Subsection 118(1) - Personal credits
Paragraph 118(1)(a) - Married or common-law partnership status
Cases
The Queen v. Robichaud, 83 DTC 5265, [1983] CTC 195 (FCTD)
A taxpayer who married on December 23 and whose husband's income for the balance of the year thus was miniscule could not claim her husband as a dependant, despite expenditures (such as for clothing) being made by her for his benefit, because her husband's wages were twice her wages and she thus could not establish that she "supported" him.
See Also
Reid v. MNR, 91 DTC 1443 (TCC)
A man who had been the common law spouse of the taxpayer for thirty years was not a "spouse" for purposes of the Income Tax Act.
Administrative Policy
23 December 2014 T.I. 2014-0543311E5 - Reporting marital status
A married couple no longer reside together because one spouse has advanced Alzheimer's and has been moved to a nursing home indefinitely. The other does not care for his or her spouse other than visiting and ensuring that all financial needs are met. Should their marital status be reported as separated? CRA stated that it:
accepts that individuals are separated when they live separate and apart from their spouse or common-law partner because of a breakdown in the marriage or common-law partnership for a period of at least 90 days without reconciling.
…It is the CRA's position that spouses or common-law partners are not living separate and apart for purposes of the Act where the separation is for reasons other than a breakdown of their relationship….for example… a separation for attendance at school or for work, or where there is an involuntary separation such as for medical reasons or incarceration.
Paragraph 118(1)(b) - Wholly dependent person
Cases
Pilette v. The Queen, 2010 DTC 5075 [at 6808], 2009 FCA 367
The legislative choice reflected in s. 118(1)(b)(ii)(D), that no credit would be provided to young adults over the age of 18 who remained dependant upon their parents but were not suffering from a mental or physical infirmity, did not engage the right to equality set out in s. 15 of the Charter given the absence of direct or indirect discrimination in this legislative design.
The Queen v. Mercier, 97 DTC 5081 (FCTD)
The 18-year age limit in s. 118(1)(b)(ii)(D) was not contrary to s. 15(1) of the Charter (and would have been justified under s. 1 of the Charter if it were).
See Also
Severinov v. The Queen, 2013 DTC 1230 [at 1260], 2013 TCC 292
The taxpayer appealed the denial of Canada child tax benefits and child tax credits. In respect of the child tax credits, the Minister's Reply was written as if the words "at any time in the year" in s. 118(1)(b) had instead been "throughout the year."
Woods J found that the Minister's failure to identify the proper test may have been prejudicial to the taxpayer. She allowed the taxpayer's appeal on this issue.
Abiola v. The Queen, 2013 DTC 1141 [at 754], 2013 TCC 115
The taxpayer paid child support, pursuant to a court order, in respect of her three children who lived with her spouse. The taxpayer's daughter moved in with her, prompting a second order to amend the first. The second order was vaguely worded, but was calculated in a manner that appeared to acknowledge that the taxpayer was no longer obligated to pay child support in respect of her daughter. The taxpayer was therefore not prevented from claiming Canada child tax benefits in respect of her daughter.
Bruno v. The Queen, 2007 DTC 1172, 2007 TCC 360
The taxpayer, who was separated from his former spouse, resided with his son in a self-contained, one-bedroom suite in the matrimonial home, but with his son sleeping in the portion of the matrimonial home that continued to be occupied by the former spouse. In finding that the son was wholly dependent upon the taxpayer for support, Rossiter J. rejected the Crown's submission that it was essential that the dependent sleep in the self-contained establishment.
Mercier v. MNR, 92 DTC 1693 (TCC)
Lamarre Proulx J. found that s. 118(1)(b)(ii) of the Act should be considered to be of no effect in light of s. 15 of the Charter and that it should be read as if clause D had not been enacted.
Administrative Policy
4 January 2000 T.I. 4-993302
Discussion of the meaning of the phrase "living separate and apart".
