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Date: 20030121 |
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Docket: 2002-436(IT)I |
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BETWEEN: |
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BARBARA BENSON, |
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Appellant, |
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and |
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HER MAJESTY THE QUEEN, |
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Respondent. |
_______________________________________________________________
Appeal heard on November 8, 2002 at St. John's, Newfoundland
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Before: The Honourable Judge Terrence O'Connor |
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Appearances: |
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For the Appellant: |
The Appellant herself |
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Counsel for the Respondent: |
Dominique Gallant |
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JUDGMENT
The appeals from the reassessments made under the Income Tax Act for the 1998 and 1999 taxation years are allowed, without costs, in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 21st day of January, 2003.
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"T. O'Connor" |
J.T.C.C.
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Date: 20030121 |
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Docket: 2002-436(IT)I |
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BETWEEN: |
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BARBARA BENSON, |
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Appellant, |
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and |
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HER MAJESTY THE QUEEN, |
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Respondent. |
REASONS FOR JUDGMENT
O'Connor, J.T.C.C.
[1] The basic facts are set forth in the following paragraphs of the Reply to the Notice of Appeal:
9. In respect of the 1997, 1998 and 1999 base taxation years, the Appellant claimed and received a CTBC in respect of one eligible child, Stephen, who was born in November, 1982. The Appellant's reported income for the 1997, 1998 and 1999 taxation years was used to calculate the Appellant's CTBC entitlement from July, 1998 to June, 1999, from July, 1999 to June, 2000 and from July, 2000 to November, 2000 (the "Periods"), respectively. The Appellant also claimed the Goods and Services Tax Credit ("GSTC") in respect to the Periods and the personal credit for wholly dependant persons in respect to the 1998 and 1999 taxation years.
10. By Child Tax Benefit Notices dated January 19, 2001 the Minister of National Revenue (the "Minister") recalculated the "adjusted income" for the 1997, 1998 and 1999 base taxation years to include the income of the Appellant's "cohabiting spouse" thereby reducing the Appellant's CTBC for the Periods. By Goods and Services Tax Credit Notices dated December 13, 2000 the Minister recalculated and reduced the Appellant's entitlement to the GSTC for the Periods. By Notices of Reassessment dated March 8, 2001 the Minister disallowed the personal credit for wholly dependant persons for taxation years 1998 and 1999.
FURTHER FACTS
[2] The further principal facts are as follows:
The Appellant married her second husband, Roger in 1992. In 1994 they purchased a home together. Between July, 1998 and September, 2000 the Appellant claims they were separated and had signed a Separation Agreement notwithstanding the fact that they continued to live under the same roof. The Appellant had two children from a previous marriage as did her husband and all the four children lived with the Appellant and her husband for a period of time. It is only the Appellant's child, Stephen, who is of concern in these appeals.
[3] The Separation Agreement provided that Roger would pay the mortgage and utilities and that the Appellant would pay for some groceries and certain household expenses. The Appellant and her husband slept in different rooms and did not have sexual relations. They usually ate separately. She would cook, clean and do the shopping. She carried out certain minor repairs but her husband took on the heavier duties of maintenance and repairs. The Appellant clothed her children and provided them with shelter and food.
[4] The Appellant had a health plan at her work and it compensated Roger with respect to certain expenses.
[5] The Appellant's claims are made under the following provisions of the Income Tax Act.
1. The equivalent-to-spouse deduction (paragraph 118(1)(b));
2. The child tax benefit credit, (section 122.6); and
3. The GST credit, (section 122.5).
[6] The Appellant's right to claim the deduction and those credits is dependent upon her living separate and apart from Roger by reason of the breakdown of the marriage. The Appellant testified that that was the case.
[7] In Molodowich v. Penttinen (1980), 17 R.F.L. (2d) 376, Kirosko D.C.J. (Ont. Dist. Ct.) at pages 381 and 382 developed the following seven questions or criteria to determine when parties are or are not living separate and apart:
1. Shelter:
(a) Did the parties live under the same roof?
(b) What were the sleeping arrangements?
(c) Did anyone else occupy or share the available accommodation?
2. Sexual and Personal Behaviour:
(a) Did the parties have sexual relations? If not, why not?
(b) Did they maintain an attitude of fidelity to each other?
(c) What were their feelings toward each other?
(d) Did they communicate on a personal level?
(e) Did they eat their meals together?
(f) What, if anything, did they do to assist each other with problems or during illness?
(g) Did they buy gifts for each other on special occasions?
3. Services:
What was the conduct and habit of the parties in relation to:
(a) preparation of meals;
(b) washing and mending clothes;
(c) shopping;
(d) household maintenance; and
(e) any other domestic services?
4. Social:
(a) Did they participate together or separately in neighbourhood and community activities?
(b) What was the relationship and conduct of each of them toward members of their respective families and how did such families behave towards the parties?
5. Societal:
What was the attitude and conduct of the community toward each of them and as a couple?
