DOUGLAS SAGE, Appellant, v. HER MAJESTY THE QUEEN,, 2003 TCC 166

Docket: 2002-1651(IT)I BETWEEN: DOUGLAS SAGE, Appellant, and HER MAJESTY THE QUEEN, Respondent. ____________________________________________________________________ Appeal heard on February 28, 2003 at Kelowna, British Columbia Before: The Honourable Judge L.M. Little Appearances: Counsel for the Appellant: Neville J.

McDougall Counsel for the Respondent: Nadine Taylor Pickering ____________________________________________________________________ JUDGMENT The appeal from the assessment made under the Income Tax Act for the period from August 2000 to January 2001 is dismissed in accordance with the attached Reasons for Judgment. Signed at Vancouver, British Columbia, this 27th day of March 2003. "L.M. Little" J.T.C.C. Citation: 2003TCC166 Date: 20030327 Docket: 2002-1651(IT)I BETWEEN: DOUGLAS SAGE, Appellant, and HER MAJESTY THE QUEEN, Respondent. REASONS FOR JUDGMENT Little, J. A.

FACTS : [ 1 ] The Appellant and his ex-spouse, Elizabeth Sage ("Elizabeth"), were married in Peterborough, Ontario on August 31, 1985. [ 2 ] The Appellant and Elizabeth have two children, Erik Alexander Sage ("Erik") born September 15, 1988 and Ryan Stewart Sage ("Ryan") born February 10, 1990. [ 3 ] The Appellant and Elizabeth separated on December 26, 1997. [ 4 ] On the 11th day of January 2001 the Supreme Court of British Columbia issued an Order (the "Order") in which it was stated that the Appellant and Elizabeth were divorced effective on the 31st day after January 11, 2001. [ 5 ] The Order provided that the Appellant and Elizabeth would have joint guardianship of Erik and Ryan. [ 6 ] The Order provided that the Appellant and Elizabeth would have joint custody of Erik and Ryan, with Erik and Ryan spending equal time with both the Appellant and Elizabeth. [ 7 ] The Order provided that for purposes of responsibility for expenses of Erik and Ryan and for tax purposes, the principal residence of Erik would be deemed to be with the Appellant and the principal residence of Ryan would deemed to be with Elizabeth. [ 8 ] The Order further provided that neither the Appellant nor Elizabeth would pay child support to the other and that the principal residence for each child as designated in the Order would determine which child each spouse was responsible to pay expenses for.

The only exception to this arrangement is that the orthodontic expenses in respect of both children would be shared equally by the spouses.

[ 9 ] In the 1999 taxation year the Appellant claimed the equivalent to married tax credit and child care expenses in respect of Erik and Elizabeth claimed similar expenses in respect of Ryan. [ 10 ] Prior to December 1998 and in 1999 and 2000 Elizabeth received the Child Tax Benefit (the "Benefit") in respect of both Erik and Ryan. [ 11 ] In July 2001, the Appellant applied to receive the Benefit in respect of Erik. [ 12 ] The Appellant was paid the benefit in respect of Erik for the period from August 2000 to June 2001. [ 13 ] The Benefit in respect of Erik for the period August 2000 to January 2001 (the "Period") had already been paid to Elizabeth. [ 14 ] Pursuant to a Notice dated October 19, 2001, the Appellant was advised that since the Benefit in respect of Erik for the Period had already been paid to an eligible individual, the Appellant had been overpaid.

The Appellant was also asked to repay the Benefit in respect of Erik for the Period. [ 15 ] By letter from an official of the Canada Customs and Revenue Agency dated the 21st day of November 2001, the Appellant was advised that he was the person who would receive the Benefit in respect of Erik for the period commencing February 2001. B. ISSUE [ 16 ] The issue is whether the Appellant is entitled to the Benefit in respect of Erik for the Period. C. ANALYSIS [ 17 ] Erik is a qualified dependant as defined in

section 122.6 of the Income Tax Act (the " Act "). [ 18 ] The phrase "eligible individual" is defined in

section 122.6 of the Act as follows: "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, ... [ 19 ] The evidence provided by Douglas and Elizabeth regarding the party who primarily fulfilled the responsibility for the care and upbringing of Erik during the Period was contradictory since Douglas claimed that he was primarily responsible for Erik during the Period and Elizabeth claimed that she was primarily responsible for Erik during the Period.

Elizabeth stated that after the Court Order of January 11, 2001 Douglas assumed primary responsibility for Erik. [ 20 ] In order to resolve this issue I must analyse the evidence. [ 21 ] Elizabeth stated categorically that after the separation and prior to the Order she paid the majority of the expenses for the children including the mortgage expenses before the family home was sold. [ 22 ] The Appellant was somewhat vague on the family expenses that he paid after the separation and prior to the Order.

For example, he was only able to make a rough estimate of his contribution to the mortgage expense after the separation. [ 23 ] I have concluded, on a balance of probability, that the evidence of Elizabeth is to be preferred and I find that Elizabeth was primarily responsible for the care and upbringing of Erik during the Period. [ 24 ] Before concluding my comments, I wish to state that I was impressed with the comments made by Douglas and Elizabeth in their attempt to provide Erik and Ryan with a stable and loving relationship. The appeal is dismissed, without costs.

Signed at Vancouver, British Columbia, this 27th day of March 2003 "L.M. Little" J.T.C.C. CITATION: 2003TCC166 COURT FILE NO.: 2002-1651(IT)I STYLE OF CAUSE: Douglas Sage and Her Majesty the Queen PLACE OF HEARING: Kelowna, British Columbia

DATE OF HEARING: February 28, 2003 REASONS FOR JUDGMENT BY: The Honourable Judge L.M. Little DATE OF JUDGMENT: March 27, 2003 APPEARANCES: Counsel for the Appellant: Neville J. McDougall Counsel for the Respondent: Nadine Taylor Pickering COUNSEL OF RECORD: For the Appellant: Name: Neville J. McDougall Firm: Kidston & Company Kelowna, British Columbia For the Respondent: Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada