Killick v. The Queen

Killick v. The Queen Court (s) Database Tax Court of Canada Judgments Date 2003-03-07 Neutral citation 2003 TCC 118 File numbers 2002-3565(IT)I Judges and Taxing Officers Diane Campbell Subjects Income Tax Act Decision Content Docket: 2002-3565(IT)I BETWEEN: DONALD JAMES KILLICK, Appellant, and HER MAJESTY THE QUEEN, Respondent. ____________________________________________________________________ Appeal heard on February 28, 2003 at Saskatoon, Saskatchewan Before: The Honourable Judge Diane Campbell Appearances: For the Appellant: The Appellant himself Counsel for the Respondent: Lyle Bouvier ____________________________________________________________________ JUDGMENT The appeal from the assessment made under the Income Tax Act for the 2000 taxation year is allowed, without costs, and the assessment is referred back to the Minister of National Revenue for reconsideration and reassessment in accordance with the attached Reasons for Judgment. Signed at Ottawa, Canada, this 7th day of March 2003. "Diane Campbell" J.T.C.C. Citation: 2003TCC118 Date: 20030307 Docket: 2002-3565(IT)I BETWEEN: DONALD JAMES KILLICK, Appellant, and HER MAJESTY THE QUEEN, Respondent. REASONS FOR JUDGMENT Campbell, J. [1] This appeal is from an assessment made by the Minister of National Revenue for the 2000 and 2001 taxation years. The Appellant was denied the claim for an equivalent-to-spouse credit for a wholly dependent person in the amount of $6,140.00 for 2000 and $5,293.00 for 2001. [2] At the outset, Respondent counsel advised the Court that a notice of objection to the assessment for the 2001 taxation year had never been served on the Minister. I advised the Appellant of his limitation periods in respect to the assessment dated June 10, 2002 and of the requirement to file a notice of objection before this Court could hear his appeal for that year. Respondent counsel advised that if necessary the Crown would be prepared to consent to an extension of time for filing the notice. Consequently the only year before me is the 2000 taxation year. [3] The Minister relied upon the following assumptions of fact set out in paragraph 10 of the Reply to the Notice of Appeal: 10. In so assessing the Appellant, the Minister made the following assumptions of fact: (a) the Appellant is the natural parent of two children, Steven James Frank Killick, born July 15, 1985, and Ian Patrick Killick, born August 31, 1987, (collectively referred to as the "children"); (b) Elizabeth Joan Shaw is the natural mother of the children; (c) the Appellant and Elizabeth Joan Shaw became divorced from one another in 1996; (d) the claim made by the Appellant for a personal tax credit for a wholly dependent person for the 2000 and 2001 taxation years was made in respect of one of the children; (e) pursuant to a Child Support Agreement made on December 17, 1999 (the "Agreement"), Elizabeth Joan Shaw was required to make support payments to the paternal grandparents of the children, Victor Killick and Ethel Killick, (collectively referred to as the "grandparents") in respect of the children in the amount of $831.00 per month commencing September 1, 1999; (f) pursuant to the Agreement, the Appellant was required to make support payments to the grandparents in respect of the children in the amount of $580.00 per month commencing August 1, 1999; (g) pursuant to the Agreement, the children were to reside primarily with the grandparents; (h) during the 2000 and 2001 taxation years, the Appellant made support payments to the grandparents in respect of the children; (i) at all material times to the 2000 and 2001 taxation years, the children resided with their grandparents in the same domestic establishment located at 1901 Amisk Drive, Denare Beach, Saskatchewan; (j) at all material times, the Appellant was employed as an airline pilot; (k) at all material times, the Appellant did not reside with the children, rather he lived in an apartment located at 102B - 111 Tait Crescent, Saskatoon, Saskatchewan; (l) the Appellant did not reside with the children in the 2000 and 2001 taxation years due to the nature of his employment, which required the Appellant to travel a lot; (m) the Appellant did spend time with his children during the 2000 and 2001 taxation years when he was not travelling in the course of his employment; and (n) at all material times to the 2000 and 2001 taxation years, the children were not wholly dependent upon the Appellant for support, rather they were wholly dependent upon the grandparents for support. [4] This case centres upon the interpretation of paragraph 118(1)(b) which reads as follows: 118(1)(b) Wholly dependent person - 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, [5] The Appellant filed a child support agreement (Exhibit A-1). The provisions of this agreement which are relevant to this appeal are paragraphs 1 and 2(c). They read as follows: 1. CUSTODY The Mother and Father shall continue to have Joint Custody of the children, however the children will reside primarily with the paternal grandparents, Victor and Ethel Killick, at 1901 Amisk Drive, Denare Beach, Saskatchewan, and also with the Father. Given the ages and level of maturity of the children, the parties agree that the children may determine where they wish to reside, and that all parties will comply with the wishes of the children. . . . 