6. Support (economic):
(a) What were the financial arrangements between the parties regarding the provision of or contribution toward the necessaries of life (food, clothing, shelter, recreation, etc.)?
(b) What were the arrangements concerning the acquisition and ownership of property?
(c) Was there any special financial arrangement between them which both agreed would be determinant of their overall relationship?
7. Children:
What was the attitude and conduct of the parties concerning the children?
[8] It is well-accepted law, as admitted in the Reply, that it is possible for spouses to live separate and apart in the same residence (Rushton v. Rushton (1969), 2 D.L.R. (3d) 25, 66 W.W.R. 764 (B.C.)).
[9] The most relevant cases analyzing the meaning of "separate and apart" in the context of the GSTC, CTBC and personal credit for a wholly dependent person areKelner v. Canada, [1996] 1 C.T.C. 2687, (1995) 17 R.F.L. (4th) 288, [1995] T.C.J. No. 1130, Bowman, T.C.J., Rangwala v. Canada, [2000] 4 C.T.C. 2430, [2000] T.C.J. no. 624, Campbell, T.C.J. and Roby v. Canada, [2001] T.C.J. No. 801, Bowman, A.C.J.T.C.
[10] In Kelner, a marriage disintegrated after the husband suffered a work-related injury and fell into depression. He began living by himself in a self-contained unit in the basement of the family home and performed his own domestic duties. He did not have sexual relations with the Appellant wife and only communicated with her about child-related issues. Although the husband did not contribute at all to the household expenses, Bowman T.C.J. (as he then was) found that the couple was living separate and apart in the same house, and granted the appeal to allow deductions for child care expenses. In coming to his decision, Judge Bowman reviewed the available case law and quoted Holland J. in Cooper v. Cooper, (1973), 10 R.F.L. 184 (Ont. H.C.) at 187 [hereinafter Cooper] with approval:
Can it be said that the parties in this case are living separate and apart? Certainly spouses living under the same roof may well in fact be living separate and apart from each other. The problem has often been considered in actions brought under s. 4(1)(e)(i) of the Divorce Act and, generally speaking, a finding that the parties were living separate and apart from each other has been made where the following circumstances were present:
(i) Spouses occupying separate bedrooms.
(ii) Absence of sexual relations.
(iii) Little, if any, communication between spouses.
(iv) Wife performing no domestic services for husband.
(v) Eating meals separately.
(vi) No social activities together.
[11] Kelner is among the extensive case law canvassed by Campbell T.C.J. in Rangwala. There, the facts also involved a couple allegedly separated but living in the same house. After a separation agreement was signed, each of the spouses kept completely separate premises from one another, and shared neither meals nor domestic duties. Communication was minimal, and finances were completely separate. Since the two spouses shared custody, meal preparation and expenses for their son would rotate between the two on a monthly basis. At issue were the GSTC and the CTBC.
[12] In finding the two spouses were living separate and apart, Judge Campbell determined there to be "both physical and psychological separation", and wrote that the two spouses "shared the same address and little else". She therefore allowed the appeal. In her reasons, besides citing Kelner, she also quotes Cooper with approval and mentions the relevancy of the criteria listed in Molodowich v. Penttinen.
[13] I accept the credibility of the Appellant and based on all of the evidence, I am satisfied that during the period in question, namely, July, 1998 to September, 2000 the Appellant and her husband, Roger, were living separate and apart although under the same roof. All factors must be looked at and no one factor is determinative. I do not consider that separate finances before, during and after separation and coverage of the husband under the health care plan of the Appellant were sufficient factors to alter the foregoing conclusion.
[14] Consequently since they were considered to be living separate and apart, the Appellant was entitled to the Child Tax Benefit Credit claimed as well as the Goods and Services Tax Credit claimed. Those credits are not to be reduced because of Roger's income.
[15] Further, in my opinion, the Appellant was entitled to the deduction for a wholly dependent person under paragraph 118(1)(b) since she was a person who was married and who neither supported nor lived with her husband (since they were considered to be living separate and apart) and she was not supported by her spouse and moreover she, jointly with her husband, maintained a self-contained domestic establishment (in which she lived) and actually supported in that establishment a person who at that time was her child, namely, Stephen, who was under the age of 18.
[16] For all of the above reasons the appeals are allowed, without costs.
Signed at Ottawa, Canada, this 21st day of January, 2003.
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"T. O'Connor" |
J.T.C.C.
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COURT FILE NO.: |
2002-436(IT)I |
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STYLE OF CAUSE: |
Barbara Benson v. The Queen |
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PLACE OF HEARING |
St. John's, Newfoundland |
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DATE OF HEARING |
November 8, 2002 |
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REASONS FOR JUDGMENT BY: |
The Honourable Judge T. O'Connor |
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DATE OF JUDGMENT |
January 21, 2003 |
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APPEARANCES: |
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For the Appellant: |
The Appellant herself |
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Counsel for the Respondent: |
Dominique Gallant |
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COUNSEL OF RECORD: |
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For the Appellant: |
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Name: |
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Firm: |
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For the Respondent: |
Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada |