Robitaille v. R., [1999] 2 CTC 2934

Lamarre Proulx T.C.J.:

This appeal, under the informal procedure, concerns the application of provisions of the Income Tax Act (the “Act’) with respect to the child tax benefit in a case involving joint custody.

In order to make the redetermination for the child tax benefit, the Minister of National Revenue (the “Minister”) assumed the facts set out in paragraph 9 of the Reply to the Notice of Appeal, as follows:

[TRANSLATION]

(a) during the 1993 taxation year, the appellant lived separate and apart from her former spouse, Michel Gagnon:

(b) the appellant and her former spouse had joint custody of their two daughters, Marie-Claude and Isabelle;

(c) a review by the Department of National Health and Welfare determined that it was the appellant’s former spouse who primarily fulfilled the responsibility for the care and upbringing of the appellant’s two daughters, Marie-Claude and Isabelle;

(d) the two children for whom the appellant received a child tax benefit for the months of January to June 1993 are Marie-Claude and Isabelle:

(e) after reviewing the information obtained from Health and Welfare Canada, the Minister reduced the child tax benefit to which the appellant was entitled for January to June 1993 to nil;

(f) the appellant had therefore received an overpayment of $1,041 broken down by month as follows:

1993	RECEIVED	REVISED	OVERPAYMENT
January	$ 173.55	0	$ 173.55
February	$ 173.49	0	$ 173.49
March	$ 173.49	0	$ 173.49
April	$ 173.49	0	$ 173.49
May	$ 173.49	0	$ 173.49
June	$ 173.49	0	$ 173.49
Total	$1.041.00	0	$1.041.00

In paragraph 6 of her Notice of Appeal, the appellant stated the grounds on which she based her appeal:

[TRANSLATION]

(A) The appellant and Michel Gagnon exercise parental authority over their two minor children and have shared physical custody of the children since their de facto separation in July 1992;

(B) The appellant was the eligible individual who received the tax benefit, by agreement with Michel Gagnon;

(C) There has been no change in the situation of the appellant, Michel Gagnon and the children since the agreement between the parties on August 7, 1992;

(D) The appellant has always complied with her agreements with Michel Gagnon regarding the joint custody of the children and the sharing of the family allowance and tax benefits received;

(E) The appellant was unable to obtain an explanation regarding the criteria used by the respondent with respect to her eligibility as the eligible individual prior to responding to the questionnaire required by the respondent;

(F) In the alternative, if the appellant is not the eligible individual, the respondent cannot apply her determination retroactive;

(G) The respondent has not taken into account the written agreements between the parties and the judgment confirming the agreement of October 2, 1992;

(H) The appellant acted in good faith with respect to the amounts received as child tax benefits;

(I) The respondent has no valid factual basis on which to decide who is the eligible individual for the child tax benefits since the two parents have joint custody and equal parental authority:

(J) The appellant must be given the benefit of the presumption established in paragraph (f) of the definition of eligible individual since the dependants reside with her and the appellant is the female parent of the dependants;

(K) The respondent acted unfairly and inequitably with respect to the appellant;

The appellant testified at the request of her counsel. Jacques St-Pierre, an official of the Minister, testified at the request of counsel for the respondent.

The appellant’s testimony consisted in claiming that custody of the children was shared equally between her and her husband and that she did not provide more care than her husband with respect to the children. Exhibit A- 1 is a judgment of the Quebec Superior Court, dated November 12, 1992, pronouncing the separation of the couple as to bed and board and confirming their agreement. In that agreement, paragraph 2 specifically states that the parties agree to joint custody of the children and to sharing the family allowance benefits equally between them. Exhibit A-2 is a questionnaire completed by the appellant at the request of a child tax benefit administrative employee. It is dated October 22, 1993. It includes a description of the appellant’s responsibilities with respect to the care of her children. Exhibit A-3 is a judgment of the Quebec Superior Court, dated March 10, 1995, pronouncing the divorce of the couple. Custody remains joint. The parties agree that the father will collect the family allowance benefits and will remit half to the mother.

The separation dates back to July 29, 1992. The appellant continued to receive the tax benefits and to remit half to her former spouse each month. On September 23, 1993, the appellant received notice from the Minister informing her that her husband had applied to have the benefits paid in his name. On October 22, 1993, she completed the questionnaire and on December 20, 1993, she received the notice of redetermination.

In his testimony, the Minister’s official explained that he determined that the father was the eligible individual from the written material received from the former spouses.

