Date: 20020903
Docket: 2002-1175-IT-I
BETWEEN:
KALEEM W. KHAN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasonsfor Judgment
O'Connor, J.T.C.C.
[1] The essential facts are set forth in the assumptions contained in the Reply to the Notice of Appeal. These read as follows:
13. In so reassessing the Appellant, the Minister made the following assumptions of fact:
(a) in filing his income tax return for the 1999 taxation year, the Appellant claimed his mother, Suraiya Khan ("Suraiya") as an infirm dependant age 18 or older in the calculation of his non-refundable tax credits;
(b) at all material times, the Appellant's father, Sarfraz Khan ("Sarfraz") claimed Suriaya as a dependant in the calculation of his non-refundable tax credits;
(c) Suriaya was a dependant of Sarfraz;
(d) Suriaya was not a dependant of the Appellant.
ISSUES
[2] As stated in the Reply the issue was whether the Appellant, who did not appear at the hearing but whose father did appear, is entitled to deduct the amount for an infirm dependants age 18 or older in the 1999 taxation year.
ANALYSIS
[3] Subsection 118(1) of the Income Tax Act allows a person who is married a spousal deduction calculated on the basis of a formula. However, subsection 118(4)(a) (c) and (d) provide as follows:
(4) For the purposes of subsection (1), the following Rules apply:
(a) no amount may be deducted under subsection (1) because of paragraphs (a) and (b) of the description of B in subsection (1) by an individual in a taxation year for more than one other person;
(a.1) no amount may be deducted under subsection (1) because of paragraph (b) of the description of B in subsection (1) by an individual for a taxation year for a person in respect of whom an amount is deducted because of paragraph (a) of that description by another individual for the year if, throughout the year, the person and that other individual are married to each other and are not living separate and apart because of a breakdown of their marriage;
...
(c) where an individual is entitled to a deduction under subsection (1) because of paragraph (b) of the description of B in subsection (1) for a taxation year in respect of any person, no amount may be deducted because of paragraph (c.1) or (d) of that description by any individual for the year in respect of the person;
(d) where an individual is entitled to a deduction under subsection (1) because of paragraph (c.1) of the description of B in subsection (1) for a taxation year in respect of any person, the person is deemed not to be a dependant of any individual for the year for the purpose of paragraph (d) of the description; and
...
[4] The application of the foregoing sections according to the counsel for Justice precludes the Appellant from claiming the deduction he has for an infirm dependant age 18 or older in the 1999 taxation year and in my opinion that is the correct interpretation.
[5] The problem for the Appellant and his father is that the father states that in preparing the 1999 return for the Appellant he followed the General Income Tax and Benefit Guide (the "Guide") furnished by CCRA. At pages 26 and 27 of that guide the following is stated:
Line 303 - Spousal amount
You may be able to claim a spousal amount if, in 1999, you had a spouse (see page 10) whom you supported. In the Identification area on page 1 of your return, be sure to enter the information concerning your spouse...
Line 305 - Equivalent-to-spouse amount
You may be able to claim an equivalent-to-spouse amount if, at any time in the year, you were single, divorced, separated, or widowed and, at that time, you supported a dependant to whom all of the following applied. The dependant:
§ was under 18, your parent or grandparent, or mentally or physically infirm;
§ was related to you by blood, marriage or adoption;
§ lived with you in a home that you maintained; and
§ in most cases, lived in Canada..
You cannot claim this amount if any of the following applies:
§ You are claiming a spousal amount (see line 303).
Line 306 - Amount for infirm dependants age 18 or older
You can claim an amount for your or your spouse's dependent child or grandchild only if that child or grandchild was mentally or physically infirm and was born in 1981 or earlier.
You can also claim an amount for a person who meets all of the following conditions. The person must have been:
§ your or your spouse's parent, grandparent, brother, sister, aunt, uncle, niece, or nephew;
§ born in 1981 or earlier;
§ mentally or physically infirm;
§ dependent on you, or on you and others for support; and
§ living in Canada at any time in the year.
Notes
A parent includes someone on whom you were completely dependent and who had custody and control of you when you were under 19 years of age.
A child can include anyone who has become dependent on you, even if he or she is older than you.
If some else is claiming an amount on line 305 for a dependant, you cannot claim an amount on line 306 for that dependant. If you are claiming an amount on line 305 for a dependant who is infirm and age 18 or older, you may also be able to claim an amount on line 306 for that dependant. You can claim an amount only if the dependant's net income (line 236 of his or her return, or the amount that it would be if he or she filed a return) is less than $6,794.
[6] The Appellant argues rather forcefully that most Canadian taxpayers do not read every last word of the Income Tax Act but in doing their returns they follow the Guide and the Guide is published by the Government of Canada. Since the Guide in discussing line 306 simply states you can't claim on both lines 305 and line 306 for the same dependant. However, this caveat fails to mention line 303 with the result that it is incomplete and in this case the claim that the father made was under line 303 and there is nothing in the Guide at line 306 to indicate that the claim contemplated on that line for dependants age 18 or older cannot be made when a claim is made at line 303.
[7] Thus the Appellant has been lead into error by the incorrect advice contained in the Guide and for that reason and for any other reason that the Appellant may raise as to hardship or any other matter it is recommended that the Remission Order be granted.
[8] Notwithstanding this recommendation I must apply the above provisions of the Act and consequently the appeal is dismissed.
Signed at Ottawa, Canada, this 6th day of September, 2002.
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"T. O'Connor" |
J.T.C.C.COURT FILE NO.: 2002-1175(IT)I
STYLE OF CAUSE: Kaleem W. Khan v. The Queen
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: August 12, 2002
REASONS FOR JUDGMENT BY: The Honourable Judge O'Connor
DATE OF JUDGMENT: September 6, 2002
APPEARANCES:
Agent for the Appellant: Sarfraz Khan
Counsel for the Respondent: Eric Sherbert
COUNSEL OF RECORD:
Agent for the Appellant:
Name: Sarfraz Khan
Firm:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2002-1175(IT)I
BETWEEN:
KALEEM W. KHAN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on August 12, 2002 at Toronto, Ontario, by
the Honourable Judge Terrence O'Connor
Appearances
Agent for the Appellant: Sarfraz Khan
Counsel for the Respondent: Eric Sherbert
JUDGMENT
The appeal from the reassessment made under the Income Tax Act for the 1999 taxation year is dismissed for the reasons set forth in the attached Reasons for Judgment. However, as I mentioned to the parties this might be an appropriate situation for the granting of a Remission Order. In this regard, annexed to the Reasons for Judgment is an article on Remission Orders, how to apply and when they should be rendered and for what reasons. The article appears in Tax Litigation
Volume No. 2, pages 624 to 628 and as mentioned is annexed to the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 6th day of September, 2002.
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"T. O'Connor" |
J.T.C.C.