Date:
20130306
Docket:
A-335-12
Citation: 2013 FCA 69
CORAM: NOËL
J.A.
GAUTHIER
J.A.
TRUDEL
J.A.
BETWEEN:
MARC
VERONES
Appellant
and
HER
MAJESTY THE QUEEN
Respondent
REASONS
FOR JUDGMENT
TRUDEL
J.A.
BACKGROUND
[1]
This
is an appeal by Mr. Verones (the “appellant”) from a decision of the Tax Court
of Canada (the “Tax Court”) (2012 TCC 291). The Tax Court concluded that the
appellant was not entitled to claim non-refundable tax credits in respect of a
wholly dependent person and child pursuant to paragraphs 118(1)(b) and (b.1),
and subsections 118(5) and (5.1) of the Income Tax Act, R.S.C. 1985, c.
1 (5th Supp.) (the “Act”) for the taxation years 2009 and 2010.
[2]
Within
the context of the present facts, subsection 118(5) of the Act provides that no
amount may be claimed as a personal credit by the appellant since he is
required, by Court order, to pay support for his children to a former spouse
from whom he was living separate and apart through the taxation years in issue.
For its part, subsection 118(5.1) provides a narrow exception to this rule
where both parents are paying child support to each other for a given taxation
year as, otherwise, subsection 118(5) would prevent both of them from claiming
the tax credit. In his memorandum of fact and law, the appellant argues that
his case falls within this exception. At the hearing of this appeal, the
appellant also argued that his case falls within subsection 118(5) if properly
construed. The interpretation that he proposes rests on his view that
subsection 118(5.1) should be repealed as it undermines the general rule
expressed in subsection 118(5), and that the introduction of this provision in
2007 constituted an error of law. For the reasons which follow, I propose to
dismiss the appeal with costs.
THE RELEVANT
FACTS
[3]
The
appellant and his former spouse have lived apart since 2008. They are the
parents of two children under the age of 18. The children reside 50% of the
time with each parent in a shared custody arrangement. Pursuant to an Order of
the Court of Queen’s Bench of Alberta, the appellant was ordered to pay both
spousal support and child support. Only the child support is at issue in this
appeal. The appellant pays monthly support for the children in the amount of
$1,763. This amount represents a set-off between the total amount the appellant
is required to contribute to his children’s needs ($2,202), and the amount his
former spouse is required to contribute ($439), as set out in the Federal
Child Support Guidelines, SOR/97-175 (the “Federal Guidelines”).
[4]
The
appellant’s original position is that pursuant to the Federal Guidelines, both
he and his ex-spouse pay child support to each other. For the appellant,
the set-off technique found in the Federal Guidelines is simply a means of
avoiding the unnecessary exchange of cheques between the parents, as it would
make no sense for him to write a cheque in the amount of $2,202 to his former
spouse and for her to do the same to him in the amount of $439. As a result,
the appellant argues that he is entitled to the tax credit for one of the two
children pursuant to subsection 118(5.1) of the Act.
ANALYSIS
[5]
I
am of the view that the Tax Court correctly rejected the appellant’s thesis.
The Tax Court observed that the Order of the Court of Queen’s Bench of Alberta
directed only the appellant to make child support payments, notwithstanding
that his former spouse’s income was taken into consideration in determining the
amount that he, as the higher income spouse, was directed to pay. It is clear
that the child support payments made by the appellant constitute a "support
amount" as contemplated by subsection 56.1(4) of the Act. The mother’s
contribution to the children’s needs does not meet the requirement of that
subsection as there is no order or written agreement requiring her to make
child support payments to the appellant. As a result, subsection 118(5) is
applicable and the appellant is not entitled to the tax credits (see Perrin
v. Canada, 2010 TCC 331; Ladell v. Canada, 2011 TCC 314, cited at
paragraph 6 of the Tax Court’s reasons).
[6]
The
whole discussion about the concept of set-off is a mere distraction from the
real issue, i.e. whether or not the appellant is the only parent making
a "child support payment" in virtue of "an order of a competent
tribunal or an agreement", as defined under the Act.
[7]
In
Contino v. Leonelli-Contino, 2005 SCC 63; [2005] 3 S.C.R. 217 [Contino],
Bastarache J. clearly articulated that the underlining principle relating to
child support in the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.) (s.
26.1(2)), and the Federal Guidelines (s. 1), consists of the parents’ “joint
financial obligation to maintain the children of the marriage in accordance
with their relative abilities to contribute to the performance of that
obligation" (at paragraph 32).
[8]
Once
each parent’s obligation vis-à-vis the children is determined, the higher
income parent may be obligated to make child support payments to the lower
income parent as part of his or her performance of said obligation. However, in
the end, the set-off concept does not translate the parents’ respective
obligation to contribute to child rearing into a "support payment” as
defined in the Act.
[9]
Thus,
the appellant’s argument as to the impact of the Federal Guidelines on child
support payments cannot succeed. Moreover, subsection 118(5.1) of the Act does
not apply to the present factual situation. As found by the Tax Court Judge,
"(s)ubsection 118(5.1) was introduced in 2007 presumably to provide relief
where both parents do, in fact, pay an amount of child support" which, as
mentioned above, is not the case here. As for the appellant’s suggestion that
subsection 118(5.1) of the Act should be repealed, it is a matter which only
Parliament can address.
[10]
Finally,
the respondent has sought a modification to the style of cause to name Her
Majesty the Queen as the proper respondent in this file and the judgment will
so provide.
CONCLUSIONS
[11]
As
a result, I propose to dismiss the appeal with costs.
"Johanne
Trudel"
“I
agree
Marc Noël
J.A.”
“I
agree
Johanne Gauthier J.A.”
FEDERAL COURT OF
APPEAL
NAMES OF COUNSEL AND
SOLICITORS OF RECORD
DOCKET: A-335-12
APPEAL FROM A JUDGMENT OF THE
HONOURABLE MADAM JUSTICE CAMPBELL OF THE TAX COURT OF CANADA DATED MARCH 21,
2012, DOCKET NUMBER 2011-2948(IT)I.
STYLE OF CAUSE: MARC
VERONES and HER MAJESTY THE QUEEN
PLACE OF HEARING: CALGARY, ALBERTA
DATE OF HEARING: MARCH 05, 2013
REASONS FOR JUDGMENT
BY: TRUDEL J.A.
CONCURRED IN BY: NOËL J.A.
GAUTHIER J.A.
DATED: MARCH 06, 2013
APPEARANCES:
|
Mr. Marc Verones
|
FOR
THE APPELLANT
(self represented)
|
|
Mr. Robert Neilson
|
FOR
THE RESPONDENT
|
SOLICITORS OF RECORD:
|
N/A
|
FOR
THE APPELLANT
(self represented)
|
|
William F. Pentney
Deputy
Attorney General of Canada
|
FOR
THE RESPONDENT
|
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