BETWEEN:
and
____________________________________________________________________
Appeal heard July 19, 2006 at Sudbury, Ontario.
Before: The Honourable Justice Georgette Sheridan
Appearances:
|
Counsel for the Respondent: |
Nicolas Simard |
____________________________________________________________________
JUDGMENT
The appeals from the assessments made under the Income Tax Act for the 2002 and 2003 taxation years are dismissed in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 26th day of July, 2006.
BETWEEN:
JOHN T. COCHRANE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
[1] The Appellant is appealing the disallowance of the Minister of National Revenue of his claim for a deduction for an "eligible dependant" in his 2002 and 2003 taxation years.
[2] The Appellant and his ex-spouse have two children. When they separated in 2001, they drafted a separation agreement pursuant to which the children were to live with their mother and the Appellant was to pay the mortgage payments, in lieu of child support, on the matrimonial home until it was sold. The Appellant fulfilled these obligations. In 2003, the matrimonial home was sold and the Appellant began to pay child support to his ex-spouse.
[3] The Appellant and his ex-spouse also agreed under the separation agreement effectively, to share the "equivalent to spouse" deduction; in other words, the Appellant would claim the deduction under paragraph 118(1)(b) for one daughter and his ex-spouse, the other.
[4] Subparagraph 118(1)(b)(ii) reads as follows:
(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 grand-parent of the individual, either under 18 years of age or so dependent by reason of mental or physical infirmity, [Emphasis added.]
...
[5] The key phrase in this rather awkwardly worded provision appears in the opening preamble of paragraph (ii): "actually supports in that establishment". What this means is that in order to be eligible to claim the equivalent to spouse deduction, the taxpayer must support the child claimed in his own residence. The Appellant was very frank in admitting that that his daughter resided with her mother. He and his ex-spouse had specifically agreed to that when drafting their separation agreement in the hope of disrupting, to the least extent possible, their children's daily lives. As contemplated by the agreement, the Appellant's daughter went to school and interacted with her friends from her mother's residence. This evidence was corroborated by that of his ex-spouse, called as a witness for the Crown. The Appellant testified further that his daughter spent, at most, 5 weeks per year under his roof during holidays and weekends.
[5] In support of his claim, the Appellant cited two decisions[1] which I promised to read. Having now had an opportunity to consider them, I am persuaded by the submissions of counsel for the Respondent that the facts of those cases are quite different from his own. Where the Appellant seems to have gone wrong is in his mistaken belief that he and ex-spouse could opt out of the provisions of the Act by agreeing that each of them would claim the deduction in respect of one of the daughters. This is not the case. A taxpayer's entitlement to a deduction[2] depends, not on private arrangements (no matter how sensible) with other taxpayers, but on satisfying the statutory criteria. On the evidence presented, it is clear the requirements of subparagraph 118(1)(b)(ii) have not been met.
[6] While it is not necessary for the disposition of the appeal, the Appellant is further ineligible for the deduction under subsection 118(5). That provision precludes a taxpayer from claiming the deduction in respect of a child for whom he is required to pay child support. During 2002 and 2003 the Appellant was paying child support under the written agreement with his ex-spouse in respect of the daughter for whom he was claiming the deduction.
[7] Before concluding, I would like to echo the words of counsel for the Respondent that these appeals are not about whether the Appellant is a good father. Indeed, the evidence shows he has fulfilled his obligations to his family and cares very much for his children. Of that he should be duly proud; it does not, however, affect his eligibility for the deduction claimed. Accordingly, the appeals must be dismissed.
Signed at Ottawa, Canada, this 26th day of July, 2006.
"G. Sheridan"
Sheridan J.
COURT FILE NO.: 2005-2464(IT)I
STYLE OF CAUSE: JOHN T. COCHRANE AND HER MAJESTY THE QUEEN
PLACE OF HEARING: Sudbury, Ontario
DATE OF HEARING: July 19, 2006
REASONS FOR JUDGMENT BY: The Honourable Justice Georgette Sheridan
DATE OF JUDGMENT: July 26, 2006
APPEARANCES:
|
For the Appellant: |
The Appellant himself |
|
Counsel for the Respondent: |
Nicolas Simard |
COUNSEL OF RECORD:
Firm:
For the Respondent: John H. Sims, Q.C.
Deputy Attorney General of Canada
Ottawa, Canada