Moore v. The Queen

Moore v. The Queen Court (s) Database Tax Court of Canada Judgments Date 2006-12-18 Neutral citation 2006 TCC 587 File numbers 2006-1154(IT)I Judges and Taxing Officers Leslie M. Little Subjects Income Tax Act Decision Content Docket: 2006-1154(IT)I BETWEEN: MARGARET MOORE, and HER MAJESTY THE QUEEN, Respondent. ____________________________________________________________________ Appeal heard on October 19, 2006, at Winnipeg, Manitoba Before: The Honourable Justice L.M. Little Appearances: For the Appellant: The Appellant herself Counsel for the Respondent: Adrianne Edmunds ____________________________________________________________________ JUDGMENT The appeal from the assessment made under the Income Tax Act for the 2004 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 18th day of December 2006. "L.M. Little" Little J. Citation: 2006TCC587 Date:20061218 Docket: 2006-1154(IT)I BETWEEN: MARGARET MOORE, Appellant, and HER MAJESTY THE QUEEN, Respondent. REASONS FOR JUDGMENT Little J. A. FACTS [1] The Appellant and Lance Tyler Moore ("Lance") are the parents of two children: − Son born on August 27, 1997; − Daughter born on March 4, 2001. [2] The Appellant and Lance separated on July 4, 2005. [3] The Appellant testified that as of July 4, 2005 the Son and Daughter did not reside with her and she was no longer the primary caregiver of the Son and Daughter. [4] Based on the evidence Lance was the primary caregiver of the Son and Daughter as of July 4, 2005 and the Son and Daughter resided with Lance after that time. [5] During the period from August 2005 to December 2005 Canada Child Tax Benefits ("CCTB") were deposited in a joint bank account by the Federal Government at the Gimli Credit Union in Gimli, Manitoba (hereinafter the "Joint Bank Account:"). The Appellant and Lance had signing authority on the Joint Bank Account. [6] The evidence indicated that the following CCTBs were deposited in the Joint Bank Account by direct deposit. Date of Payment Method of Payment Amount August 19, 2005 Direct Deposit $485.30 September 20, 2005 Direct Deposit 485.20 October 20, 2005 Direct Deposit 485.20 November 18, 2005 Direct Deposit 485.20 $1,940.90 [7] The CCTB paid by the Federal Government on December 13, 2005 was sent to the Appellant by cheque. (Note - The Appellant stated in the Notice of Appeal that she had received the cheque dated December 13, 2005 for $485.20 and she acknowledges that she is prepared to repay this amount to the Minister of National Revenue (the "Minister"). [8] The Appellant also testified that she advised officials of the Canada Revenue Agency (the "CRA") in July 2005 that the Son and Daughter were no longer under her care and therefore she was not entitled to receive the CCTB. There was no evidence produced to question the accuracy of this statement. [9] During the period from October 2005 to January 2006 amounts totalling $347.00 for the Goods and Services Tax Credit ("GSTC") were deposited in the Joint Bank Account by way of direct deposit. [10] In the Reply to the Notice of Appeal the Minister concedes that the Appellant was entitled to a GSTC only in the amount of $86.75 for the month of October 2005 and $86.79 for the month of January 2006 for a total of $173.54. B. ISSUES [11] The issues to be decided are: 1. Whether the Appellant was properly assessed a CCTB overpayment in the amount of $1,940.80 for the months of August, September, October and November 2005; and 2. Whether the Appellant was properly assessed a GSTC overpayment in the amount of $173.50 for the 2004 taxation year. C. ANALYSIS [12] Section 122.6 of the Income Tax Act (the "Act") defines "eligible individual": "eligible individual" in respect of a qualified dependant at any time means a person who at that time (a) resides with the qualified dependant, (b) is the parent of the qualified dependant who primarily fulfils the responsibility for the care and upbringing of the qualified dependant, [13] Section 122.5 of the Act defines "qualified relation" and "qualified dependant" in relation to the GST credit: "Qualified relation" of an individual, in relation to a month specified for a taxation year, means the person, if any, who, at the beginning of the specified month, is the individual's cohabiting spouse or common-law partner. "Qualified dependant" of an individual, in relation to a month specified for a taxation year, means a person who at the beginning of the specified month (a) is the individual's child or is dependent for support on the individual or on the individual's cohabiting spouse or common-law partner; (b) resides with the individual; (c) is under