Date: 20000316
Docket: 2000-2293-IT-I
BETWEEN:
CARLENE SATCHWELL,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Rip, J.T.C.C.
[1] Carlene Satchwell appeals income tax assessments for 1996, 1997 and 1998 taxation years.[1] She claimed equivalent-to-spouse amount for her son pursuant to paragraph 118(1)(b) of the Income Tax Act ("Act") in each of the three years. For 1996 and 1997 she claimed child tax benefits and goods and services tax ("GST") credits. The Minister of National Revenue ("Minister") denied the claims on the basis that the appellant was married to her spouse and was not living separate and apart from him during the relevant years in appeal.
[2] The appellant, Carlene Satchwell, was married to Barrington Satchwell on January 23, 1993. They had one child of the marriage. She stated that she separated from Mr. Satchwell on August 4, 1994 when she moved out of the apartment unit they were sharing with their son and her daughter from a previous relationship. The appellant moved into a unit in the same apartment building (unit No. 703), which was rented by a friend. Sometime in December 1, 1995, the appellant and her children moved back into her husband's apartment (unit No. 711), "but not as husband and wife".
[3] The apartment (unit No. 711) contained two bedrooms, a den, one and one-half bathrooms, a living and dining room and a kitchen. Mrs. Satchwell and her daughter slept in one bedroom, her son slept in the den and her husband slept in the other bedroom.
[4] The rent, including utilities, for unit No. 711 was $923.00 per month, of which the appellant contributed $400.00, she said. The tenants were both her and her husband. Although they lived in the same unit, Mrs. Satchwell testified she and her husband had nothing to do with each other. They slept in separate beds and did not socialize with each other. Mrs. Satchwell testified that she and Mr. Satchwell have not had sexual relations since their separation. "He" she said, "was going to bed with other women". She had no idea where he ate his meals; she never saw him in the kitchen. Her children would eat weekday dinners with their grandmother, the appellant's mother, who also lived in the same apartment building (unit No. 1203). The appellant dined with her children on weekends. She did not prepare meals for her husband nor did she launder any of his clothes. He did not join the children to watch television. As far as Mrs. Satchwell is concerned, her husband only slept and took showers in the apartment.
[5] Occasionally Mr. Satchwell would take his son out for ice cream. It was she, Mrs. Satchwell testified, who attended to the necessities of life for their son.
[6] Mr. Satchwell got along "very well" with his wife's family. They knew him since he was a child in Jamaica. However, he always turned down their dinner invitations.
[7] Mr. and Mrs. Satchwell visited Mr. Satchwell's parents in Jamaica. Their common friends in Jamaica knew the status of their relationship. Mrs. Satchwell does not know if Mr. Satchwell's mother knew they were separated, but thinks she had "an idea of the separation".
[8] In 1997 Mrs. Satchwell's brother suggested that they purchase a house. Together they could not obtain a mortgagee in an amount necessary to purchase a house. Mr. Satchwell was a friend of the appellant's brother and he offered to participate in the acquisition of the house. The appellant, her brother and her husband acquired the house as joint tenants. Each of the three of them is liable as mortgagor ("Chargers") of the property. In the mortgage deed (charge of land), Mrs. Satchwell stated that she and Mr. Satchwell are spouses of one another. On October 24, 1997 the appellant, her brother and their parents moved into their new residence.
[9] In 1997, Mrs. Satchwell's income was approximately $20,000.00. The cost of the house was $191,000. The apparent modest down payment for the house was paid by Mrs. Satchwell. The mortgage on the house was $194,647.00. The mortgage payments were $1,357.00 per month, including principal, interest and tax. When the gas bill was high, Mr. Satchwell and the appellant's brother would contribute extra funds. Mrs. Satchwell said she incurred the costs of repairs and maintenance.
[10] The new residence contained a furnished basement with two entrances, a full bathroom, living room and bedroom. A kitchen living and dining room and powder room were on the main floor. Three bedrooms and a bathroom were on the second floor. A third floor contained a bedroom and bathroom.
[11] Some time about April 1998, Mrs. Satchwell recalled, her husband asked to live in the basement. Mrs. Satchwell's brother agreed to allow Mr. Satchwell to share the basement with him. The appellant's brother slept in the bedroom and Mr. Satchwell slept in the living room. Mrs. Satchwell and her daughter shared the third floor bedroom. Her parents and son slept in the second floor bedrooms.
