http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/230995/index.do
Groves v. The Queen (May 4, 2017 – 2017 TCC 66, Hogan J.).
Précis: Ms. Groves and her former spouse had joint custody of the two children of the marriage. They separated in 2011 and under the original Separation Agreement she was to pay child support to her former spouse. Under an amended Separation Agreement executed in 2015 they were each to pay child support. Ms. Groves claimed the Canada Child Tax Benefit in 2014 in respect of one child. CRA denied the claim and Ms. Groves appealed to the Tax Court. The Court held that the case law was clear that where only one parent pays child support the parent paying support is not entitled to the Tax Benefit. Thus the appeal was dismissed. There was no order as to costs since this was an informal procedure appeal.
Decision: While the Court was sympathetic to Ms. Groves’ plight, Justice Hogan held that he was obliged to dismiss the appeal:
[26] Turning to the second paragraph from the Original Separation Agreement excerpted above, it is clear that the agreement required both parents to share special expenses on a proportional basis according to their income. The agreement specified that the Appellant would pay her portion of the special expenses to her former spouse as and when the expenses occurred.
[27] The Appellant testified that this language was not reflective of their actual practice regarding the payment of special expenses. She testified that the parties would create a budget for the year and then pay their contributions on a monthly basis into a joint bank account to which both parents had access.
[28] The Appellant argued that the contributions of her former spouse to the joint account constituted the payment of a support amount to her.
[29] I am precluded from accepting the Appellant’s argument by the definition of “support amount” in subsection 56.1(4) of the ITA. The term “support amount” is therein defined as follows:
56.1(4)
“support amount” means an amount payable or receivable as an allowance on a periodic basis for the maintenance of the recipient, children of the recipient or both the recipient and children of the recipient, if the recipient has discretion as to the use of the amount, and
(a) the recipient is the spouse or common-law partner or former spouse or common-law partner of the payer, the recipient and payer are living separate and apart because of the breakdown of their marriage or common-law partnership and the amount is receivable under an order of a competent tribunal or under a written agreement; or
(b) the payer is a legal parent of a child of the recipient and the amount is receivable under an order made by a competent tribunal in accordance with the laws of a province.
[30] The language of the Original Separation Agreement is clear in stating that only the Appellant was required to pay her share of the special expenses to her former spouse. Therefore, the payments made by the Appellant’s former spouse into the joint bank account cannot be said to have been not made under “a written agreement” as required by paragraph (a) of the definition of “support amount” in subsection 56.1(4). The money paid into the joint account, which was used to fund special expenses of the children, also was not available to the Appellant for use at her discretion as demanded by the language of that definition. Therefore, the payments made by the Appellant’s former spouse into the joint account cannot constitute a support amount within the meaning of the ITA.
[31] In dismissing the appeal, it must be noted that the Court remains sympathetic to the position of the Appellant. At the hearing, the Appellant expressed her sense of frustration regarding the quality of the advice available on the CRA’s website to taxpayers who are attempting to navigate the issue of child support payments in drawing up a separation agreement without the assistance of legal counsel. The Appellant specifically pointed to the examples of shared custody and child support arrangements provided by the CRA on its website.
[32] These same concerns have also been raised by this Court in previous decisions (see the reasons for judgment of C. Miller J. in Ochitwa v. The Queen[9]). The Court would hope that such a government-sponsored resource would, in future, add a note clarifying that child support payments made on an offsetting basis alone are not sufficient, in cases of shared custody, to entitle both taxpayers to claim the tax credits relating to an eligible dependant and an eligible child. It would be unfortunate if the tax authorities were to continue to inadvertently mislead taxpayers in this respect.
Thus the appeal was dismissed. There was no order as to costs since this was an informal procedure appeal.