the age of 19 years; (d) is not an eligible individual in relation to the specified month; and (e) is not a qualified relation of any individual in relation to the specified month. [14] Counsel for the Respondent maintains that as of August 2005 the Appellant was not eligible to receive the CCTB or the GST credit, since the Son and Daughter were no longer living with her or in her care and her spouse was no longer living with her. [15] The Appellant has admitted that the Son and Daughter were not in her care as of July 4, 2005. The Appellant has also admitted that she was no longer living with her common-law spouse during the period where she received the Child Tax Benefit and the GST credit. However the Appellant stated that the CCTB payments were deposited by direct deposit into the Joint Bank Account. The Appellant testified that with the exception of certain specific cheques she had no control over the Joint Bank Account. [16] The Appellant admitted, in sworn testimony, that she personally withdrew the following amounts from the Joint Bank Account (Exhibit A-1): July 5 Avon - cheque No. 187 $12.12 July 6 Yoga 60.00 July 6 Gimli Gas Bar 18.00 July 9 Zellers - cheque no. 185 35.00 (July 9 Cell Phone - ½ of $94.38) - cheque no. 186 47.19 July 13 Yoga - cheque no. 189 60.00 July 15 Lakeview Dental - cheque no. 181 88.45 August 6 Lakeview Dental - cheque no. 182 88.45 $409.21 (See Transcript, pages 18-21.) (Note - Some of the above withdrawals represented post-dated cheques issued by the Appellant before July 4, 2005.) [17] The Appellant testified that other than the amounts referred to in paragraph 16 above, her former husband Lance used the funds in the Joint Bank Account to pay expenses of the Son and Daughter or to pay his own expenses. There was no evidence introduced to contradict this testimony. [18] In the Reply to the Notice of Appeal counsel for the Minister states in paragraph 10(g) as follows: 10. In so redetermining the Appellant's entitlement to the CCTB and the GSTC for the 2004 taxation year, and in so confirming the redeterminations, the Minister assumed the same facts as follows: . . . (g) during the period from August 2005 to December 2005, amounts totalling $2,426.10 for the CCTB in respect of Liam and Kyra were paid to and received by the Appellant as follows: [underlining added] Date of Payment Amount of Payment August 19, 2005 $485.30 September 20, 2005 485.20 October 20, 2005 485.20 November 18, 2005 485.20 December 13, 2005 485.20 Total $2,426.10 [19] Based on the sworn and uncontradicted testimony before me I am not convinced that the CCTB amounts totalling $1,940.80 were "paid to and received by" the Appellant. (Note - The figure of $1,940.80 does not include the cheque of $485.20 received by the Appellant by cheque in December 2005.) However the Appellant has admitted to receiving the following amounts: 1. Amounts listed in paragraph [16] above $409.21 2. Cheque issued to the Appellant on December 13, 2005 $485.20 $894.41 3. GSTC $173.50 [20] While the Appellant retained signing authority on the Joint Bank Account, until sometime after July 4, 2005, I am not convinced that the Appellant "received" the Canada Child Tax Benefits that were deposited by direct deposit by the Federal Government in the Joint Bank Account. I believe that she, in effect, waived her legal right to receive any funds in the Joint Bank Account after July 4, 2005. In my opinion, after July 4, 2005, the Appellant had established a constructive trust for the benefit of the Son and Daughter with respect to the funds in the Joint Bank Account. [21] If I were to accept the argument of counsel for the Respondent on the CCTB I would be, in effect, ordering the Appellant to repay Canada Child Tax Benefits that the Appellant never received. [22] The appeal will be allowed, without costs, and the Minister will adjust the overpayment amounts as follows: 1. Overpayment amounts owed by the Appellant Appellant Re. CanadaChild Tax Benefits (See paragraph [19] above) $894.41 2. GSTC owed by the Appellant $173.50. Signed at Ottawa, Canada, this 18th day of December 2006. "L.M. Little" Little J. CITATION: 2006TCC587 COURT FILE NO.: 2006-1154(IT)I STYLE OF CAUSE: Margaret Moore and Her Majesty the Queen PLACE OF HEARING: Winnipeg, Manitoba DATE OF HEARING: October 19, 2006 REASONS FOR JUDGMENT BY: The Honourable Justice L.M. Little DATE OF JUDGMENT: December 18, 2006 APPEARANCES: For the Appellant: The Appellant herself Counsel for the Respondent: Adrianne Edmunds COUNSEL OF RECORD: For the : Name: Firm: For the Respondent: John H. Sims, Q.C. Deputy Attorney General of Canada Ottawa, Canada