Counsel for the appellant asked whether it was accurate that the Department of National Health and Welfare has not followed the judgment of the Superior Court which confirmed an agreement between the parties whereby the mother was to continue to receive the tax benefits and to remit half to the father. In this regard, it must be concluded that the Act determines who is the eligible individual. The parties may reach an agreement as to how the tax benefit is to be divided once it is received, but they may not determine which person will receive it. That determination is made in accordance with the provisions of the Act.

Counsel for the appellant also questioned the retroactive application of the Minister’s determination, especially in an instance involving joint custody. She could understand a decision that would have an effect in future on eligibility for the tax benefit, but did not understand a decision that would have the effect of requiring the appellant to repay $1,041 when the appellant had joint custody with the father. On the question of the legitimacy of a redetermination involving the repayment of tax benefits paid to the appellant, counsel did not refer to any provision of the Act which would prohibit such a redetermination with respect to the appellant or to any case law. Accordingly, I did not have the benefit of any debate in the courts which would have enabled me to decide the question. In the circumstances, I must conclude that the Act allows the Minister to make a redetermination with respect to the tax benefits paid to the appellant.

Counsel for the respondent referred to the decision of the Federal Court of Appeal in R. v. Marshall (1996), 96 D.T.C. 6292 (Fed. C.A.), which ruled that only one parent is an eligible individual for the purposes of eligibility for the child tax benefit. I cite the comments of Stone J.A.:

In our view as it was the female parent who, on the facts as found below, was the person who “primarily fulfils the responsibility for the care and upbringing” of the children of the marriage, only that parent may be properly regarded as the person entitled to child care benefits as provided for in section 122.6 of the Income Tax and section 6302 of the Regulations made pursuant to that section of the statute.

This section of the Act contemplates only one parent being an “eligible individual” for the purpose of allowing the benefits. It makes no provision for prorating prorating of benefits but it has not done so.

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(Emphasis added).

The relevant part of the definition of the expression “eligible individual” is found in section 122.6 of the Act, as follows:

“eligible individual” in respect of a qualified dependant at any time means a person who at that time

(a) resides with the qualified dependant,

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

and for the purposes of this definition,

(f) where the qualified dependant resides with the qualified dependant’s female parent, the parent who primarily fulfils the responsibility for the care and upbringing of the qualified dependant is presumed to be the female parent,

(g) the presumption referred to in paragraph (f) does not apply in circumstances set out in regulations made by the Governor in Council on the recommendation of the Minister of National Health and Welfare, ...

Paragraph 6301 (1)(J) of the Income Tax Regulations (the “Regulations”) stipulates that if the qualified dependant resides with more than one person who applies to be the eligible individual, the presumption in para- graph 122.6(f) of the Act does not apply. Paragraph 6301(1)(d) of the Regulations reads as follows:

For the purposes of paragraph (g) of the definition “eligible individual” in section 122.6 of the Act, the presumption referred to in paragraph (f) of the definition does not apply in the circumstances where

(d) more than one notice is filed with the Minister of National Health and Welfare under subsection 122.62(1) of the Act in respect of the same qualified dependant who resides with each of the persons filing the notices where such persons live at different locations.

Under subsection 122.62(9) of the Act, the Minister may obtain the advice of the Minister of National Health and Welfare in determining whether a person is an eligible individual. I quote this subsection:

The Minister may obtain the advice of the Department of National Health and Welfare as to whether

(a) a taxpayer is an eligible individual in respect of a qualified dependant;

(b) a person is a qualified dependant; or

(c) a person is a taxpayer’s cohabiting spouse.

In accordance with this subsection and as mentioned in subparagraph 9(c) of the Reply cited earlier, the Minister determined from “a review by the Department of National Health and Welfare...that it was the appellant’s former spouse who primarily fulfilled the responsibility for the care and upbringing of the appellant’s two daughters, Marie Claude and Isabelle”.

According to the long-standing rules of evidence in tax litigation, in order to obtain a reversal of this determination, the burden is on the appellant to show that she was the one who primarily fulfilled the responsibility for the care of the qualified dependent children. Her testimony was that the responsibility was shared equally. In light of the lack of evidence and the fact that the Court is bound by the decision of the Federal Court of Appeal, cited supra, which states that only one parent may be an eligible individual, the Minister’s determination must be affirmed.

Accordingly, the appeal is dismissed.

Appeal dismissed.