Brunner v. R., [1998] 3 CTC 2450

Christie A.C.J.T.C.:

This appeal is governed by the Informal Procedure, which is granted under section 18 and following sections of the Tax Court of Canada Act. It pertains to Child Tax Benefits based on the 1993 and 1994 taxation years.

The Notice of Appeal reads:

I am writing to appeal (under the informal procedure) a decision that was made against me by the appeals Division. In Feb. ’96 my ex-husband applied and started receiving the Child Tax Credit for all three of our children. At that time he had only our oldest son - Scott David Brunner living with him. Our two younger sons - Christopher John Louis Brunner and Jeffrey Louis Brunner were both living with me. I re-applied and started receiving the Child Tax Credit about six weeks later. My ex then told the Child Tax Credit office that the children had been livin ome at 7:30 a.m., feed the boys breakfast and drive them to school. In Oct. ’94 I returned to the family home, into my own bedroom. In Nov. of ’94 my ex-husband and I reconciled. We went to counselling and tried to put our marriage back together. But I found nothing had changed, so in Feb. of ’95 I moved back into my own bedroom. With my part of the divorce settlement I bought a home for my children and me. My possession date was August 1 of ’95. Part of the agreement was I was to stay in the family home with the children until August 1 of ’95. In July of ’95 I took my children to Kelowna to visit my family. When we returned we found my ex had moved all my possessions out onto the back yard deck and had moved his girlfriend and her children into our family home. My children had lost their rooms to other children, their toys were mysteriously gone as well as their clothes, skates, etc. On August 1, 1995 my children and I moved into our new home. I had to buy them all new clothes and toys because their father had given his girlfriend’s children theirs. Scott, my oldest son, decided that he wanted to go live with his father. I made Child Tax Credit aware of this so they could adjust my check accordingly. I am appealing because I am now paying a bill I should not be paying. Every last cent of the Child Tax Credit went on my boys. Now my boys and I are paying so my ex can take holidays, etc. My ex-husband always told me he’d make me pay if I ever left him, unfortunately he is making the children pay too.

The opening paragraph and paragraphs numbered 1 to 13 of the Reply to the Notice of Appeal, read:

In reply to the Notice of Appeal, dated March 4, 1997, with respect to the Child Tax Benefits based on the 1993 and 1994 taxation years the Deputy Attorney General of Canada (the ‘Deputy Attorney General’) on behalf of Her Majesty the Queen says:

1. Except as herein expressly admitted, the Deputy Attorney General denies all of the facts alleged in the Notice of Appeal and puts the Appellant to the strict proof thereof.

2. With respect to the Notice of Appeal the Deputy Attorney General admits only that

(a) Scott David Brunner, Christopher John Louis Brunner and Jeffrey Louis Brunner (hereinafter referred to as ‘the Children’) were the Appellant’s sons;

(b) the Appellant and her husband, David John Peter Brunner (‘David’), were still married in 1993;

(c) the Appellant bought a house and took possession on or about August 1, 1995;

(d) the Appellant and the Children moved into the house after August 1, 1995;

(e) the Appellant’s oldest son, Scott, moved back to David’s home; and

(f) David filed an Application for the Child Tax Benefit with the Minister of National Revenue (the ‘Minister’), but states that such Application was filed on November 8, 1995.

3. The Deputy Attorney General states that the remainder of the Notice of Appeal is in the nature of argument and contains no relevant facts to admit or deny; but to the extent that it is found that the remainder of the Notice of Appeal contains allegations of fact the Deputy Attorney General has no knowledge of those allegations of fact and puts them in issue.

4. By way of Child Tax Benefit Notices dated March 20, 1996, the Minister advised the Appellant that she was in receipt of Child Tax Benefit overpayments as follows:

(a) for the 1993 base taxation year, $3,174.35 in respect of the monthly payments made between July 1994 and June 1995, inclusive; and

(b) for the 1994 base taxation year, $1,959.41 in respect of the monthly payments made between July 1995 and February 1996, inclusive.

5. The Appellant filed a Notice of Objection, dated April 15, 1996, to the Child Tax Benefit Notices. The Minister confirmed the reassessment of the Child Tax Benefits for the 1993 and 1994 base taxation years by a Notification of Confirmation, dated December 20, 1996.

6. In so determining the Appellant’s Child Tax Benefit overpayment, the Minister made the following assumptions of fact:

(a) the facts admitted or stated above;

(b) the Children were born on the following dates:

Given Name	Date of Birth
Scott	March 12, 1981
Christopher	June 16, 1983
Jeffrey	July 6, 1986

(c) David is the father of the Children;

(d) the Appellant filed for a divorce in May 1994;

(e) the Appellant and David were divorced on October 10, 1995;

(f) the Appellant moved out of the residence located at 19 Wood- sworth Close, Red Deer, Alberta (the ‘Family Home’) on or before June 1, 1994;

(g) the Appellant did not reside at the Family Home after June 1, 1994;

(h) until August 1, 1995, the Children resided at the Family Home;

(i) after August 1, 1995, the Children moved into the Appellant’s house located at 5525 - 35 Street, Red Deer, Alberta;

(j) on or about August 8, 1995, Scott moved back to the Family Home;

(k) throughout the period of July 1, 1994 to August 1, 1995, inclusive, the Appellant was not the parent who primarily fulfilled the responsibility for the care and upbringing of the Children;

(l) the Appellant did not file an election with the Minister which indicated that she was an eligible individual with respect to the Children;

(m) in July 1994 the Appellant received a Child Tax Benefit cheque in the amount of $265.32;

(n) for the months of August 1994 to June 1995, inclusive, the Appellant received monthly Child Tax Benefit cheques in the amount of $264.51;

(o) for the months of July, August and September 1995 the Appellant received monthly Child Tax Benefit cheques in the amount of $320.71, $320.39 and $320.39, respectively;

(p) for the month of October 1995 the Appellant received a monthly Child Tax Benefit cheque in the amount of $119.00;

and

(q) for the months of November 1995 to February 1996 the Appellant received monthly Child Tax Benefit cheques in the amount of $219.73.

7. The Deputy Attorney General states that by a Notice dated May 17, 1996, the Minister determined that the Appellant’s Child Tax Benefits for the period of September 1995 to April 1996 had been underpaid by $1,785.05. The Deputy Attorney General further states that this determination reduced the amount of Child Tax Benefits determined to be overpaid for the period of July 1995 to February 1996 to $640.82.

8. The Deputy Attorney General states that on March 20, 1997, the Minister issued a Notice of Redetermination with respect to the overpayment of Child Tax Benefits for the 1993 base taxation year. This Notice of Redetermination allowed the Appellant Child Tax Benefits for the period of July to November 1994, inclusive, in the amount of $1,322.64, which reduced the amount of the overpayment for the 1993 base taxation year to $1,851.71.

9. The issues to be decided in this appeal are

(a) whether the Minister correctly determined that the Appellant received an overpayment of Child Tax Benefits in the amount of $1,851.71 for the 1993 base year and;

(b) whether the Minister correctly determined that the Appellant received an overpayment of Child Tax Benefits in the amount of $640.82 for the 1994 base year.

10. The Deputy Attorney General relies, inter alia, on sections 122.6, 122.61, 122.62 and 171 and subsection 252(4) of the Income Tax Act, R.S.C. 1985 (5th supp.), c. 1, as amended for the 1993 and 1994 base taxation years and Regulations 6300, 6301 and 6302 of the Income Tax Regulations (the 'Regulations ) thereunder.

11. It is submitted that the Appellant did not reside with the Children between July 1, 1994 and August 1, 1995, inclusive, and that the Appellant was not the parent who primarily fulfilled the responsibility for the care and upbringing of the Children during this period. Consequently, it is submitted that the Appellant was not an ‘eligible individual’ as that term is defined in section 122.6 of the Income Tax Act (the 'Act ).

12. It is further submitted that as the Appellant was not an ‘eligible individual’ throughout the period of July 1, 1994 and August 1, 1995, inclusive, the Appellant was not entitled to Child Tax Benefits for this period of time pursuant to sections 122.6, 122.61 and 122.62 of the Act and the Regulations.

13. Furthermore, it is submitted that the Appellant was not entitled to the Child Tax Benefits in the amount of $1,322.64 for the period of July 1994 to November 1994, which were allowed by the Notice of Redetermination dated March 20, 1997. The Deputy Attorney General accepts that this Court cannot increase the subject assessment given the provisions of section 171 of the Act.

The onus is on the appellant to establish that the Minister of National Revenue erred in determining Child Tax Benefit overpayment to the appellant. That onus can be discharged by adducing evidence to establish such an error on a balance of probability.

It was settled at trial that the period of time in issue on this appeal is December 1, 1994 to August 1, 1995 (“the period in issue”). This includes taking into account what is said in paragraph 13 of the Reply to the Notice of Appeal.

The appellant and her former husband, David P. T. Brunner, are the parents of Scott, Christopher and Jeffrey, each of whom is a “qualified dependant” as defined in section 122.6 of the Income Tax Act. They resided with their parents during the period in issue.

The answer to this question resolves this litigation in favour of the appellant or against her: was the appellant during the period in issue a parent described in paragraph (Z?) of the definition of “eligible individual” in section 122.6. Paragraph (Z?) reads:

‘Eligible individual’ in respect of a qualified dependant at any time means a person who at that time

(b) is the parent of the qualified dependant who primarily fulfils the responsibility for the care and upbringing of the qualified dependant.

I repeat the key words, “primarily fulfils the responsibility for the care and upbringing of the qualified dependant”.

It is the position of the appellant that she was the eligible individual in relation to the children at the time relevant to this appeal. The respondent says that it was David Brunner.

The circumstance giving rise to this litigation is the breaking up of the marriage between the appellant and David Brunner. The marriage was dissolved on October 10, 1995 by a judgment issued out of the Court of Queen’s Bench of Alberta. A good deal of evidence was adduced about that break-up. But, for present purposes, it is sufficient to relate that in June 1994 the appellant left the matrimonial home and took up residence with a male friend. The children remained at home with the father. The appellant returned to the matrimonial home around October 17, 1994. There was hope of reconciliation and they received counselling in this regard. Reconciliation was not, however, achieved.

It might be noted that during the period of her absence from June 1994 to October 17, 1994, the appellant testified that she would still see the children during the day and cared for them.

By February 1995, the appellant concluded the marriage was over and she moved back into her own bedroom in the matrimonial home. This arrangement continued until she left for good.

On November 9, 1994, the appellant and David entered into an agreement dealing with a number of matters, including custody and access, child maintenance, spousal support, matrimonial property, the wife’s personal property, the husband’s personal property, and debts. Under this agreement, the appellant received a substantial amount of cash, which enabled her to purchase a new home for herself and the children. They occupied it on August 1, 1995. About a week later the eldest son, Scott, chose of his own volition to return to his father’s home.

The appellant’s evidence is that she purchased food and made other expenditures on behalf of the children. She also indicated in the Notice of Appeal and repeated at trial, that she took care of them, apart from the expenditures just referred to. There is evidence that, when the appellant resided in the matrimonial home, she was on the payroll of Sylvan Auto Centre, a business conducted by David. The cheques issued to her were used to make payments due under a mortgage on that home.

It is important to bear in mind that the factors to be considered in determining what constitutes care and upbringing of a qualified dependant are enumerated in section 6302 of the Income Tax Regulations. They make it clear that expenditure of funds does, not of itself, determine which parent primarily fulfilled the responsibility for the care and upbringing of the children.

The appellant tendered in evidence testimonials reflecting favourably on her relationship with the children. The signatories were not called as witnesses. Nevertheless, they are admissible in evidence under Ainsley v. R. (May 26, 1997), Doc. A-610-96 (Fed. C.A.), a decision of the Federal Court of Appeal. But this evidence is of limited assistance because there has been no allegation that the appellant’s affection for and the interest in the welfare of the children was other than it should be.

It is stated in the documents, however, that the appellant transported the children to and from school, and this relates to paragraph (d) of section 6302.

David Brunner testified on behalf of the respondent. He generally confirmed what is said in these reasons about the movements of the appellant in relation to the matrimonial home. He also confirmed that by February 1995 the marriage had broken down permanently. He admitted that the appellant made some contributions towards the children. He said, for example, that from time to time she would purchase food that he regarded as too expen sive. But he estimated that 90 percent of the needs of the children were taken care of by him.

Having regard to what was placed before me by way of evidence last Monday, this is not an easy case to decide. Nevertheless, having regard to the whole of the evidence, and bearing in mind the factors to be considered in determining what constitutes care and upbringing that are set out in section 6302 of the Income Tax Regulations, I have concluded that the appellant was the parent of the three children who at the relevant time primarily fulfilled the responsibility for their care and upbringing. It follows that judgment shall issue allowing the appeal. The appellant is entitled to party and party costs if she has incurred any.

Appeal dismissed.