[OFFICIAL ENGLISH TRANSLATION]
2001-1043(IT)I
BETWEEN:
RAYMOND LAVOIE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on January 18, 2002, at Québec, Quebec, by
the Honourable Alban Garon
Chief Judge
Appearances
For the Appellant: The Appellant himself
Counsel for the Respondent: Stéphanie Côté
JUDGMENT
The appeal from the assessment made under the Income Tax Act for the 1999 taxation year is dismissed.
Signed at Ottawa, Canada, this 28th day of January 2002.
|
"Alban Garon" |
C.J.T.C.C.
Translation certified true
on this 1st day of May 2003.
Erich Klein, Revisor
[OFFICIAL ENGLISH TRANSLATION]
Date: 20020128
Docket: 2001-1043(IT)I
BETWEEN:
RAYMOND LAVOIE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
For the Appellant: The Appellant himself
Counsel for the Respondent: Stéphanie Côté
REASONS FOR JUDGMENT
(read at the end of the hearing on
January 18, 2002, at Québec, Quebec)
Garon, C.J.T.C.C.
[1] This is an appeal from an income tax assessment for the 1999 taxation year. Through that assessment, the Minister of National Revenue disallowed the $5,718 tax credit for a wholly dependent person claimed by the appellant. That credit is equivalent to the credit for a married person.
[2] The Minister of National Revenue relied on the allegations of fact set out in paragraph 5 of the Reply to the Notice of Appeal. Paragraph 5 reads as follows:
[TRANSLATION]
(a) two children, Frédéric Lavoie-Néron and Emmanuel Lavoie-Néron, were born of the union of the appellant and Marjolaine Néron (hereinafter his "former spouse");
(b) during the 1999 taxation year, the appellant lived separate and apart from his former spouse;
(c) for the 1999 taxation year, the appellant claimed $5,718 for his son Frédéric, who was born on April 30, 1984, as an equivalent-to-spouse amount;
(d) at all relevant times, Frédéric and Emmanuel were minor children;
(e) in 1995, the appellant brought a motion in the Superior Court to vary the provisional measures provided for in a judgment of April 26, 1994, and claimed, inter alia, custody of the children;
(f) in an evaluation order and interim order made by the Superior Court on November 3, 1995, the Honourable Mr. Justice Robert Lesage ordered a psychosocial evaluation in order to assess the children's wishes and the parent-child relationship context;
(g) in the meantime, the Honourable Mr. Justice Robert Lesage varied the judgment confirming the provisional measures agreement and declared that the former spouse would have custody of the children pending judgment on the appellant's motion;
(h) in the same order, the Honourable Mr. Justice Lesage ordered, inter alia, that the appellant pay his former spouse $1,500 a month for the children as of July 1, 1996, to be payable in advance on the 15th of each month, with the exception of $750 to be paid on July 1, 1996;
(i) there are no documents in the appellant's file showing that the agreement was varied by an order, judgment or written agreement between him and his former spouse.
[3] The appellant admitted all the subparagraphs of paragraph 5 of the Reply to the Notice of Appeal.
[4] The appellant was the only person who testified on his behalf.
[5] The appellant struck me as an entirely credible witness. There is no reason to doubt his testimony.
[6] He testified that his former spouse did not leave their former common residence on July 1, 1996, as she was required to do by the order of November 3, 1995. According to the appellant, his son Frédéric was forced by his mother to leave the couple's former residence in November 1995. He went to live with his father at his father's home. The time Frédéric lived in his father's home included all of 1999, and he was wholly dependent on his father that entire year.
[7] The appellant testified that he had asked his former spouse to consent to variations to the order of November 3, 1995, but she refused to accept any such variations. The appellant did not want to apply to the Superior Court of Quebec to have the order of November 3, 1995, varied because of the legal expenses and other outlays that this would have entailed.
[8] The appellant also testified that in 1999 he paid, inter alia, the municipal and school taxes and the telephone bills for his former residence.
[9] The appellant also admitted that he did not make the payments provided for in the order of November 3, 1995, since his former spouse was not complying with that order.
Analysis
[10] Entitlement to the equivalent-to-spouse tax credit for a wholly dependent person is provided for in paragraph 118(1)(b) of the Income Tax Act:
(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,
. . .
(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 equal to the total of
(iii) $7,131, and
(iv) the amount determined by the formula
$6,055 - (D - $606)
where
D is the greater of $606 and the dependent person's income for the year.
[11] What must be determined, therefore, is whether the appellant met each of the conditions set out in paragraph 118(1)(b).
[12] The respondent has admitted that the appellant met all the conditions set out in paragraph 118(1)(b) of the Income Tax Act. The evidence is clear on this point.
[13] The only other applicable provision here is subsection 118(5) of the Income Tax Act, which states that the amounts referred to in subsection 118(1), including paragraph 118(1)(b) to which we have just made reference, may not be deducted in computing tax payable where the individual "is required to pay a support amount" to, inter alia, the individual's spouse or former spouse and the individual lives separate and apart from the spouse or former spouse because of the breakdown of their marriage or the individual claims a deduction for the year in respect of a support amount paid to the spouse or former spouse.
[14] In short, subsection 118(5) of the Income Tax Act applies if two conditions are met.
[15] The first condition concerns individuals who are required to pay a support amount. It is not necessary under this condition that the individual have actually paid the support amount. What is necessary is that the individual be required to pay such an amount. This first condition has been met here, since the appellant was required to pay a support amount by the order of November 3, 1995.
[16] The second condition involves two alternatives. The first part of the alternative condition is relevant here, since the appellant lived separate and apart from his former spouse throughout 1999 because of the breakdown of their marriage. The second part of the alternative condition need not be considered.
[17] Subsection 118(5) of the Income Tax Act is therefore applicable in this case. It follows that the appellant is not entitled to the tax credit for a wholly dependent person provided for in paragraph 118(1)(b) of the Income Tax Act.
[18] The application of subsection 118(5) of the Income Tax Act in this case seems unfair to me.
[19] Given the facts of this appeal, I would think that the appellant should normally be entitled to the tax credit in question, since his son Frédéric lived with him in 1999 and was wholly dependent on him that entire year and since neither party complied with the order of November 3, 1995.
[20] The only reproach that can be levelled at the appellant is that he did not apply to the Superior Court of Quebec to have the order of November 3, 1995, varied. The appellant gave reasons for this which are quite understandable in the circumstances.
[21] In light of those circumstances, I recommend that the tax authorities take the necessary steps to grant a remission of tax under subsection 23(2) of the Financial Administration Act, with the basis for calculation being that the appellant is entitled, inter alia, to the tax credit provided for in paragraph 118(1)(b) of the Income Tax Act. Subsection 23(2) of the Financial Administration Act reads as follows:
(2) The Governor in Council may, on the recommendation of the appropriate Minister, remit any tax or penalty, including any interest paid or payable thereon, where the Governor in Council considers that the collection of the tax or the enforcement of the penalty is unreasonable or unjust or that it is otherwise in the public interest to remit the tax or penalty.
[22] For these reasons, I am obliged to dismiss the appeal.
Signed at Ottawa, Canada, this 28th day of January 2002.
|
"Alban Garon" |
C.J.T.C.C.
Translation certified true
on this 1st day of May 2003.
Erich Klein, Revisor