Date: 20030116
Docket: A-115-02
Neutral citation: 2003 FCA 19
CORAM: STRAYER J.A.
SEXTON J.A.
BETWEEN:
SHEILA LYNN MATTE
Applicant
and
HER MAJESTY THE QUEEN
Respondent
Heard at Vancouver, British Columbia, on January 16, 2003
Judgment delivered from the Bench at Vancouver, British Columbia, on January 16, 2003
REASONS FOR JUDGMENT OF THE COURT BY: STRAYER J.A.
Date: 20030116
Docket: A-115-02
Neutral citation: 2003 FCA 19
CORAM: STRAYER J.A.
SEXTON J.A.
SHARLOW J.A.
BETWEEN:
SHEILA LYNN MATTE
Applicant
and
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT
(Delivered from the Bench at Vancouver, British Columbia
on January 16, 2003)
STRAYER J.A.
[1] This is an application for judicial review of a decision of the Tax Court of Canada. That decision confirmed a reassessment by the Minister of National Revenue which required the applicant to repay $391.75, said to be an overpayment to her of a Child Tax Credit in respect of the month of August, 1998.
[2] The Child Tax Credit she had received related to three of her children, whose father was her former common law partner and from whom she had separated. A custody order made in July 1998 gave custody of these children to the father. The applicant mother was given access to them for certain occasions as well as for one month in the summer.
[3] The applicant applied for the Child Tax Benefit for the month of August, 1998, stating that she had become the primary care giver on July 16, 1998. The Minister of National Revenue paid the Child Tax Benefit to the applicant for August, 1998, but later determined that she was not entitled because she was not an "eligible individual" within the meaning of section 122.6 of the Income Tax Act. The Minister took the position before the Tax Court and before us that the father, having custody of the children by order, was the "eligible individual" who "primarily fulfils the responsibility for the care and upbringing" of the child and that there was no finding of the Tax Court Judge to the contrary in respect to the month of August, 1998.
[4] The Tax Court Judge confirmed the Minister's reassessment. He considered himself to be bound by a decision of this Court in R. v. Marshall [1996] 2 C.T.C. 92. In that case the Court said in respect of section 122.6:
This section of the Act contemplates only one parent being an "eligible individual" for the purpose of allowing the benefits. It makes no provision for prorating between two who claim to be eligible parents. ( p. 94)
The Tax Court Judge was nevertheless invited to follow the later decision of Bowman T.C.J. in Armstrong v. R. [1999] 4 C.T.C. 2719, where that judge found that the non-custodial parent with whom the children had resided for two months was entitled to be the "eligible individual" for that period. The Tax Court Judge distinguished the Armstrong case on its facts and held that by virtue of the Marshall decision he could not recognize the applicant as the "eligible individual" for the month of August, 1998.
[5] We are of the view that the Marshall case is distinguishable and that there is no legal barrier to a non-custodial parent being considered to be the "eligible individual" for a period as short as one month as requested here.
[6] Section 122.6 of the Income Tax Act defines "eligible individual" in part as follows:
"eligible individual" in respect of a qualified dependant at any time means a person who at that time
(a) resides with the qualified dependant,
(b) is the parent of the qualified dependant who primarily fulfils the responsibility for the care and upbringing of the qualified dependant...
(There are Regulations at C.R.C. 1978, c. 945, s. 6302 which prescribe factors for determining what constitutes "care and upbringing" of a qualified dependant. It is not necessary for present purposes to comment on those factors.).
[7] It is important to note that this definition clearly contemplates that the "eligible individual" may change from time to time, as long as at the relevant time he or she is primarily fulfilling the responsibility of a caregiver. This is indicated by the words "at any time means a person who at that time..." in the opening words of the definition.
[8] The formula for calculating the amount of benefits payable is found in section 122.61 of the Act. It is based on the deemed repayment of a notional overpayment of taxes, and that overpayment, according to subsection 122.61(1)
...is deemed to have arisen during a month...[when the person to be paid the benefit]...was an eligible individual at the beginning of the month...
According to the formula the person who was an eligible individual at the beginning of the month is to receive 1/12 of the annual rate of the benefits as prescribed in the section. Counsel for the respondent agreed with this interpretation.
