BETWEEN:
and
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Appeal heard on June 21, 2005, at Kamloops, British Columbia
By: The Honourable Justice D.W. Beaubier
Appearances:
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JUDGMENT
The appeals from the assessments made under the Income Tax Act for the 2001 and 2002 taxation years are allowed and the assessments are referred back to the Minister of National Revenue for reconsideration and reassessment in accordance with the attached Reasons for Judgment.
The Appellant is awarded party-and-party costs for this appeal, including a
full day's hearing before this Court in which she was represented by a lawyer.
Signed at Vancouver, British Columbia, this 26th day of July 2005.
"D.W. Beaubier"
BETWEEN:
MICHELLE SIMARD,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
[1] This appeal pursuant to the Informal Procedure was heard at Kamloops, British Columbia, on June 21, 2005. The Appellant testified and called Pamela Astley, ("Pam"), a friend who babysat for her and Sherry Yurkiew, who lived across the street from her in Clearwater, British Columbia, and who also babysat for the Appellant. The Respondent called the Appellant's former husband, Yvan Rotzetter, ("Ron"), and Glen Preston, a friend of Ron's and a teacher counsellor at Tyson's school in Clearwater.
[2] The issues between the parties are set out in paragraphs 3 to 13 of the Reply to the Notice of Appeal. They read:
3. In respect of paragraph 2 of the Notice of Appeal, he admits that there is an Order of Mr Justice Blair dated April 9, 2002 in which it states that the Appellant shall receive the full amount of the child tax credit and the GST refund but he denies that Mr Justice Blair had jurisdiction to make that decision and he states further that there is a subsequent order dated December 31, 2003.
4. In the period from July 2002 to October 2003, the Appellant received the Child Tax Benefit ("CTB") payments and the Goods & Services Tax Credit ("GSTC") in respect of:
Tyson Rotzetter ("Tyson"), born December 1988
Robert Rotzetter ("Robert"), born September 1990
Marc Rotzetter ("Marc"), born January 1993
Devin Rotzetter ("Devin"), born August 1995 and
Jessica Rotzetter ("Jessica"), born July 1998.
The Appellant also received the CTB and the GSTC in respect of another child born in July 2003 who is not involved in this appeal.
5. By way of CTB Notices dated November 20, 2003 ("CTB Notices") in respect of the 2001 and 2002 Base Taxation Years, the Minister of National Revenue ("Minister") advised the Appellant that she no longer qualified for the CTB effective July 2002 and that she had been overpaid as follows:
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Base Year
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Period Involved |
Amount overpaid |
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2001 |
July 2002 to June 2003 |
$5,218.00 |
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2002 |
July 2003 to October 2003 |
$1,888.73 |
This was because, effective July 2002, Tyson and Robert were no longer residing with the Appellant.
6. By way of GSTC Notices dated October 22, 2003 and October 31, 2003 ("GSTC Notices") in respect of the 2001 and 2002 Base Taxation Years, respectively, the Minister advised the Appellant that she no longer qualified for the GSTC effective July 2002 and that she had been overpaid $224.00 for the period from July 2002 to June 2003 and $114.00 for the period from July 2003 to October 2003. This was because, effective July 2002, Tyson and Robert were no longer residing with the Appellant.
7. The Appellant objected to the CTB Notices and the GSTC Notices ("Notices"). By way of a Notice dated August 31, 2004, the Minister confirmed the Notices as it was determined that the Appellant not an "eligible individual" as defined in section 122.6 of the Income Tax Act ("Act") in respect of her sons Robert and Tyson from July 2002 to present and therefore, the overpayment on account of the Appellant's tax liability for the Base Years 2001 and 2002 was correctly calculated in accordance with subsection 122.6(1) of the Act. The GSTC was calculated according to subsection 122.5(3) of the Act.
