Date: 20020607
Docket: 2002-62-IT-I
BETWEEN:
ELIZABETH J. IRWIN-KENYON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasonsfor Judgment
McArthur J.
[1] The issue in this appeal is whether the amount of $4,846 paid by the Appellant's former spouse is to be included in the Appellant's income for the 1999 taxation year. The Minister of National Revenue (the Minister) relies on paragraph 56(1)(b) and subsection 56.1(1) of the Income Tax Act (the Act) which read as follows:
56(1) Without restricting the generality of section 3, there shall be included in computing the income of a taxpayer for a taxation year,
...
(b) the total of all amounts each of which is an amount determined by the formula
A - (B + C)
where
A is the total of all amounts each of which is a support amount received after 1996 and before the end of the year by the taxpayer from a particular person where the taxpayer and the particular person were living separate and apart at the time the amount was received,
B is the total of all amounts each of which is a child support amount that became receivable by the taxpayer from the particular person under an agreement or order on or after its commencement day and before the end of the year in respect of a period that began on or after its commencement day, and
C is the total of all amounts each of which is a support amount received after 1996 by the taxpayer from the particular person and included in the taxpayer's income for a preceding taxation year;
56.1(1) For the purposes of paragraph 56(1)(b) and subsection 118(5), where an order or agreement, or any variation thereof, provides for the payment of an amount to a taxpayer or for the benefit of the taxpayer, children in the taxpayer's custody or both the taxpayer and those children, the amount or any part thereof
(a) when payable, is deemed to be payable to and receivable by the taxpayer; and
(b) when paid, is deemed to have been paid to and received by the taxpayer.
The parties agree that the pertinent question is whether the Appellant is deemed to have received the child support payments pursuant to paragraph 56.1(1)(b) of the Act, and specifically, whether the Appellant had custody of her two daughters during the relevant period.
Facts
[2] The Appellant was the only witness. She was married to Steve J.N. Galianos in 1977. They had two children, Jessica born February 9, 1977 and Christina born September 23, 1981. They entered into a domestic contract (separation agreement) dated June 15, 1993. The Appellant was granted custody of the two girls and contracted to pay $300 per month per child with a cost of living escalation clause. The agreement provided in paragraph 7(i) that:
a. The payments shall be the full sum of Three Hundred Dollars ($300.00) each, payable on the fifteenth and thirtieth of each and every month commencing June 15, 1993, payable directly to Elizabeth Galianos and thereafter commencing June 30, 1993 payable to the Court of Queens Bench, Family Division, Justice Building, Queen Street, Fredericton, New Brunswick until one or more of the following occur:
i. the child ceases to reside with the Wife. (The child shall be deemed to reside with the Wife notwithstanding that the child lives away from home while pursuing or enjoying a reasonable holiday, attending an educational institution, or engaging in summer employment.);
ii. the child becomes 19 years of age and ceases to be in attendance at an educational institution;
iii. the child obtains her first post secondary degree, diploma or certificate;
iv. the child marries;
v. the child dies;
vi. the Husband dies;
[3] The following facts set out in the Notice of Appeal are accurate:
... The support payments to my two children went directly to them in their names. For Jessica Galianos, my eldest daughter, this was done effective September 1997. I paid income tax on her support payments until she left home at 22 years of age and went away to University of Montreal. For Christina, the payments went to her as of September 1999, in her name. She was 18 at the time and living in Montreal attending University. Each time I spoke to my Family Support enforcement officer, Arnold Crawford, who directed me to send him a faxed copy of my request and the Court of Queen's Bench Support Services would change who the payments went to without having to go back to court. Under Section 60.1(1) of the Act regarding adult childrens' support payments, I feel I am not responsible for the support payments, that I never received, never used and from which I received no benefit. I had no control over this money, and my adult children do, therefore why I should have to pay income tax on it? This money was exclusively for my two adult children. My daughters have submitted a written statement corroborating my claims in this matter. My ex-spouse knew very well that our daughters were getting the support payments, made out to them for their use only and that I did not receive or use these funds.
[4] The Appellant included in her income the proportionate amount paid for Christina's support[1] while she was living at home with her mother. In 1999, Jessica was 22 years old and Christina turned 18 on September 23, 1999. About September 1, 1999, Christina left her mother's home to reside in Montreal and attend Concordia University. At this time, the Appellant feels she no longer had custody of Christina. To illustrate this, the Appellant recalled that she became aware shortly after Christina left home, that her older daughter Jessica was no longer residing in Montreal attending Concordia but had moved to Toronto to work as a stewardess for Air Canada. This caused the Appellant considerable distress. While she had lost custody and control of Christina, she hoped Jessica would be close by to counsel and assist her younger sister to cope with her anxiety. The Appellant sought counselling. Apparently, she was advised to face reality and let go. Christina was 18 years old, 500 miles away and on her own. Christina visited her mother at Christmas, spending half of those holidays with her father. She remained in Montreal during the summer of 2000 returning only for Christmas.
