Date: 20000225
Docket: 98-9328-IT-I
BETWEEN:
STANLEY P. KLIMOWICZ,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Bowman, J.T.C.C.
[1] This is an appeal from an assessment for the 1996 taxation year. I reserved judgment because it raises a somewhat novel point concerning the interaction of paragraphs 118(1)(a) and (b) of the Income Tax Act.
[2] Paragraph 118(1)(a) provides a credit for a married person who supported his or her spouse. Paragraph 118(1)(b) provides what is called the "equivalent to married" credit for unmarried or separated persons who support dependants.
[3] Paragraphs 118(1)(a) and (b) read:
118. (1) Personal credits. – For the purpose of computing the tax payable under this Part by an individual for a taxation year, there may be deducted an amount determined by the formula
A x B
where
A is the appropriate percentage for the year, and
B is the total of,
(a) married status. – in the case of an individual who at any time in the year is a married person who supports the individual's spouse, an amount equal to the total of
(i) $6,000*, and
(ii) an amount determined by the formula
5,000* - (C - $500*)
where
C is the greater of $500* and the income of the individual's spouse for the year or, where the individual and the individual's spouse are living separate and apart at the end of the year by reason of a breakdown of their marriage, the spouse's income for the year while married and not so separated,
(b) wholly dependent person ["equivalent to married" credit]. – in the case of an individual not entitled to a deduction by reason of paragraph (a) who, at any time in the year,
(i) is an unmarried person or a married person who neither supported nor lived with the married person's spouse and is not supported by the spouse, and
(ii) whether alone or jointly with one or more other persons, maintains a self-contained domestic establishment (in which the individual lives) and actually supports in that establishment a person who, at that time, is
(A) except in the case of a child of the individual, resident in Canada,
(B) wholly dependent for support on the individual, or the individual and the other person or persons, as the case may be,
(C) related to the individual, and
(D) except in the case of a parent or grandparent of the individual, either under 18 years of age or so dependent by reason of mental or physical infirmity,
an amount equal to the total of
(iii) $6,000*, and
(iv) an amount determined by the formula
$5,000* - (D - $500*)
where
D is the greater of $500* and the income for the year of the dependent person.
[4] The facts are these. The appellant and his wife had not been getting on for years, and in fact he originally took the position that they separated on August 3, 1993. They are currently engaged in divorce proceedings. Nonetheless they continued to live under the same roof. He lived in the basement, she upstairs. They shared the kitchen and it seems took their meals at the same place, although it is not clear whether it was at the same time. The spouses used the same entrance and the same telephone.
[5] The appellant did not press the point that they were separated in 1993. It is difficult, but not impossible, for spouses to live separate and apart under the same roof. The authorities were reviewed at some length in Kelner v. R., [1996] 1 C.T.C. 2687. I do not think the evidence supports the conclusion that the spouses were not living together since 1993.
[6] The appellant's point is that he was not living with his spouse on December 31, 1996 because on the evening of that day the police came and took him away to jail and charged him with domestic assault. He stayed in jail until January 2, 1997 when a justice of the peace granted bail, subject to certain conditions, such as that he reside in another place (13 Salina, Stoney Creek), stay away from the matrimonial home, 25 Ashford Drive, Hamilton, and not communicate with his wife and children.
[7] The appellant argues that "at any time in the year" (i.e. the last few hours of December 31, 1996, after the police arrested him and took him away) he was not living with his spouse and is therefore entitled to the credit under paragraph 118(1)(b) in respect of his son, who lived at 25 Ashford Drive. I note in passing that he clearly meets the criteria in paragraph 118(1)(a) except for the fact that his spouse made more than the limit in subparagraph 118(1)(a)(ii).
[8] There are several reasons for not accepting the appellant's argument:
(a) He was not "not entitled to a deduction by reason of paragraph (a)" within the meaning of paragraph 118(1)(b). He was entitled to a deduction under paragraph (a) because he was married and supported his spouse in 1996. He was therefore entitled to a deduction equal to the total of $6,000 under subparagraph (i) and the amount determined by the formula in subparagraph (ii). The fact that the latter calculation under subparagraph (ii) turns out to be zero does not mean that his entitlement to a deduction does not arise under paragraph (a). I put this argument to counsel for the respondent who rejected it, perhaps without realizing that it supported his position. It was nonetheless his strongest argument.
(b) If the appellant did not live with his spouse on December 31, 1996, because he was in jail, it cannot be said that he maintained a self-contained domestic establishment in which he lived and actually supported his son in that establishment.
Either he was living with his wife on December 31, 1996, in which case he qualifies under paragraph (a) and not paragraph (b), or he was living on New Year's eve and New Year's day in the local jail, which, although self-contained, could scarcely be described as a domestic establishment and is certainly not the place where he actually supported his son.
(c) Both of the above arguments seem relatively self-evident. A more difficult question would arise if on December 31, 1996 the appellant and his son moved out and moved into an apartment. While he would probably meet the criteria in subparagraph 118(1)(b)(ii), I do not think that he is "not entitled to a deduction by reason of paragraph (a)". He would still therefore fail to qualify under paragraph 118(1)(b).
[9] In 1997, the Income Tax Act was changed to substitute the words "a person who does not claim a deduction under paragraph (a)" for "a person who is not entitled...". This makes it somewhat clearer that paragraphs (a) and (b) are mutually exclusive, but I think that as a matter of statutory interpretation before the amendment they were in any event.
[10] The appeal is dismissed.
Signed at Ottawa, Canada, this 25th day of February 2000.
"D.G.H. Bowman"
J.T.C.C.