BETWEEN:
and
____________________________________________________________________
Appeal heard on June 22, 2006, at Prince Albert, Saskatchewan
Before: The Honourable Justice D.W. Beaubier
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JUDGMENT
The appeal from the reassessment made under the Income Tax Act for the 2002 taxation year is allowed, and the reassessment is referred back to the Minister of National Revenue for reconsideration and reassessment in accordance with the attached Reasons for Judgment.
The Appellant is granted the sum of $100 on account of any disbursements she may have incurred in prosecuting this appeal, by way of costs.
Signed at Edmonton, Alberta, this 30th day of June, 2006.
Beaubier, J.
BETWEEN:
NANCY FORBES,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
[1] This appeal pursuant to the Informal Procedure was heard at Prince Albert, Saskatchewan on June 22, 2006. The Appellant was the only witness. Pursuant to information she provided, her address for the purposes of this appeal is henceforth ordered to be:
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#559 - 22nd Street East Prince Albert, Saskatchewan S7V 1N8
Telephone No. (306) 763-4037 |
[2] Paragraphs 6 to 15, inclusive, raise the Respondent's concerns in this appeal. They read:
6. By CCTB Notice of Redetermination for the 2002 base taxation year dated July 20, 2004 (hereinafter referred to as the "CCTB Notice"), the Minister advised the Appellant that her entitlement to the CCTB had been reviewed based on a change to the eligible child, Justin Willoughby. The Appellant was advised that she was no longer eligible to receive benefits for Justin Willoughby as of July, 2003 since the child was no longer in her care. As a result, it was determined that the Appellant was in receipt of a CCTB overpayment in the amount of $2,694.00 for the period from July, 2003 to June, 2004.
7. By letter dated February 14, 2005, the Appellant served on the Minister a Notice of Objection to the CCTB Notice.
8. By letter dated March 11, 2005, the Minister advised the Appellant that the Notice of Objection was not filed within ninety days of the mailing date of the CCTB Notice. Therefore, it could not be accepted. The Appellant was further advised that she could apply for an extension of time to file an objection.
9. On or about March 30, 2005, the Appellant served on the Minister an application for an extension of time to file an objection to the CCTB Notice.
10. By letter dated April 5, 2005, the Minister advised the Appellant that her application for an extension of time to file an objection was granted and that the objection was considered to have been filed on April 5, 2005.
11. By letter dated April 29, 2005, the Minister confirmed the CCTB Notice.
12. In so redetermining the Appellant's entitlement to the CCTB for the 2002 base taxation year, and in so confirming the CCTB Notice, the Minister assumed the same facts as follows:
(a) the Appellant and Kevin Willoughby (the "spouse") are the parents of Justin Willoughby, born April, 1987 ("Justin");
(b) during the period from July, 2003 to June 2004, Justin was not in the Appellant's care;
(c) during the period from July, 2003 to June, 2004, Justin resided in the family home with the spouse and not with the Appellant;
(d) during the period from July, 2003 to June, 2004, the Appellant was not the eligible individual in respect of Justin;
(e) during the period from July, 2003 to June, 2004, the spouse was the eligible individual in respect of Justin;
(f) during the period from July, 2003 to June, 2004, cheques for the CCTB in respect of Justin were issued to the Appellant as follows:
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Date of Cheque |
Amount of Cheque |
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July 18, 2003 |
$ 234.98 |
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August 20, 2003 |
234.82 |
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September 19, 2003 |
234.82 |
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October 20, 2003 |
234.82 |
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November 20, 2003 |
219.32 |
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December 12, 2003 |
219.32 |
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January 20, 2004 |
219.32 |
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February 20, 2004 |
219.32 |
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March 19, 2004 |
219.32 |
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April 20, 2004 |
219.32 |
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May 20, 2004 |
219.32 |
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June 18, 2004 |
219.32 |
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Total |
$2,694.00 |
(g) the Appellant was in receipt of a CCTB overpayment for the 2002 base taxation year in the amount of $2,694.00, being the amount of the CCTB received by her for the 2002 base taxation year.
B. ISSUE TO BE DECIDED
13. The issue to be decided is whether the Appellant was in receipt of a CCTB overpayment in the amount of $2,694.00 for the 2002 base taxation year.
