Ravi Kiran v. Minister of National Revenue, [1986] 2 CTC 2176, 86 DTC 1623

Taylor, T.C.J.:—This is an appeal heard in Ottawa, Ontario, on July 7, 1986, against an income tax reassessment for the year 1981, because the Minister of National Revenue originally had allowed, and then disallowed as a deduction, an amount of $1,090 claimed for support of the appellant's non-resident sister. The Minister in the reply to notice of appeal stated:

. . . in 1981 the Appellant’s sister was not dependent on the Appellant for support within the meaning of paragraph 109(1)(f) of the Act, and the Appellant was properly reassessed with respect to his 1981 taxation year.

And from the notice of appeal:

My father retired in May 1980 with a small pension paid to him monthly by his employer. This pension amount is hardly enough to meet my parents’ day to day needs.

During my visit in 1980, I discussed the entire situation with my father to facilitate my sister's day to day requirements and her further education. I gave him approximately $1,000 in 1980 which I could not claim due to lack of financial transactions documents. In 1981, I continued supporting my sister on a monthly basis and at the same time I filed for her immigration papers. This arrangement continued until December 1982.

The following facts and assumptions can be read in the Minister’s reply to notice of appeal.

In computing his income tax for the 1981 taxation year the Appellant deducted $2,007.93 for the support of his sister in India.

that during 1981 the Appellant's mother and father were not infirm and were not over 65 years of age,

that during 1981 the Appellant’s sister resided with the Appellant’s parents and attended University,

that during 1981 the Appellant’s sister was dependent on the Appellant’s father, and not the Appellant, for support within the meaning of paragraph 109(1 )(f) of the Income Tax Act.

The testimony and evidence indicated that the sister, living in India with her parents at the time, was 20 years of age on her birthday in 1981, the year in issue. A total of $2,007.93 Canadian had been sent by the appellant to his father in India, in response to him assuming the obligations of supporting his sister — including the provision of funds for her university education. About $800 of the above amount had been used for the sister's university education, and the balance (about $1,200) used for her "support", according to him.

Counsel for the Minister introduced a copy of a letter to the appellant from his father dated January 27, 1981, in which the father thanked Mr. Kiran for past assistance, and hoped he could continue to subsidize the high cost of the university education for his sister. The letter seemed to indicate that without such assistance the university education (maybe even including a private tutor) would have been impossible.

There were two points emphasized by the Minister at the hearing which appear to require answers on behalf of the appellant:

(1) The sister was not "dependent" on the appellant for support, as outlined in paragraph 109(1 )(f) of the Income Tax Act, S.C. 1970-71-72, c. 63, as amended, because the funds sent to India by the appellant were used — at least partially — for the university education of the sister, not for her "sup- port”. For this point counsel for the Minister put forward the case of Hsieh v. M.N.R., [1980] C.T.C. 2567; 80 D.T.C. 1516.

(2) The sister could not be "dependent" on the appellant, because, the parents were not dependent on him. The case of Abdulmalik Karimi v. M.N.R., [1979] C.T.C. 2471; 79 D.T.C. 408, indicated such a result should ensue according to the Minister.

Dealing with the above two points in reverse order, I would note that while the particular circumstances in Karimi, supra, seemed to the presiding Member to place the support responsibility for the sister clearly within the ambit of the parents, rather than the appellant, I do not read the decision to mean that under other circumstances a sister could not be supported by, and therefore dependent upon a brother, irrespective of the role played vis-a-vis the parents. The case of Nanik G. Kripalani v. M.N.R., [1978] C.T.C. 2247; 78 D.T.C. 1203 is referenced in Karimi, supra, but it is just as clear from Kripalani, supra, that paragraph 109(1)(f) does not, in itself, prohibit the "support” status for a sister (or a sister-in-law as in Kripalani, supra). To whatever degree the Minister has based his assessment of Mr. Kiran on a view that this appellant could not support his sister, without also supporting his father, I would think it is not a tenable proposition.

On the other point raised, the only evidence available to the Court (from the testimony of Mr. Kiran) is to the effect that about $1,200 was paid by Mr. Kiran for the support of his sister, and about $800 for her education. Since the claim of the taxpayer is for only $1,090, I am unable to determine why the Minister appears to want to relate that amount to the $800 educational cost, as opposed to the $1,200 support cost — as asserted by the appellant. There was no challenge at the hearing posed by the Minister with respect to these amounts, or this breakdown, so I see no reason for the Court to take issue with them. I would venture the opinion that the Minister might be on tenuous grounds in disallowing even all or part of the educational costs, since I doubt that an education (even a university education) might legitimately be classified as a form of luxury or excessive living standard (see clause 109(1 )(f)(ii)(c)). While Hsieh, supra places a very heavy specific responsibility on the taxpayer, when the claim appears to be for more than "food, clothing and shelter" — (". .. the appellant would have a difficult time to establish that the recipients were dependent on him for support”. — page 2569 (D.T.C. 1517) of Hsieh), I am not aware that it would be an impossibility.

I would also note that the support requirements under paragraph 109(1 ) (f) of the Act are described as "dependent", which may be contrasted with “wholly dependent", to be found in paragraph 109(1 )(d) of the Act. The Minister in this appeal did not attempt to persuade the Court that paragraph 109(1 )(f) of the Act designated exclusive or sole dependency, as opposed to shared dependency, and therefore I do not find it necessary in the context of this appeal to determine that point.

The appellant did not present any calculation in support of the amount claimed of $1,090, nor did the Minister challenge that amount in the pleadings or at the hearing. The issue of any maximum permissible under paragraph 109(1 )(f) of the Act did not arise — the sole point placed before the Court being the question of dependency. It is evident that any claim by Mr. Kiran beyond the limits of the relevant section of the Act would not be deductible.

As I see the issue before the Court, Mr. Kiran asserted that he had taken over the support of his sister for the year 1981, and paid for educational requirements as well as food, clothing and shelter. That some or all of that “food, clothing and shelter" might have been provided in a common living arrangement wherein his father provided for his own daily requirements — largely at his own expense — does not appear to me to disqualify this taxpayer from claiming support for his sister.

The appeal is allowed in order that the appellant may claim support for his non-resident dependent sister under paragraph 109(1)(f) of the Act, and the matter is referred back to the respondent for reconsideration and reassessment.

The appellant is entitled to party and party costs.

Appeal allowed.