[9] We understand this to mean that the minimum benefit period is one month and that a month of benefits is to be paid to whomever was the eligible individual at the beginning of the month: that is, to the person who was primarily fulfilling the responsibility for the care and upbringing of the child or children at that time. It is merely an administrative convenience to pay the whole month's benefit to the person acting as caregiver as of the first of the month. In this way it is not necessary to do per diem calculations because of a change of caregiver sometime during the month. Nor is it necessary that changes in caregivers must occur only in strict correspondence with calendar months. Otherwise in a case like this neither parent would have been able to claim for August: the mother's caregiving apparently only covered half of that calendar month so she could not claim, and the father could not claim as he was not the caregiver on August 1 as required by the terms of subsection 122.61(1).
[10] We are satisfied that this result is not in conflict with the Marshall decision. We understand that decision to be limited to the proposition that there can only be one eligible individual at any given time or within any given month. In that case the children lived for 18 days each month with their mother and 12 days each month with their father, and each acted as caregiver as required by the Act. It appears that the Tax Court Judge had determined that both parents were eligible individuals and both were entitled to the benefit in the same month. (See the Tax Court Judge's explanation of his original determination: R. v. Marshall [2002] Carswell Tax Partner Cases Release 7, pp. 3,4). It was this conclusion to which the findings of the Court of Appeal were directed. That is not the issue in the present case.
[11] We also understand the later decision of Bowman T.C.J. in Armstrong (supra) not to have been inconsistent with Marshall. Firstly, he concluded that a family law award of custody to one parent did not preclude the other parent from meeting the requirements of section 122.6 of the Employment Insurance Act when the children were actually in that other parent's care. His case involved only one caregiver at a time. Secondly, he found that a determination of who is the caregiver must be made on a minimum of a monthly basis. He was able to conclude on the evidence that as the non-custodial parent had in fact had the primary responsibility for the children's care for the months of July and August, 1996, she was entitled to the benefit for that period.
[12] We are therefore of the view that the Tax Court Judge erred here in finding as a matter of law that the applicant mother, the non-custodial parent, could not be eligible for the child tax benefit for the month of August, 1998 as requested, because her former partner was at other times of the year the "eligible individual".
[13] Unfortunately as a result of this conclusion of law, the Tax Court Judge made no finding as to whether the applicant was in fact the "eligible individual" as of August 1, 1998. We are of the vew that we can make such a determination as a matter of law by relying on a statutory presumption to this effect. It is not in dispute that the children were residing with the applicant on August 1, 1998. Section 122.6, in its definition of "eligible individual", provides as follows:
(f) where the qualified dependant resides with the dependant's female parent, the parent who primarily fulfils the responsibility for the care and upbringing of the qualified dependant is presumed to be the female parent,
(g) the presumption referred to in paragraph 122.6 eligible individual (f) does not apply in prescribed circumstances, and...
Although it was suggested by counsel for the respondent that this presumption would not apply because of an exception prescribed in paragraph 6301(1)(d), of the Regulations, there was nothing in the record to establish that the conditions which would trigger that exception actually existed in this case. We are thus at liberty to apply this presumption as a matter of law.
[14] Therefore we conclude that the Trial Judge erred in law in his interpretation of the definition of "eligible individual" and we will set aside his decision affirming the Minister's assessment. We are applying the presumption that, as the children were (it is admitted) qualified dependants and resided with the applicant on August 1, 1998, she is deemed to have been the "eligible individual" on that date and entitled to the Child Tax Benefit for the month of August, 1998. The matter will be referred back to the Minister for reassessment accordingly.
[15] Costs will be awarded to the applicant.
(Sgd.) "B.L. Strayer"
J.A.
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-115-02
STYLE OF CAUSE: Sheila Lynn Matte v. The Queen
PLACE OF HEARING: Vancouver, B.C.
DATE OF HEARING: January 16, 2003
REASONS FOR Judgment : STRAYER J.A.
CONCURRED IN BY:
DATED: January 16, 2003
APPEARANCES:
Mr. David Mossop, Q.C. FOR THE APPLICANT
Susan Wong FOR THE RESPONDENT
SOLICITORS OF RECORD:
Community Legal Assistance Society FOR THE APPLICANT
Vancouver, B.C.
Morris Rosenberg FOR THE RESPONDENT
Department of Justice
Vancouver Regional Office