and
(b) claimed, in the
computation of his non-refundable tax credits and tax payable, an
amount of $6,140 for a wholly dependent person in respect of his
son, Kenneth Howdle Jr.
6. By means of
a Notice of Reassessment dated November 20, 2001, the Minister of
National Revenue (the "Minister") disallowed the
spousal support amount and the claim for the wholly dependent
person.
7. The
Appellant filed a Notice of Objection to the reassessment,
received April 30, 2002.
8. The
Minister confirmed the reassessment by means of a Notification of
Confirmation dated September 20, 2002.
9. In so
assessing the Appellant, the Minister made the following
assumptions of fact:
(a) the Appellant
separated from Amy on May 1, 1998;
(b) the three
children (the "Children") of the marriage are:
Gregory James, born April 20, 1985;
Kenneth Ronald Jr., born October 10, 1982; and
Christine Amy, born April 2, 1981;
(c) by written
agreement dated May 1, 1998 (the "Original
Agreement"), it was agreed that the Appellant pay Amy the
amount of $600 monthly ($200/ child) for support of the Children
and $400 monthly as spousal support (the "Spousal
Support");
(d) by written
agreement dated January 28, 2000 and signed on February 10, 2000
(the "Second Agreement") the Appellant agreed:
(i) upon sale
of the house, to continue to pay Amy $600 per month ($300/child)
for child support in respect of Kenneth Jr. and Gregory;
and
(ii) on November 1,
2000 to pay Amy $300 per month for child support in respect of
Gregory and to continue until May 1, 2003;
(e) The house
referred to in (d) above was sold in May of 2000;
(f) by
Judgment of Divorce dated November 6, 2000 (the "Divorce
Judgment"), the Appellant is required to pay Amy the sum of
$158 per month as child support in respect of Gregory, commencing
on October 1, 2000 and payable on the first day of each and every
month thereafter for so long as the child remains a child within
the meaning of the Divorce Act;
(g) during the 2000
Taxation Year, the Appellant made support payments totalling
$5,511 to Amy pursuant to the Original Agreement, Second
Agreement and Divorce Judgment as follows:
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Month
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Amount Paid
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January 2000
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$1,000
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February 2000
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1,000
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March 2000
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1,000
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April 2000
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1,000
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May 2000
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340
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September 2000
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539
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October 31, 2000
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158
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November 1, 2000
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158
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November 15, 2000
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158
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December 1, 2000
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158
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TOTAL
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$5,511
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(h) the Appellant
was required to make child support payments totalling $5,874 for
the 2000 Taxation Year as follows:
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Month
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Amount Payable
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January
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$600
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February
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600
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March
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600
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April
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600
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May
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600
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June
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600
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July
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600
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August
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600
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September
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600
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October
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158
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November
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158
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December
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158
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TOTAL
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$5,874
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(i) the
Appellant was required to make Spousal Support payments totalling
$2,000 for the 2000 Taxation Year as follows:
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Month
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Amount Payable
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January
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$400
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February
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$400
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March
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$400
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April
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$400
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May
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$400
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TOTAL
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$2,000
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(j) the
required child support amounts payable by the Appellant for the
2000 Taxation Year are in arrears;
(k) the Appellant
was living separate and apart from Amy at the time the payments
were made and throughout the remainder of the year; and
(l) the
Appellant was required to pay support amounts in respect of both
Amy and the Children during the 2000 Taxation Year.
B.
ISSUES TO BE DECIDED
10. The issues are:
(a) whether the
Appellant is entitled to deduct a Spousal Support amount in
respect of Amy for the 2000 Taxation Year; and
(b) whether the
Appellant is entitled to claim a wholly dependent person amount
for Kenneth Jr. pursuant to paragraph 118(1)(b) of the Act
in the computation of his non-refundable tax credits for the 2000
Taxation Year.
[3] All of the assumptions except 9
(g) and 9 (j) were either not refuted or were supported by the
evidence. In particular, the Court believes the Appellant's
testimony about the receipts and does not accept the references
to "mortgage" et cetera put on them by Mrs.
Howdle. All the payments were for support or constituted advances
for support amounts due later, as calculated hereafter.
[4] Respecting assumptions 9 (g) and
(j), the Court finds:
1. January to April
inclusive, the assumptions are supported by the evidence.
2. From May, inclusive, on
the Court finds as follows:
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(i)
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Payments made by the Appellant, January 1 to March 1
inclusive, to apply, as agreed with his former spouse to
later months
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$3,000
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(ii)
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Less, applied to May as assumed
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- $1,000
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Balance
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$2,000
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(iii)
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Due for child support, as per assumptions June 1 to
September 1 inclusive
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$2,400
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Less previous surplus
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- $2,000
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Balance (negative)
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- $400
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(iv)
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"Good Faith" September payment as per Exhibit
R-2
Less balance (negative)
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$539
- $400
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Surplus balance
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$139
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(v)
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Judgment, November 6, 2000, support due for Gregory
October 1, November, 1 and December 1
(158 x 3)
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$474
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(vi)
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Paid October, November, December
(4 x 158)
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$632
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(vii)
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In paragraphs (iv) and (vi)
Paid
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$139
+ $632
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$771
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$771
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Due (paragraph v)
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$474
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Excess paid
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$294
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[5] There is no evidence as to the
payment source for the $340 in May, 2000, described in assumption
(g). For this reason, it is ignored in the foregoing
calculations.
[6] Therefore the total paid as due by
the Appellant in 2000:
1. Spouse
Support
$2,000
2. Child Support
January to
May
3,000
June 1 to September
1
2,400
(surplus $139)
October 1 to December 1 (158 x
3)
474
$5,874
Claimable and allowed in
appeal
$7,874
[7] The Appellant is not entitled to
claim Kenneth Jr. as a wholly dependent person in 2000 because he
admitted that he was living in a common-law relationship that
year when Kenneth Jr. moved in with them in October 2000.
[8] The appeal is allowed as set forth
in paragraph [6] and this matter is referred back to the Minister
of National Revenue for reconsideration and
reassessment pursuant to these Reasons. The Appellant is
awarded his disbursements for photocopying, postage et cetera,
respecting this appeal which are fixed at
$100.
Signed at Ottawa, Canada, this 20th day of May 2003.
J.T.C.C.
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