C. STATUTORY PROVISIONS, GROUNDS RELIED ON AND RELIEF SOUGHT
14. He relies on sections 122.6, 122.61, 122.62, 122.63 and 122.64 of the Income Tax Act, R.S.C. 1985 (5th Supp.) c.1, (the "Act"), as amended, for the 2002 taxation year and on Part LXIII of the Income Tax Regulations.
15. He submits that, during the 2002 base taxation year, being for the months from July, 2003 to June, 2004, the Appellant was not an eligible individual in respect of Justin as this term is defined within the meaning of section 122.6 of the Act. Accordingly, the Appellant was not entitled to the CCTB for Justin for the 2002 base taxation year pursuant to section 122.61 of the Act.
Section 122.62 of the Income Tax Act reads:
Eligible individuals
122.62. (1) For the purposes of this subdivision, a person may be considered to be an eligible individual in respect of a particular qualified dependant at the beginning of a month only if the person has, no later than 11 months after the end of the month, filed with the Minister a notice in prescribed form containing prescribed information.
122.62.(2) Extension for notices
(2) The Minister may at any time extend the time for filing a notice under subsection 122.62(1).
122.62.(3) Exception
(3) Where at the beginning of 1993 a person is an eligible individual in respect of a qualified dependant, subsection 122.62(1) does not apply to the person in respect of the qualified dependant if the qualified dependant was an eligible child (within the meaning assigned by subsection 122.2(2) because of subparagraph (a)(i) of the definition "eligible child" in that subsection) of the individual for the 1992 taxation year.
122.62.(4) Person ceasing to be an eligible individual
(4) Where during a particular month a person ceases to be an eligible individual in respect of a particular qualified dependant (otherwise than because of the qualified dependant attaining the age of 18 years), the person shall notify the Minister of that fact before the end of the first month following the particular month.
122.62.(5) Death of cohabiting spouse
(5) Where
(a) before the end of a particular month the cohabiting spouse or common-law partner of an eligible individual in respect of a qualified dependant dies, and
(b) the individual so elects, before the end of the eleventh month after the particular month, in a form that is acceptable to the Minister,
for the purpose of determining the amount deemed under subsection 122.61(1) to be an overpayment arising in any month after the particular month on account of the individual's liability under this Part for the base taxation year in relation to the particular month, subject to any subsequent election under subsection 122.62(6) or 122.62(7), the individual's adjusted income for the year is deemed to be equal to the individual's income for the year.
(c) (Repealed by S.C. 1998, c. 21, s. 95.)
(d) (Repealed by S.C. 1998, c. 21, s. 95.)
122.62.(6) Separation from cohabiting spouse
(6) Where
(a) before the end of a particular month an eligible individual in respect of a qualified dependant begins to live separate and apart from the individual's cohabiting spouse or common-law partner, because of a breakdown of their marriage or common-law partnership, for a period of at least 90 days that includes a day in the particular month, and
(b) the individual so elects, before the end of the eleventh month after the particular month, in a form that is acceptable to the Minister,
for the purpose of determining the amount deemed under subsection 122.61(1) to be an overpayment arising in any month after the particular month on account of the individual's liability under this Part for the base taxation year in relation to the particular month, subject to any subsequent election under subsection 122.62(5) or 122.62(7), the individual's adjusted income for the year is deemed to be equal to the individual's income for the year.
(c) (Repealed by S.C. 1998, c. 21, s. 95.)
(d) (Repealed by S.C. 1998, c. 21, s. 95.)
122.62.(7) Person becoming a cohabiting spouse
(7) Where
(a) at any particular time before the end of a particular month a taxpayer has become the cohabiting spouse or common-law partner of an eligible individual, and
(b) the taxpayer and the eligible individual jointly so elect in prescribed form filed with the Minister before the end of the eleventh month after the particular month,
for the purpose of determining the amount deemed by subsection 122.61(1) to be an overpayment arising in any month after the particular month on account of the eligible individual's liability under this Part for the year, the taxpayer is deemed to have been the eligible individual's cohabiting spouse or common-law partner throughout the period that began immediately before the end of the base taxation year in relation to the particular month and ended at the particular time.
122.62.(8) Person becoming a cohabiting spouse
(8) (Repealed by S.C. 1998, c. 19, s. 142(2).)
122.62.(9) Advice of Department of Human Resources Development
(9) (Repealed by S.C. 1998, c. 19, s. 142(2).)
