Tremblay T.C.J.:
1 This appeal was heard under the informal procedure on April 29, 1997 at Montréal, Quebec.
1. Point at issue
2 According to the Notice of Appeal and the Reply to the Notice of Appeal, the question is whether the appellant is entitled to claim a non-refundable equivalent-to-married tax credit of $914.60 ($5,380 × 17%) for a wholly dependent person, his daughter Nadia.
3 The appellant argues that he has joint custody of the four children from his marriage.
4 The respondent disallowed the credit on the basis that the appellant was already entitled to a deduction for maintenance paid to his ex-wife for the children.
2. Burden of proof
5 2.01 The appellant has the burden of showing that the respondent's assessment is incorrect. This burden of proof arises from several court decisions including the decision of the Supreme Court of Canada in Johnston v. Minister of National Revenue
6 2.02 In that decision, the Supreme Court ruled that the facts assumed by the respondent in support of the assessment or reassessment are presumed to be correct unless proven otherwise. In the instant case, the facts assumed by the respondent are set out in subparagraphs (a) to (i) of paragraph 4 of the respondent's Reply to the Notice of Appeal. That paragraph reads as follows:
[TRANSLATION]- 4. In making this assessment for the 1995 taxation year, the Minister relied inter alia on the following facts:
(a) the appellant and Suzanne Mignault (hereinafter the “ex-wife”) were married on June 24, 1978; [admitted]
(b) the appellant and his ex-wife had four children: Sonia, born on May 1, 1981, Nadia, born on July 11, 1982, Cynthia, born on September 22, 1985 and Simon-Pierre, born on July 19, 1987; [admitted]
(c) the appellant and his ex-wife legally separated on June 17, 1994; [admitted]
(d) the appellant pays support to his ex-wife for the four children; [admitted]
(e) in his tax return for the 1995 taxation year, the appellant claimed a deduction for maintenance in the amount of $2,600; [admitted]
(f) in his tax return for the 1995 taxation year, the appellant claimed a non-refundable equivalent-to-married tax credit of $914.60 for a wholly dependent person, his daughter Nadia; [admitted]
(g) in her tax return for the 1995 taxation year, the appellant's ex-wife claimed a non-refundable equivalent-to-married tax credit of $914.60 for a wholly dependent person, her son Simon-Pierre; [no knowledge]
(h) during the whole of 1995, the ex-wife received tax benefits for the four children; [admitted]
(i) for the 1995 taxation year, the Minister disallowed under subsection 118(5) of the Income Tax Act (hereinafter the “Act”) the appellant's claim of the non-refundable equivalent-to-married tax credit for a wholly dependent person with respect to his daughter Nadia; [admitted that this is the respondent's decision but not agreed with]
3. Facts in evidence
7 3.01 In addition to the above admissions, the appellant testified that he had joint custody of the children with his ex-wife.
8 3.02 The mother has custody of the children one week and the father the next. The father pays the mother maintenance for the children in the amount of $100 for each week the mother has custody of the children. This arrangement is in compliance with paragraphs (2) and (3) of the agreement which was part of the separation judgment dated September 13, 1994, issued by the Superior Court, District of Joliette (Exhibit I-1).
4. Act - Analysis
4.01 Act
9 The statutory provision that governs this matter is subsection 118(5) of the Income Tax Act which reads as follows:
118(5) Alimony and maintenance.
(5) Where an individual in computing the individual's income for a taxation year is entitled to a deduction under paragraph 60(b), (c) or (c.1) in respect of a payment for the maintenance of a spouse or child, the spouse or child shall, for the purposes of this section (other than the definition “qualified pension income” in subsection (7)) be deemed not to be the spouse or child of the individual.
4.02 Analysis
4.02(1) Appellant's argument
10 The appellant reiterated in court the argument he had set out in his Notice of Appeal:
[TRANSLATION]
Under subsection 118(5) of the Income Tax Act, the equivalent-to-married credit for a dependant cannot be claimed for a child in respect of whom the taxpayer has paid maintenance during the year.
The Income Tax Act does not therefore provide in any way for joint custody. It is true that I paid child support but only for half the year because, during the other 26 weeks, my four children were wholly dependent on me. Is this not taken into consideration at all?
If we look at the situation differently, that is, if we suppose that there was no joint custody and that my four children lived with me during the first 26 consecutive weeks of the year, you could not then deny the fact that they were wholly dependent on me during this period.
This situation is the same as joint custody. My children are my dependants for 26 weeks of the year. In theory, I should be entitled to the credit for dependent persons for the half of the year when my children are my dependants.
I do not consider it equitable or fair that one of the parents can take advantage of this benefit while the other is penalized because we have chosen joint custody. We both have our children as dependants for an equal period of time, namely half of the year.
4.02(2) Respondent's argument
11 Counsel for the respondent laid particular emphasis on the last part of subsection 118(5) which reads as follows:
...the spouse or child shall, for the purposes of this section (other than the definition “qualified pension income” in subsection (7)) be deemed not to be the spouse or child of the individual [i.e. of the appellant].
12 Therefore, argued counsel for the respondent, because this marital and parental state is deemed not to exist, the appellant cannot claim the tax credit.
13 4.02.3 The appellant responded that his children are his children and that one cannot, through this deeming provision, decide that they no longer are.
14 4.02.4 In many places in the Act, Parliament creates such presumptions for the purposes of administering the legislation.
15 One such presumption with regard to tax benefits relating to children is in subsection 122.61(1) which deals with overpayments.
16 4.03 The Court must apply the Act and, accordingly, upholds the respondent's position.
5. Conclusion
17 For the above reasons, the appeal is dismissed.
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