8. In issuing the Notices and confirming them, the Minister assumed the same facts, as follows:
a) the 2001 taxation year is the base year for the period from July 2002 to June 2003;
b) the 2002 taxation year is the base year for the period from July 2003 to June 2004;
c) the Appellant was married to Yvan Rotzetter ("Rotzetter") and they separated around June 2000;
d) the Appellant and Rotzetter had 5 children, Tyson, Robert, Marc, Devin and Jessica ("Children");
e) by way of an Order of Mr Justice Blair of the Supreme Court of British Columbia dated April 9, 2002 ("First Order");
i) the Appellant and Rotzetter were divorced and were given joint guardianship and custody of the Children;
ii) the primary residence of the Children was to be with the Appellant;
iii) the Appellant was entitled to receive the whole CTB and GSTC;
iv) the Children were to spend from Saturday evening to Wednesday morning with the Appellant and from Wednesday to Saturday with Rotzetter
v) Tyson and Robert were able to extend their time with Rotzetter if they wished
vi) the Appellant and Rotzetter were to have the Children equally during the Christmas and Summer school vacations and Spring Break;
f) sometime in June 2002, Tyson and Robert moved in with Rotzetter;
g) pursuant to a subsequent order of Mr Justice Blair of the Supreme Court of British Columbia dated December 31, 2003 ("Second Order"), the primary residence of Tyson and Robert was to be with Rotzetter and the primary residence of Marc, Devin and Jessica was to remain with the Appellant. The Christmas, Spring Break and Summer vacations were to be divided equally between the Appellant and Rotzetter;
h) from July 2002 to October 2003, Tyson and Robert resided with Rotzetter and he was the person who primarily fulfilled the responsibility for their care and upbringing.
B. ISSUE TO BE DECIDED
9. The issue is whether the Appellant was an eligible individual in respect of Tyson and Robert ("Boys") from July 2002 on and therefore was entitled to the CTB and the GSTC in respect of them in the period from July 2002 to October 2003 ("Period").
C. STATUTORY PROVISIONS RELIED ON
10. He relies on sections 122.5, 122.6 and 122.61 of the Act, as amended for the 2001 and 2002 Base years.
D. GROUNDS RELIED ON ANDRELIEF SOUGHT
11. He submits that during the Period, the Boys were "qualified dependants" as defined in section 122.6 of the Act.
12. Further, since Rotzetter had the Boys residing with him in the Period and Rotzetter was the person who primarily fulfilled the responsibility for the care and upbringing of the Boys, Rotzetter was an eligible individual in respect of the Boys effective July 2002 and therefore, the Appellant was not entitled to the CTB for the Period.
13. He submits that the Minister has properly determined that the Boys were not qualified dependants of the Appellant in the Period pursuant to subsections 122.5(1), 122.5(5) and section 122.6 of the Act and therefore, the amount of GSTC to which the Appellant was entitled for the Period was correctly calculated in accordance with section 122.5 of the Act.
[3] All of the assumptions except 8 f) and h) were confirmed by the evidence. 8 f) and h) are the subject of the dispute.
[4] It is clear from the Order of Blair, J. dated April 9, 2002 (Exhibit A-1) that Blair, J. ordered that Michelle was appointed as the "parent who primarily fulfills the responsibility for the care and upbringing of the qualified dependant" within the meaning of the definition of "eligible individual" contained in Section 122.6 of the Income Tax Act. On that basis, paragraph (f) of the definition in Section 122.6 presumes the female parent, Michelle, to be the "eligible individual". But that presumption does not apply in circumstances set out in Regulations LXIII, 6300-6302. In this case, Ron filed a Notice claiming Robert and Tyson as his qualified dependants for the period from July 2002 to October 2003 because he claimed that they resided with him at his house one and a half blocks from Michelle's house.
