2017 QCCQ 3047, 2017 QCCQ 3047

Pawlos c. Agence du revenu du Québec 2017 QCCQ 3047 JG2338 COURT OF QUEBEC Small Claims Division CANADA PROVINCE OF QUEBEC DISTRICT OF BEAUHARNOIS LOCALITY OF VAUDREUIL-DORION Civil Division No: 760-32-016852-156 DATE: February 3, 2017 ______________________________________________________________________ IN THE PRESENCE OF THE HONOURABLE CÉLINE GERVAIS, J.Q.C. ______________________________________________________________________ Barbara PAWLOS Plaintiff v. AGENCE DU REVENU DU QUÉBEC Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] Mrs. Barbara Pawlos files a

summary appeal regarding an assessment dated November 14, 2014, covering taxation year 2013, as regards the tax credit for child care expenses that was refused by the Agence du Revenu du Québec (Revenu Quebec). [ 2 ] The amounts that are in dispute are as follows: • $ 5800 paid to Mr. Piotr Kazimierczuk; • $ 3000 paid to Mr. Manuel Abarzua; [ 3 ] The parties have filed a voluntary limitation under

Section 93.6 of the Tax Administration Act [1] , by which Mrs. Pawlos consents to having the subject of the

summary appeal limited to an amount that does not exceed $ 4000. THE FACTS: [ 4 ] Mrs. Pawlos is the mother of Patrick Pawlos, age 20, who is severely disabled. She works as a massotherapist in a spa and has also some private clients. Her notice of assessment for the year 2013 shows a net income of $ 13 713, out of a business income of $ 15 299. [ 5 ] She claims that she needs help with her son, who needs care 24 hour a day. As he is now an adult, Mrs. Pawlos has more difficulty to take care of him by herself. [ 6 ] Mrs.

Pawlos brought her son at the hearing, and every person present in the courtroom could feel nothing but empathy for Mrs. Pawlos and her son’s situation. [ 7 ] Mrs. Pawlos filed two receipts signed by Messrs. Kazimierczuk and Abarzua, the first dated May 31, 2013 and the second December 31, 2013. The receipt signed by Mr. Kazimierczuk shows his social insurance number, and details the amounts that were paid monthly to him by Mrs. Pawlos, namely $ 1500 in January, $ 1250 in February, $ 1500 in March, $ 1100 in April, and $ 450 in May, all paid in cash. [ 8 ] The receipt signed by Mr.

Abarzua is less detailed, stating only that he received $ 3000 during the year 2013 from Mrs. Pawlos. The receipt also bears his social insurance number. [ 9 ] In their contestation of those deductions, Revenu Quebec say that no other proof was filed by Mrs. Pawlos, despite their

demands, by bank statements, budgets, agenda or any other documents. They also express doubts as to the truthfulness of the receipts, as Mr. Kazimierczuk lives in Verdun, Mr. Abarzua on Pie-IX Street in Montreal, as Mrs. Pawlos in Ile-Perrot. [ 10 ] They also doubt the fact that she could really spend a total amount of $ 9560, as declared in her declaration of revenue, while she earns only $ 13 712, which represents almost 70 % of her budget. [ 11 ] Mrs.

Pawlos transmitted to Revenu Quebec some receipts confirming the amounts paid every month, but those receipts cannot be accepted as a proof, as they were signed by Mrs. Pawlos herself. She added to the receipts a more detailed break-down of the hours that were worked by Messrs. Kazimierczuk and Abarzua, who were paid $ 20 per hour to take care of Patrick. Mr. Kazimierczuk worked 75 hours during the months of January and March, 62.5 hours in February, 55 hours in April, and 22.5 hours in May. This document shows the weeks on which Mr.

Kazimierczuk worked, and gives the total amount of hours for each week. [ 12 ] As for the document prepared by Mrs. Pawlos regarding Mr. Abarzua, it shows the specific dates on which he worked between the months of June and October 2013, from 3 to 8 hours a day. [ 13 ] In their contestation, Revenu Quebec also state that Mr. Kazimierczuk works in construction and renovation, and that Mr. Abarzua works in residential maintenance. [ 14 ] Mrs. Pawlos said that Mr. Kazimierczuk was a long-time friend of her. He stopped taking care of Patrick in May 2013, after he injured his back. Mr.