2. (c) The Father shall provide support to the paternal grandparents, Victor and Ethel Killick, pursuant to the Federal Child Support Guidelines in the amount of $580.00 per month, which amount is based on the annual income of the Father of $42,300.00, commencing August 1, 1999 and continuing on the first of each and every month thereafter for as long as the children remain children within the meaning of the Divorce Act, or until further agreement or order of the Court. [6] The Appellant resides in an apartment in Saskatoon for approximately 200 days out of each year. As an airline pilot he could be anywhere in North America within this 200 day period. When he is on reserve status, he is on call and must be within a two-hour report time to the Saskatoon airport. For the remainder of the year, when he is not flying or on reserve status, he resides with his parents and his children at his parents' residence at Denare Beach, Saskatchewan. [7] Pursuant to the child support agreement, the mother and the Appellant (the children's father) share joint custody but the agreement goes on to state that the children are to reside primarily with the paternal grandparents and with the father. It is also clear from the Agreement that the Appellant provides support for the children. However under paragraph 118(1)(b), the Appellant must also maintain a self-contained domestic establishment and must support the children in the self-contained domestic establishment. [8] Although the Appellant maintained an apartment or self-contained domestic establishment in Saskatoon, his evidence was that it was maintained so that he could retain his employment as an airline pilot. When he was not required to be in Saskatoon, he was residing and caring for his children in Denare Beach. The Appellant did not alone maintain the self-contained domestic establishment in Denare Beach but he did so jointly with his parents. The Agreement stipulated that he was to pay monthly support of $580.00. However in his Notice of Appeal he states that he voluntarily pays $750.00 monthly. I view the voluntary payment as further indication that he was assisting his parents in the additional cost of maintaining this establishment in which his children resided. As well according to the Appellant's Notice of Appeal, he also pays for extracurricular activities, clothing and travel to see their mother. The fact that the Agreement stipulates that the children are to reside with both the Appellant and his parents is a further indication that the Appellant would be residing with his children at Denare Beach and helping to maintain this establishment. The Appellant meets the requirement of subparagraph 118(1)(b)(ii). He alone does not maintain the self-contained domestic establishment but he does so jointly with one or more other persons, that is, his parents. The fact that it is his parents' residence is irrelevant. He assists them in maintaining this domestic establishment and supports his children who reside there. [9] I see nothing in paragraph 118(1)(b) which would prevent an individual from maintaining more than one self-contained domestic establishment. Judge Lamarre reached this same conclusion in Mujawamariya v. The Queen, 2001 DTC 396. The Saskatoon apartment is a necessary adjunct to his employment. It is his work base. In any event I see this establishment as playing a relatively minor role in the facts of this case. He is based out of this apartment for approximately 200 days each year but because he is a pilot, he is clearly not staying 200 nights at the Saskatoon apartment. I have no evidence before me as to a breakdown of days and nights at each establishment but I would think it is reasonable to conclude that he probably spends more actual time at the Denare Beach establishment than in the Saskatoon establishment. In any event the opening few lines to paragraph 118(1)(b) specify that an individual "at any time in the year" must maintain and live in a self-contained establishment where he supports a wholly dependent person. [10] I conclude that the Appellant fully satisfies the requirements of this section. He supports his children; he resides in a self contained domestic establishment with his children for a substantial portion of each year and certainly for all of the periods when he is not working; he jointly maintains this establishment with his parents and he pays to the parents additional amounts over and above the required basic support payment to assist his parents in maintaining this establishment in which his children reside. [11] The appeal is allowed and the assessment is referred back to the Minister for reconsideration and reassessment on the basis that the Appellant is entitled, pursuant to paragraph 118(1)(b) of the Act, to an equivalent-to-spouse credit for a wholly dependent person in the amount of $6,140.00 for the 2000 taxation year. Signed at Ottawa, Canada this 7th day of March 2003. "Diane Campbell" J.T.C.C. CITATION: 2003TCC118 COURT FILE NO.: 2002-3565(IT)I STYLE OF CAUSE: Donald James Killick PLACE OF HEARING: Saskatoon, Saskatchewan DATE OF HEARING: February 28, 2003 REASONS FOR JUDGMENT BY: The Honourable Judge Diane Campbell DATE OF JUDGMENT: March 7, 2003 APPEARANCES: For the Appellant: The Appellant himself Counsel for the Respondent: Lyle Bouvier COUNSEL OF RECORD: For the Appellant: Name: Firm: For the Respondent: Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada