Date: 20010525
Docket: 2000-4046-IT-I
BETWEEN:
BONNIE L. HICKSON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Hamlyn, J.T.C.C.
FACTS
[1]
These are appeals from assessments of tax for the 1997 and 1998
taxation years.
[2]
The Appellant was reassessed by Notices dated May 17, 1999 which
included child support payments in the amounts of $9,000.00 and
$5,850.00 for the 1997 and 1998 taxation years, respectively.
[3]
The Appellant states that pursuant to an Order of the Ontario
Court (General Division) dated October 26, 1993[1], the Appellant's
ex-spouse was to pay the sum of $750.00 per month per child
until:
... one or more of the following occurs:
(a)
the child ceases to reside with the Petitioner;
(b)
the child becomes eighteen years of age and ceases to be in
full-time attendance at an educational institution;
(c)
the child becomes twenty-one years of age;
(d)
the child dies;
(e)
the child marries.
[4]
The Appellant has two children, subject to the order, named
Matthew Hickson and Jillian Hickson, born June 18, 1975
and September 24, 1977, respectively.
[5]
The Appellant stated that her children remained dependent on her
beyond the age of 18 as they were attending post-secondary
institutions. She requests that her children be deemed dependent
children and that the appropriate tax relief be granted for the
relevant years.
[6]
The Appellant referred to various Divorce Act[2] provisions and
stated that the Minister of National Revenue's (the
"Minister") position1 and assessments are in
conflict with those provisions.
[7]
The Minister states that the child support payments for Jillian
continued until she became 21 years of age in 1998. The Minister
also states that the payments made pursuant to the Order do not
have a "commencement day" as that term is defined in
subsection 56.1(4) of the Income Tax Act (the
"Act"). The Minister therefore contends that the
amounts were required to be included by the Appellant in
computing her income for the 1997 and 1998 taxation years. The
Minister also stated that the children were not under 18 years of
age or dependent on the Appellant for support by reason of mental
or physical infirmity during the 1997 and 1998 taxation
years.
ISSUES
[8]
The issues are:
(a)
whether the Appellant is required to include the child support
amounts of $9,000.00 and $5,850.00 in computing her income for
the 1997 and 1998 taxation years, respectively; and
(b)
whether the Appellant is entitled to claim an amount for the
wholly dependent person credit in the computation of her tax
payable for the 1997 and 1998 taxation years.
ANALYSIS
Child Support Payments
[10] For an
amount to be included under paragraph 56(1)(b) of the Act,
it must meet the requirements of the definition of "support
amount" and "commencement day" in
subsection 56.1(4). Those provisions read:
56(1)(b) Support — the total of all amounts each
of which is an amount determined by the formula
A - (B + C)
where
A
is the total of all amounts each of which is a support amount
received after 1996 and before the end of the year by the
taxpayer from a particular person where the taxpayer and the
particular person were living separate and apart at the time the
amount was received,
B
is the total of all amounts each of which is a child support
amount that became receivable by the taxpayer from the particular
person under an agreement or order on or after its commencement
day and before the end of the year in respect of a period that
began on or after its commencement day, and
C
is the total of all amounts each of which is a support amount
received after 1996 by the taxpayer from the particular person
and included in the taxpayer's income for a preceding
taxation year;
56.1(4) "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. [emphasis added]
"commencement day" at any time of an agreement or
order means
(a)
where the agreement or order is made after April 1997, the day it
is made; and
(b)
where the
agreement or order is made before May 1997, the day, if any, that
is after April 1997 and is the earliest of
(i) the day specified as the commencement
day of the agreement or order by the payer and recipient under
the agreement or order in a joint election filed with the
Minister in prescribed form and manner,
(ii) where the agreement or order is
varied after April 1997 to change the child support amounts
payable to the recipient, the day on which the first payment of
the varied amount is required to be made,
(iii) where a subsequent agreement or order
is made after April 1997, the effect of which is to change the
total child support amounts payable to the recipient by the
payer, the commencement day of the first such subsequent
agreement or order, and
(iv) the day specified in the agreement or
order, or any variation thereof, as the commencement day of the
agreement or order for the purposes of this Act.
[10] If the
amount was received after 1996, it is necessary to determine
whether it was receivable under an order or agreement made after
April 1997 and whether or not a "commencement day" as
defined in subsection 56.1(4) has otherwise been established. In
the present appeals, the Order was made prior to May 1997. As
such there is no "commencement day" within the meaning
of the section. Therefore the amounts at issue are required to be
included in the Appellant's income.
Wholly Dependent Person
[11] Paragraph
118(1)(b) of the Act provides a credit for certain
individuals who do not claim the married status credit but whose
status is considered to be "equivalent-to-married".
Provided that certain requirements are met, the individual may
claim a credit for the support of one wholly dependent person.
Paragraph 118(1)(b) reads as follows:
118(1)(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) the amount determined by
the formula
$5,000 - (D - $500)
where
D
is the greater of $500 and the income for the year of the
dependent person,
[12] In the
present appeals, the Minister has disallowed the above credit on
the basis that the Appellant's children were not under the
age of 18 years or dependent by reason of mental or physical
infirmity. The Appellant's children were over the age of 18
in the years at issue. The only exception in
clause 118(1)(b)(ii)(D) from the requirement that the child
be under the age of 18 is if that child is dependent by reason of
mental or physical infirmity. The evidence fails to support the
exception. The Appellant also raised the question that if she is
denied the wholly dependent person credit, she is being
discriminated against. The Federal Court, Trial Division found in
The Queen v. Mercier, 97 DTC 5081 that clause (D) did not
violate subsection 15(1) of the Canadian Charter of
Rights and Freedoms and, even if it did, it was justified by
section 1.
[13] The
disallowance of this credit when a dependent is above 18 years of
age has been confirmed in numerous appeals. See Ramos v.
R., [1999] 1 C.T.C. 2074 (T.C.C.) and Nartey v. R.,
[1998] 4 C.T.C. 2495 (T.C.C.). The Appellant is therefore not
eligible for this credit.
[14] The
Appellant also raised issues of her account with CCRA and
collection procedures (garnishment) by CCRA. All these matters
being post-assessment, are not matters that can be adjudicated on
by this Court.
DECISION
[15] The
appeals are dismissed.
Signed at Ottawa, Canada, this 25th day of May 2001.
"D. Hamlyn"
J.T.C.C.
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