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Docket: 2002-4647(IT)I |
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BETWEEN: |
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TANYA PETERSEN, |
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Appellant, |
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and |
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HER MAJESTY THE QUEEN, |
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Respondent. |
____________________________________________________________________
Appeal heard on November 26, 2003, at Calgary, Alberta, by
By: The Honourable Justice E.A. Bowie |
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Appearances: |
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Agent for the Appellant: |
David Naylor |
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Counsel for the Respondent: |
John O'Callaghan |
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JUDGMENT
The appeal from the assessment of tax made under the Income Tax Act for the 2000 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 Appellant is entitled to a non-refundable tax credit under paragraph 118(1)(b) of the Act.
Signed at Ottawa, Canada, this 7th day of January, 2004.
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"E.A. Bowie" |
Bowie J.
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Citation: 2004TCC14 |
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Date: 20040107 |
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Docket: 2002-4647(IT)I |
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BETWEEN: |
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TANYA PETERSEN, |
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Appellant, |
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and |
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HER MAJESTY THE QUEEN, |
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Respondent. |
REASONS FOR JUDGMENT
Bowie J.
[1] Ms. Petersen brings this appeal from her income tax assessment for the year 2000. When filing her return for that year, she claimed a non-refundable tax credit under paragraph 118(1)(b) of the Income Tax Act (the "Act"), sometimes referred to as the equivalent-to-spouse amount, in respect of her son. Initially she was assessed according to the return she had filed, but the Minister of National Revenue (the "Minister") has since reassessed her to deny the claimed credit. Her appeal was heard under the Court's informal procedure.
[2] Paragraph 118(1)(b) of the Act, so far as it is relevant, reads:
118(1) 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) ...
(b) in the case of an individual who does not claim a deduction for the year because of paragraph (a) and who, at any time in the year,
(i) is
(A) a person who is unmarried and who does not live in a common-law partnership, or
(B) a person who is married or in a common-law partnership, who neither supported nor lived with their spouse or common law-partner and who is not supported by that spouse or common-law partner, 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 ...
(the computation of the amount is not in dispute)
[3] The Appellant and Donald, the father of her son, lived together in a common-law relationship beginning in May 2000. On November 21 of that year she gave birth to their son. Their common-law relationship came to an end on December 28 that year when Donald left their home and went to live elsewhere. They later reconciled and were married, but I am satisfied that the breakdown of their relationship, as to which they both testified, was genuine.
[4] The Appellant's position is that for the three-day period between December 28 and December 31, 2000 she maintained the apartment and actually supported her son there, and that during those three days he was wholly dependent upon her for support. The Minister's position is that her son was not wholly dependent on her for support during those three days.
[5] The Minister's position is expressed this way in paragraphs 11 and 12 of the Reply to the Notice of Appeal:
11. It is submitted that the Appellant and Donald lived in a common-law partnership in the 2000 taxation year and that Donald was the Appellant's spouse, pursuant to subsection 252(4) of the Act.
12. Furthermore, it is submitted that the Appellant resided with Donald throughout the 2000 taxation year and that Donald supported her during that time. In addition, from November 20, 2000, which is the day Spencer was born, until December 31, 2000, inclusive, Donald also supported Spencer.
Although subsection 118(4) of the Act is referred to in paragraph 10, no argument based on that subsection was advanced either in the Reply or by counsel at the hearing of the appeal. I therefore will not consider whether it might have any application. I propose to decide the appeal with regard only to the issue actually addressed by the parties, namely, whether the Appellant met the requirements of paragraph 118(1)(b). The Minister says that she did not, and supports that position on the basis of the following assumed facts, as found in paragraph 8 of the Reply:
(a) at all material times the Appellant lived in a common-law relationship with Donald;
(b) the Appellant and Donald leased an apartment at Westwinds Village in Calgary, Alberta, from at least May 1, 2000 to April 30, 2001;
(c) since at least May 1, 2000 to December 31, 2000, inclusive, the Appellant and Donald resided together in the apartment;
(d) at all material times the Appellant and Donald cohabitated;
(e) the Appellant and Donald resided together at the end of the 2000 taxation year;
(f) at all material times the Appellant and Donald did not live separate and apart by reason of a breakdown of their common-law relationship;
(g) Spencer was born on November 21, 2000;
(h) the Appellant and Donald are the biological parents of Spencer;
(i) since at least May 1, 2000, the Appellant and Donald shared the financial responsibilities of the household in which they resided;
(j) since November 21, 2000, the Appellant and Donald shared the parental responsibilities for the care and upbringing of Spencer;
(k) in computing her income tax liability for the 2000 taxation year the Appellant reported net income $16,899 (rounded off to the nearest dollar);
(l) in computing her income tax liability for the 2001 taxation year the Appellant reported that she was living common law with Donald; and
(m) in computing her income tax liability for the 2000 taxation year the Appellant included $6,140 for equivalent-to-spouse when calculating her non-refundable tax credits.
[6] It is clear from the evidence that the Minister's assumptions 8(a), (c), (d), (e) and (f) are incorrect. 8(j) is incorrect to this extent at least: for the last three days of the year 2000 Donald did not live with the Appellant and their son, and he did not share responsibility for his care during that part of the year. The Minister appears to have assumed, wrongly, although perhaps understandably, that there was no interruption in the common-law relationship of the Appellant and Donald during the year 2000. In fact, as I have found, there was an interruption in it. For three days, at the end of December 2000 the Appellant was neither married nor living in a common-law relationship. She maintained a self-contained domestic establishment in which she and her son lived. The child was only five weeks old, and was breast-fed by his mother. Clearly, she "actually supported" him during that three-day period, and for much longer as well.
[7] I need not decide whether Donald contributed to the maintaining of the apartment or the support of their son. It is clear from the words "... whether alone or jointly with one or more other persons ..." and "... or the individual and the other person or persons, as the case may be ..." appearing in subparagraph 118(1)(b)(ii) that the Appellant's right to the credit in question would not be negated by any such finding. On the plain words of paragraph 118(1)(b), the Appellant qualifies for the credit she claims.
[8] The appeal will therefore be allowed, and the reassessment will be referred back to the Minister for reconsideration and reassessment on the basis that the Appellant is entitled to include an amount under paragraph 118(1)(b) of the Act when calculating her non-refundable tax credits for the 2000 taxation year.
Signed at Ottawa, Canada, this 7th day of January, 2004.
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"E.A. Bowie" |
Bowie J.
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CITATION: |
2004TCC14 |
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COURT FILE NOS.: |
2002-4647(IT)I |
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STYLE OF CAUSE: |
Tanya Peterson and Her Majesty the Queen |
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PLACE OF HEARING: |
Calgary, Alberta |
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DATE OF HEARING: |
November 26, 2003 |
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REASONS FOR JUDGMENT BY: |
The Honourable Justice E.A. Bowie |
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DATE OF JUDGMENT: |
January 7, 2004 |
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APPEARANCES: |
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Agent for the Appellant: |
David Naylor |
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Counsel for the Respondent: |
John O'Callaghan |
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COUNSEL OF RECORD: |
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For the Appellant: |
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Name: |
N/A |
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Firm: |
N/A |
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For the Respondent: |
Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada |