http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/100539/index.do 
Scott v. The Queen (January 16, 2015 – 2015 TCC 9, V. Miller J.).
Précis: The taxpayer claimed the Canada Child Tax Credit and the Harmonized Sales Tax Credit in 2010, 2011 and 2012. In 2012 she was reassessed on an alleged overpayment of the Credits. The sole issue was whether she was “cohabiting” at the time with her spouse, Mr. Scott. The Court found that while she had a somewhat convoluted relationship with her spouse they were not in fact cohabiting during the period in question and allowed her appeal.
Decision: This is a decision that turned on a very narrow issue – was the taxpayer cohabiting with her spouse during the period in question:
[1] This appeal relates to the Appellant’s application for the Canada Child Tax Benefit (“CCTB”) for the 2009 and 2010 base taxation years (July 2010 to June 2011 and July 2011 to June 2012) and the Harmonized Sales Tax Credit (“HSTC”) for the 2009 and 2010 taxation years (July and October 2010; January, April, July and October 2011; and January and April 2012). The Minister of National Revenue (“the Minister”) assessed the Appellant for the periods from July 2010 to June 2012 for deemed overpayments of CCTB and HSTC.
[2] The issue in this appeal is whether Jeffrey Scott, her spouse, was a “cohabiting spouse” of the Appellant during the periods July 2010 to June 2012.
The factual background was complex:
[12] The Appellant and Jeffrey Scott were married in 2006. At the time of their marriage, the Appellant had two children from a previous marriage, N. M-R born 1996 and A. M-R born 1998. Although her spouse was not the biological father of these two children, he fulfilled all parental responsibilities with respect to them.
[13] The Appellant and her spouse had three children together – S.S born 2008; C.S. born 2009; and J.S. born 2012.
[14] According to the Appellant, she and her spouse lived together at 367 Yale Crescent, Oakville, Ontario until December 27, 2010 when they separated because of a breakdown in their marriage. She was not sure where her spouse lived after the separation but she continued to live in Ontario in the family home. After the separation, her spouse came to the family home to visit the children. At some point in time, her spouse moved to PEI for employment which commenced in May 2011.
[15] The Appellant stated that, after the separation, she experienced financial difficulties and on April 21, 2011, she applied for social assistance from Ontario Works (“OW”). Her application was approved on May 5, 2011. However, this financial assistance was cancelled on August 3, 2011 because the Appellant started to receive non-taxable support income from her first spouse.
[16] The Appellant stated that due to her financial problems, she asked her mother to live with her at the Yale Crescent address. I am not sure when the Appellant’s mother moved in with her because at first she stated that it was after the social assistance was cancelled, then she stated that it was June or July 2011 and in cross-examination she stated that it was October or November 2011.
[17] It was the Appellant’s evidence that she became pregnant in May 2011. She asked her spouse if the two older children could live with him and attend school in PEI. These children were 13 and 15 years old at the time and they moved to PEI for the September 2011 to June 2012 school year.
[18] According to the Appellant, she and the younger children continued to live in Ontario but they visited with her spouse and the older children in PEI for Christmas 2011. She became ill and was ordered by a physician that she was not to travel until her child was born. She gave birth to her son JS in PEI on February 8, 2012.
The Crown relied upon a fairly thin amount of evidence that the Scotts were in fact cohabiting:
[21] It was the Respondent’s position that the Appellant did not present sufficient evidence to establish that she and her spouse were living separate and apart. Ms. Arsenault stated that she requested the Appellant’s bank statements which the Appellant refused to provide. The bank statements would show where the Appellant was shopping during the period. She also asked for a letter from the school the children attended which would show who had registered the children at the school in PEI. The Appellant did not to provide these documents.
[22] According to the documentary evidence presented by the Respondent, the Appellant was in PEI in April 2012. The envelope which contained the Appellant’s notice of objection was mailed from Charlottetown on April 26, 2012.
[23] The Respondent also tendered an Order from the Office of the Director of Residential Rental Property for PEI. This Order was dated June 5, 2013 and listed the Appellant and her spouse as the lessees of a property in Kingston, PEI (the “property”). According to the Order, the lessees made an application on December 27, 2012 to have their security deposit returned. The application was heard on May 15, 2013 and according to the written reasons, the Appellant was present at the hearing.
[24] Ms. Arsenault also read from her notes which had been made an exhibit. These notes were with respect to a conversation which Ms. Arsenault had with the owner of the property in Kingston, PEI. According to Ms. Arsenault, the owner of this property confirmed to her that Mr. Scott and his wife and children lived at the property. The lease on the property was from December 2011 until November 2012.
The Court preferred the evidence of Mrs. Scott to that of the Crown:
[31] The Appellant has given documentary evidence to show that she was present in Ontario for her doctor appointments in June to December 2011 and June 2012. She received mail in 2011 and 2012 at her address in Ontario. However, there would have been no problem for the Appellant to receive any mail sent to her at the Yale Crescent address in 2011 and 2012 because her mother lived at this address.
[32] The Order from the Office of the Director of Residential Rental Property for PEI listed both the Appellant and her spouse as lessees of the property whereas the lease for the property clearly showed that the only lessee for the property was the Appellant’s spouse. The Appellant was present in PEI for the hearing of the application before the Director of Residential Rental Property. However, this hearing took place on June 4, 2013 which was outside the relevant period. I have given no weight to this Order and I have given no weight to the fact that it listed the Appellant as a lessee.
[33] Although Ms. Arsenault’s notes and her testimony with respect to her conversation with the owner of the property in PEI were hearsay, I admitted them into evidence because this is an informal procedure appeal and the evidence was relevant to the appeal: Suchon v Canada, 2002 FCA 282. However, I have given no weight to the testimony which Ms. Arsenault gave with respect to her conversation with the owner of the property in PEI. This testimony went to the heart of the issue under appeal and the Appellant did not have an opportunity to cross examine the owner of the property in PEI.
[34] Although the Appellant could not remember the date her mother moved into the Yale Crescent address with her, most of the Appellant’s testimony was consistent with the documents she presented and the previous statements she had made to the CRA at the objection stage of her appeal. Her credibility was not shaken in cross-examination.
[35] It is my view that the Appellant presented a prima facie case to establish that she and her spouse separated on December 27, 2010 due to a breakdown in their marriage and they lived separate and apart from this date and during the benefit period. This shifted the onus to the Respondent. The Respondent presented hearsay evidence which was not sufficient to satisfy the onus which reverted to her. I cannot rely on this hearsay evidence to show that the Minister’s assessments were correct.
As a result the appeal was allowed.