[5] Regulation 6302 describes the factors to be considered in what constitutes care and upbringing of Tyson and Robert in these circumstances. Using them as headings, the Court finds:
(a)the supervision of the daily activities and needs of the qualified dependant;
The evidence is clear that Ron had more money than Michelle and paid for their hockey and took them to their hockey tournaments. Michelle had no support order and the three youngest children to care for - her babysitting arrangements with Sherry and Pam were for the three youngest and, at times Robert, and were paid for by British Columbia Provincial subsidies. (The Appellant, Pam and Sherry testified that Tyson refused to be babysat and stayed at the Appellant's house and yard while the younger children were babysat.) Pam and Michelle worked split shifts at the same Clearwaterrestaurant and offset babysitting arrangements as best they could. The evidence of Sherry and Pam is believed when they testified that Tyson and Robert spent their after-school hours at Michelle's where all of Ron and Michelle's children played together. On the evidence, upon their parents' separation and divorce, their five children became their own family unit, as distinct from their parents. In contrast to the hockey, Michelle took the children to church and enrolled Tyson and Robert in baseball, but could not afford to keep paying the required fees. Both parents were titled "primary contact" parents at the boys' school. Glen Preston testified as to hearsay from one of the boys, but he never testified that he saw them either at Michelle's or at Yvan's. Thus, the Court finds that Tyson and Robert spent their leisure time at or near Michelle's home with their younger brothers and sister and, in their particular circumstances, that was their home.
(b) the maintenance of a secure environment in which the qualified dependant resides;
Both parents maintained a secure environment for Tyson and Robert. The "residence" in these circumstances is that specified in Blair, J.'s orders.
(c) the arrangement of, and transportation to, medical care at regular intervals and as required for the qualified dependant;
Again, both parents carried out these duties for Tyson and Robert.
(d) the arrangement of, participation in, and transportation to, educational, recreational, athletic or similar activities in respect of the qualified dependant;
Ron did more of this for Tyson and Robert, but he had more money and could not qualify for the British Columbia babysitting subsidy. However, Michelle attended the boys' local Clearwater hockey games when she could, enrolled Tyson and Robert in baseball so far as she could afford it and took them to church. Ron and Michelle are equal in this respect.
(e) the attendance to the needs of the qualified dependant when the qualified dependant is ill or otherwise in need of the attendance of another person;
Again, insofar as there is evidence respecting this matter, Ron and Michelle are equal.
(f) the attendance to the hygienic needs of the qualified dependant on a regular basis;
(g) the provision, generally, of guidance and companionship to the qualified dependant;
Again, insofar as there is evidence respecting these matters, Ron and Michelle are equal.
(h) the existence of a court order in respect of the qualified dependant that is valid in the jurisdiction in which the qualified dependant resides.
The court order of Blair, J. is clearly to be interpreted as granting Michelle the position of "eligible individual" until it was changed on December 31, 2003 (Exhibit R-1) upon Ron's application. Exhibit R-1 specifies that on December 31, 2003 "the primary residence of ... Tyson ... and ... Robert ... shall be with" Ron.
[6] For these reasons, the appeal is allowed. Michelle is found to be the eligible individual and Tyson and Robert were qualified dependants of Michelle as specified in Exhibit A-1 for the period in question until December 31, 2003, when, pursuant to Blair, J.'s second Order (Exhibit R-1) Ron became the eligible individual respecting Tyson and Robert.
[7] It should be noted that the Orders of Blair, J. in this matter are the orders of a Judge of a Court which has jurisdiction over family matters and a Court which hears sworn evidence from all sides of a custody hearing. It may be said that these Orders are sometimes after the event, but either parent can apply for them and in this case, Ron acted for himself respecting the Order of December 31, 2003, a practice which is becoming more common. However, the full evidence before this Court gives me no reason to find differently than did Blair, J.
[8] The Appellant is awarded party-and-party costs for this appeal and
including a full day's hearing before this Court in which she was represented by a lawyer.
Signed at Vancouver, British Columbia, this 26th day of July 2005.
"D.W. Beaubier"
Beaubier, J.
COURT FILE NO.: 2004-4597(IT)I
STYLE OF CAUSE: Michelle Simard v. The Queen
PLACE OF HEARING: Kamloops, British Columbia
DATE OF HEARING: June 21, 2005
REASONS FOR JUDGMENT BY: The Honourable Justice D.W. Beaubier
DATE OF JUDGMENT: July 26, 2005
APPEARANCES:
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For the Appellant: |
Gerard Simard
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Counsel for the Respondent: |
Pavanjit Mahil |
COUNSEL OF RECORD:
Firm:
For the Respondent: John H. Sims, Q.C.
Deputy Attorney General of Canada
Ottawa, Ontario