Commet v. R. - TCC: Tax Court not bound Superior Courts on child tax credits

Commet v. R. - TCC:  Tax Court not bound Superior Courts on child tax credits

Commet v. The Queen  (February 23, 2016 – 2016 TCC 48, V. Miller J.).

Précis:   Mr. Commet and his former spouse shared custody of their two children on a 50%/50% basis from 2010 until May of 2013 when their daughter started to live on a full time basis with her mother.  Mr. Commet claimed tax credits in respect of his daughter for 2013 and they were denied.  He appealed to the Tax Court which rejected his appeal on the basis that the “net” amount of support he paid was not the equivalent of support payments for the children being made by both Mr. Commet and his ex-spouse.

Decision:   The facts were not complex:

[3]             The Appellant and his former spouse divorced in 2010 and they have been living separate and apart since at least 2010. They have joint custody of their two minor children – a son and a daughter. After the marriage breakdown, the children resided with each of the Appellant and his former spouse on a week on/week off basis until May 2013 when the daughter moved in with the Appellant on a permanent basis. The son continued to reside with both parents. In his income tax return, the Appellant claimed the Tax Credits for his daughter for the 2013 taxation year.

[4]             Four court orders from the Court of Queen’s Bench of Alberta (the “Court”) were submitted as exhibits at the hearing. The first order was a Consent Order which was made on January 24, 2013. In it the Court ordered that the Appellant had to pay his former spouse $860 monthly commencing the 1st day of January, 2013. This order also stipulated that there was no retroactive credit/child support credit given by one party to the other as at December 31, 2012.

[5]             The second order was an ‘Interim “Without Prejudice” Consent Order’ (the “Interim Order”) made on December 18, 2013. The Court ordered that the daughter’s primary residence was with the Appellant until there was a further agreement between the parties. It also ordered that there was to be a net payment from the Appellant to his former spouse of $306 monthly commencing December 1, 2013. The order also contained the following paragraph:

The balance of the issues as outlined in the Defendant Father’s application including retroactive child support credit owing by the Plaintiff Mother to the Defendant Father, shall be adjourned to Special Family Law Chambers on March 19, 2014.

[6]             The third order was made on March 19, 2014. The Court ordered that the Appellant was to pay his former spouse the sum of $391 per month commencing April 1, 2014; that the Appellant could earn up to an additional $13,000 over and above his salary of $108,000 before the child support payable by him would be recalculated; and there was no retroactive child support/arrears payable by one party to the other as at March 19, 2014. In this order, the Court stated that starting the 2013 tax year, the Appellant could claim the “Child Tax Benefit, G.S.T., equivalent to spouse deduction and such other tax benefits as may be available” with respect to the daughter and his former spouse could claim the tax credits with respect to the son.

[7]             The fourth order, pronounced on March 3, 2015, amended the third order to give specifics with respect to the calculation of the child support.

[8]             It was the Appellant’s position that he should be eligible to claim the Tax Credits because his daughter lived with him for most of the year in 2013. As well, the second court order reduced the amount he had to pay to his former spouse from $868 to $306 because his former spouse had to pay him $562. In support of his argument, he submitted the “Summary of Child Support Guideline Calculations” which showed that the amount of child support payable by the Appellant was $868 and the amount payable by his former spouse was $562.

The Tax Court dismissed the appeal holding that the matter was governed by the decision in Verones v The Queen, 2013 FCA 69 and a netting of payments under the Guideline Calculations did not amount to support payments being made by both parents, even where that was what the Alberta Court of Queen’s Bench intended:

[16]        I noted that in her Order made on March 3, 2015, Madame Justice Pentelechuk wrote that the Appellant was “at liberty”  to claim the various tax credits. With respect, the Court of Queen’s Bench of Alberta does not have jurisdiction with respect to the entitlement to tax credits. That jurisdiction lies with the Tax Court of Canada.

One would think that this situation should be soluble if both Courts worked together.  Otherwise the result is simply to reduce the amount of after-tax income available for child care and support.