Abarzua was then referred to her by another friend. [ 15 ] It was impossible for Revenu Quebec to speak with Mr. Abarzua. When they spoke with Mr. Kazimierczuk and started asking questions abouth Patrick Pawlos, Mr. Kazimierczuk, who was then speaking in French, suddenly said that he spoke only Polish and could give no more information, as everything was on the receipt. [ 16 ] Mrs. Pawlos did not call Mr. Abarzua as a witness, as he did not want to come to Court. As for Mr.

Kazimierczuk, he died a few months before the hearing. [ 17 ] Revenu Quebec also pointed out that it is the same accountant who prepared the declarations of revenue for Mrs. Pawlos and Mr. Abarzua. [ 18 ]

Section 1029.8.67 of the Taxation Act [2] reads as follows: 1029.8.67 In this division, “child care expense” of an individual for a taxation year means an expense that is neither prescribed nor excluded under

section 1029.8.68 and that (

a) is incurred in the year for the purpose of providing child care services in Canada including baby sitting services, day nursery services or services provided at a boarding school or a camp for an eligible child of the individual for the year; (

b) is incurred to enable the individual, or, subject to the second paragraph of

section 1029.8.81, the individual’s eligible spouse for the year, who resides with the child at the time the expense is incurred, i. to perform the duties of an office or employment, ii. to carry on a business, either alone or as a partner actively engaged in the business, (…) (

c) is paid by the individual, or by the individual’s eligible spouse for the year, for services provided in the year by a person resident in Canada (…) [ 19 ]

Section 1029.8.69 is also relevant: 1029.8.69 For the purpose of determining an individual’s qualified child care expenses for a taxation year, the individual may include, in the aggregate of the individual’s child care expenses for the year, an amount paid as such, (

a) only if, where paragraph a.1 does not apply, proof of payment of the amount is provided by filing with the Minister one or more receipts each of which was issued by the payee and contains, where the payee is an individual, the individual’s Social Insurance Number; (…) [ 20 ] It is important to establish the criteria that have been developed by the jurisprudence. ANALYSIS AND DECISION: [ 21 ]

Section 1014 of the Taxation Act establishes that an assessment is deemed to be valid. The burden of proof related to that presumption has been explained in 2007 by the Court of appeal : (…) Le contribuable doit seulement démolir l’exactitude de la présompti on en présentant une preuve prima facie de son inexactitude. La preuve du contribuable doit toutefois comporter un certain degré de précision et de probabilité en sa faveur par opposition à des allégations vagues et ambigu ë s.

Règle générale, la simple affirmation du contribuable ne suffit pas; elle aura avantage à être soutenue par une preuve documentaire ou circonstancielle. [3] [ 22 ] Many judgments have applied this rule, and decided that documentary proof from the taxpayer is necessary to establish the fact that the monies have really been paid to the caregiver. Those documents shall establish the period of time when the child was taken care

of and the fact that payment was made [4] ; they could be banking statements, agendas, budget or any document that can help proving payment [5] . [ 23 ] While it is true that

section 1029.8.69 of the Taxation Act states that proof of payment may be made by the filing of a receipt, when Revenu Quebec question the legality of such receipt and request supporting evidence, the taxpayer has the obligation to establish its validity, and other documents have to be filed. [6] [ 24 ] Many judgments also refer to the credibility problem that arises when the fees paid to a caregiver are too high in relation with the income of the parent. [7] [ 25 ] At the hearing, Mrs. Pawlos did not bring any work

schedule or agenda, and could not remember how many hours a week she was working in 2013, stating that it depended on the number of clients she had. [ 26 ] She said that she could not provide Revenu Quebec with any banking statement to prove cash payments she made to Mr. Abarzua and Mr. Kazimierczuk, because she had to borrow money to pay them as her income was too low. [ 27 ] Mrs. Pawlos’ testimony is too vague to constitute a rebuttal of the presumption of validity of the assessment, and her appeal cannot be granted. FOR ALL THESE MOTIVES, THE COURT: DISMISSES the

summary appeal; CONFIRMS the assessment, number M 346632, for the taxation year 2013; THE WHOLE , without costs. __________________________________ CÉLINE GERVAIS, J.Q.C.