S.C. 1994, c. 7, Sch. VII, s. 12; S.C. 1996, c. 11, ss. 95(h), 97(1)(e); S.C. 1998, c. 19, s. 142; S.C. 1998, c. 21, s. 95; S.C. 2000, c. 12, s. 142.
122.63.(1)
[3] At the opening of the hearing, Respondent's counsel conceded that the payments for:
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April 20, 2004 |
$219.32 |
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May 20, 2004 |
219.32 |
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and June 18, 2004 |
219.32 |
had been returned to the Respondent. Taking into account an additional $28.00 respecting Saskatchewan, that left $2,064.04 remaining in dispute.
[4] The Court further finds that, in fact, the Appellant's (the female parent) residence never changed from her and Justin's address in Calgary, Alberta until after 1 September, 2003. As a result, the Appellant received the July 18, 2003; August 20, 2003; and the September 19, 2003 payments properly and legitimately since her residence and Justin's residence were identical in those months. After 1 September, 2003, she moved to Prince Albert, Saskatchewan and obtained a Saskatchewanhealth card in September on the basis that she resided in Prince Albert. From June until after September 1, 2003, her residence was at Justin's residence; in that interval she was sojourning with her sister and with her parents, but her residence was in Calgary.
[5] As a result, the months remaining in question are October, 2003 through March, 2004, inclusive.
[6] Pursuant to subsection 122.62(4), Nancy Forbes notified the appropriate Respondent authorities of her intention to leave the family home in Calgary by writing in July, 2003, on October 22, 2003 (Exhibit A-1), and in December, 2003 (Exhibit A-2, undated, but received by the Respondent December 9, 2003). Despite these notices, the Respondent kept sending the cheques to her.
[7] Nancy Forbes had an accident several years ago. As a result her memory is bad, she has difficulty understanding things and finds difficulty in expressing herself and in sorting out dates and years. They are obvious impairments and were evident in Court; how much more extensive they are, is unknown, but they are severe. Despite this and the actions of the Respondent, Nancyknew the cheques were for Justin, therefore:
1. On October 30, 2003, she sent a cheque of $800 to Justice to cover the July, August and September, 2003 amounts and to provide some surplus to Justin.
2. Thereafter she deposited the cheques she received, as described in assumption 12(f), into Justin's own bank account as follows:
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November 21, 2003 |
$240.00
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December 19, 2003 |
260.00 plus 219.32
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January 30, 2004 |
219.32
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February 23, 2004 |
219.32
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March 30, 2004 |
219.32 |
(See Exhibit A-3)
[8] In view of the fact that Nancy notified the Respondent in accordance with the Income Tax Act, that the Respondent continued sending the cheques to Nancy, and that Nancy deposited the funds so received into Justin's own bank account, the Court finds that the Respondent and Nancy herself, treated Nancy as the trustee for the proper recipient of the funds.
[9] On the basis of the evidence, the Appellant became the constructive trustee for her husband, Kevin, for the funds remitted to her by the Respondent from October, 2003 through March, 2004 as a result of the actions of the Respondent and as a consequence, Nancy used those funds for the couple's son, Justin as was intended by the parties and by the Act.
[10]The Respondent did not deny that it received Nancy's notice to it. By segregating those funds from her own and using them for Justin as directed by the Act, Nancycarried out the trust imposed upon her by the Respondent.
[11]For these reasons, the appeal is allowed.
[12] The Appellant is awarded the sum of $100 on account of any out of pocket disbursements she incurred in prosecuting her appeal for photocopying, postage, telephone calls and other expenditures that she incurred.
Signed at Edmonton, Alberta, this 30th day of June, 2006.
"D.W. Beaubier"
Beaubier, J.
COURT FILE NO.: 2005-3936(IT)I
STYLE OF CAUSE: Nancy Forbes v. The Queen
PLACE OF HEARING: Prince Albert, Saskatchewan
DATE OF HEARING: June 22, 2006
REASONS FOR JUDGMENT BY: The Honourable Justice D.W. Beaubier
DATE OF JUDGMENT: June 30, 2006
APPEARANCES:
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For the Appellant: |
The Appellant herself |
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For the Respondent: |
Lyle Bouvier |
COUNSEL OF RECORD:
Firm:
For the Respondent: John H. Sims, Q.C.
Deputy Attorney General of Canada
Ottawa, Canada