[5] The Appellant wrote the New Brunswick Court of Queen's Bench in 1997 and 1999 requesting that the support payments be made directly to Jessica and Christina, respectively. Such requests were carried out and Jessica and Christina directly received the support payments from this time on.
Analysis
[6] Again the question is whether the Appellant had custody of Christina and Jessica in 1999. I found the two cases submitted by the Respondent, Robinson v. Canada[2] and Saddler v. The Queen[3] of assistance.
[7] In Robinson, Rip J. was required to consider whether a child was in a taxpayer's custody, pursuant to subsection 60.1(1) of the Act. [4] In 1996, the appellant was ordered by an Ontario Court to pay directly to his adult son, monthly support payments of $300. In assessing the taxpayer for 1997, the Minister disallowed the deduction of the $3,600 paid by him to his son during 1997. The appellant appealed to the Tax Court of Canada. Judge Rip dismissed the appeal and determined that by virtue of subsection 60.1(1) of the Act, where an amount has not been paid to the former spouse of the taxpayer, but to the benefit of the child in that person's custody, the amount is nevertheless deemed to have been paid to the spouse, so that the taxpayer may deduct it under paragraph 60(b) of the Act. The narrow question to be decided in the Robinson case, therefore, was whether or not the son was in his mother's custody during 1997, when the payments in issue were made to him. Judge Rip examined the case Saddler, supra, and various dictionary definitions, and deducted from these examinations that custody implies that the child submit himself or herself to parental control, and be dependent to a certain extent. Such a determination is a question of fact, and an adult child usually bears a greater onus than a minor child in proving that he or she is under the custody of a parent. In the Robinson case, no evidence was introduced as to whether the son had continued to submit himself to his mother's control.
[8] In the Saddler case, Bell J. determined that the appellant should be allowed to deduct child support payments made directly to his adult children and not to his former spouse. Judge Bell found that although the children attended university, they were in their mother's custody because they gave a portion of the child support payments to their mother, lived in their mother's home and ate their meals there.
[9] To support the position that the Appellant had custody of Christina after August 1999, and of Jessica in 1999, counsel for the Respondent relied on a Consent Order from the New Brunswick Court of Queen's Bench dated April 10, 2001 and paragraph 7(i)(a)i of the separation agreement, as quoted above.
[10] The Consent Order states that Steve Galianos would increase child support payments to Christina to $452. The Appellant did not believe that she initiated the proceedings resulting in the Court Order. Paragraph 7(i)(a)(i) of the separation agreement states that Steve Galianos must continue to make child support payments even if the child is no longer residing with the Appellant because she is attending school. Neither document supports the notion that Christina or Jessica were within the custody of the Appellant.
[11] During the relevant period in 1999, Jessica and Christina were living in Montreal and Toronto and attending university and working. There is no need to go beyond the ordinary meaning of the word "custody". The Appellant did not have the care and control of her daughters. Therefore, neither child was in the Appellant's custody and accordingly subsection 56.1(1) does not deem the Appellant to have received child support payments.
[12] The appeal is allowed and the Appellant is entitled to costs in the amount of $200.
Signed at Ottawa, Canada, this 7th day of June, 2002.
"C.H. McArthur"
J.T.C.C.
COURT FILE NO.: 2002-62(IT)I
STYLE OF CAUSE: Elizabeth Irvin-Kenyon and
Her Majesty the Queen
PLACE OF HEARING: Fredericton, New Brunswick
DATE OF HEARING: May 17, 2002
REASONS FOR JUDGMENT BY: The Honourable Judge C.H. McArthur
DATE OF JUDGMENT: June 7, 2002
APPEARANCES:
For the Appellant: -- The Appellant herself
Counsel for the Respondent: Christa MacKinnon
COUNSEL OF RECORD:
For the Appellant:
Name: --
Firm: --
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2002-62(IT)I
BETWEEN:
ELIZABETH J. IRWIN-KENYON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on May 17, 2002, at Fredericton, New Brunswick, by
the Honourable Judge C.H. McArthur
Appearances
For the Appellant: The Appellant herself
Counsel for the Respondent: Christa MacKinnon
JUDGMENT
The appeal from the assessment of tax made under the Income Tax Act for the 1999 taxation year is allowed and the assessment is referred back to the Minister of National Revenue for reconsideration and reassessment on the basis that the amount of $4,846 is not to be included in computing the Appellant's income.
The Appellant is entitled to costs in the amount of $200.
Signed at Ottawa, Canada, this 7th day of June, 2002.
|
"C.H. McArthur" |
J.T.C.C.