[12] Mrs. Satchwell reported rental income from the Weston Road property for 1997 and 1998, as well as expenses. In her statement of rental income she reported that her percentage of ownership of the property was 100 per cent. For 1997, she reported $3,100.00 of rental income and $8,525.00 of rent expenses; in 1998 she reported $9,000.00 of rent and claimed expenses of $13,845.00. Her parents, her brother and Mr. Satchwell, once he moved into the house in January 1998, each paid a rent of $300.00 per month to Mrs. Satchwell even though, in the case of her brother and Mr. Satchwell, they were also owners of the property. Before Mr. Satchwell moved into the home, Mrs. Satchwell’s parents, she stated, paid her $600.00 a month.
[13] During the years in appeal Mr. and Mrs. Satchwell shared a joint bank account which is still active. She deposits her paycheck to this account and makes withdrawals. He also deposits and withdraws money to and from the account.
[14] In 1993, Mrs. Satchwell subscribed to a Visa credit card from the Toronto Dominion Bank; she held this card jointly with Mr. Satchwell, but was used by her. Mr. Satchwell has a Visa card with the Canadian Imperial Bank of Commerce for his use. Mr. and Mrs. Satchwell were jointly liable on both credit cards.
[15] The beneficiaries of the insurance policy on the life of Mrs. Satchwell are Mr. Satchwell and Mrs. Satchwell's children.
[16] This appeal concerns at least three provisions of the Act: paragraph 118(1)(b) with respect to the equivalent-to-spouse amount for Mrs. Satchwell’s son for 1996, 1997 and 1998; section 122.5 with respect to the goods and services tax credit for 1996 and 1997; and section 122.6 with respect to the child tax benefit, also for 1996 and 1997.
[17] The statutory provisions of the Act for each of these tax credits require the individual spouse’s income be taken into account in determining whether the individual is entitled to any of the credits.
[18] One of the conditions entitling a married individual to the equivalent-to-spouse tax credit is that the individual neither supported nor lived with his or her spouse and is not supported by the spouse. In the appeal at bar it appears that Mrs. Satchwell and her husband, as well as her brother and parents, were mutually supporting each other.
[19] In 1996 and for most of 1997 both the appellant and her husband paid rent for an apartment unit they both lived in. Mr. Satchwell’s rent contribution was $523.00 per month, Mrs. Satchwell’s contribution was $400.00 per month. In the latter part of 1997 and during 1998 Mr. Satchwell contributed to the maintenance of the house, together with Mrs. Satchwell’s brother and parents. What was paid by Mr. Satchwell and Mrs. Satchwell’s brother to her was not rent. These were monies each payor made to ensure the mortgage interest and principal for property they owned, as well as taxes and other expenses of home ownership, would be paid.
[20] Mr. and Mrs. Satchwell each paid into and withdrew money from the same bank account and they were jointly liable on each other’s credit card. Mrs. Satchwell designated her husband as one of the beneficiaries of the life insurance policy.
[21] If Mr. and Mrs. Satchwell were living lives otherwise independent of each other, as Mrs. Satchwell claims, she did not offer any credible reason why she and her husband were so financially dependent on each other.
[22] That Mrs. Satchwell accompanied her husband to visit his mother in Jamaica, whether or not the visit was during the years in appeal, adds some weight to the Minister’s position that she and her husband were not living separate and apart. Mr. Satchwell’s mother may have “guessed” they were living apart, but Mr. and Mrs. Satchwell never repeated to her that they were living separate and apart. They travelled to Jamaica together and in Jamaica, it appears, they socialized together with old friends. There is no evidence that their relationship changed between 1995 and the date of trial. Mr. Satchwell supported his wife during the years in appeal and in my view they were not living separate and apart.
[23] The appeals are dismissed.
Signed at Ottawa, Canada, this 16th day of March 2001.
"Gerald J. Rip"
J.T.C.C.
[1] The appellant also appealed the calculation of Ontario property tax credits for 1997 and 1998. This Court has no jurisdiction to rule on a Statute of Ontario.