28 May 1991 Memorandum (Tax Window, No. 3, p. 29, ¶1266)
Two individuals, each having a child and maintaining a separate home, who are entitled to the equivalent-to-married claim under s. 118(1)(b) at the beginning of the year do not lose that entitlement for the year by virtue of marrying each other in the year and sharing a home for the balance of the year.
Paragraph 118(1)(d) - Dependants
Cases
Adams v. The Queen, 85 DTC 5528, [1985] 2 CTC 317 (FCTD)
A fetus is not a child for the purposes of s. 109(1)(d) and is not wholly dependent for support upon the husband of the mother.
Administrative Policy
25 May 2012 Ministerial Correspondence 2012-0444181M4 - Tuition tax credit - exam fees
If the fee paid by an individual for an examination taken in the year, such as, for Part I and Part II of the Medical Council of Canada Qualifying Examination and the certification by examination by the College of Family Physicians of Canada, is required by the College of Physicians and Surgeons of Ontario to license the individual to practise as a family physician in Ontario, the fee will qualify under subparagraph 118.5(1)(d).
Subparagraph 118(1)(d)(ii)
See Also
The Queen v. Diaz, 81 DTC 5112, [1981] CTC 138 (FCTD)
"[T]he word 'infirmity' implies more than mere retirement age ... [and] must be taken in its general sense, i.e., the state of being of poor or deteriorated vitality." The mother of the taxpayer, who suffered from high blood pressure and whose general physical condition was poor, was "infirm".
Subsection 118(4) - Limitations re s. (1)
Paragraph 118(4)(a.1)
See Also
Ullah v. The Queen, 2014 DTC 1022 [at 2632], 2013 TCC 387
Paris J agreed with the taxpayer that, although the taxpayer's father had claimed spousal tax credits in respect of her mother, she was entitled to claim wholly dependent person credits for her mother in those same years. Her father's income was low enough in those years that, even without the credits, his taxable income for the year would have been nil. Therefore, it could not be said that there was an amount "deducted" in the manner described s. 118(4)(a.1) (as "the claim does not in fact reduce or affect tax payable in any way, it cannot be said that there has been any deduction of an amount in computing tax payable" (para. 12)), and so the father's claiming the spousal credit was not a bar to the taxpayer.
(This appeal was necessary because complications relating to the father's bankruptcy made it unfeasible to adjust his return to withdraw the claimed credits.)
Subsection 118(5) - Support
Cases
Nelson v. Attorney General of Canada, 2000 DTC 6556, Docket: A-457-99 (FCA)
The taxpayer was denied a credit under s. 118(5) in respect of child support paid by him to his ex-wife for their two children given that he claimed and was allowed a deduction for those payments under s. 60(b) or (c).
See Also
Giroux v. The Queen, 2012 DTC 1286 [at 3883], 2012 TCC 284
The taxpayer assumed sole custody of his son on 1 November 2008, and claimed credits under s. 118(1)(b). The Minister denied the taxpayer's claims for his 2008 and 2009 taxation years pursuant to s. 118(5)(a) on the basis of a support order that required the taxpayer to make support payments to his former spouse until 15 February 2009.
Lamarre J. granted the taxpayer's appeal for 2009. She found that there was a potential ambiguity in the Act as to when the requirement to pay the support amount needs to be in place (para. 20), but it was clear that the taxpayer had sole custody throughout 2009. She stated (at para. 22):
[A]n order payment requirement is inherently conditional on the custody situation set out in that order. As soon as the child left the mother's house to move in with his father, the situation that existed [when the order was made] could not entitle the former spouse to require the appellant to pay said support.
She denied the taxpayer's appeal for 2008 based on the "throughout the year" wording of s. 118(1)(a).
Subsection 118(5.1) - Where subsection (5) does not apply
See Also
Cunningham v. The Queen, 2012 DTC 1223 [at 3622], 2012 TCC 279
Boyle J. dismissed the taxpayer's position that he and his former spouse could make support payments to each other under their separation agreement, and thereby avoid the application of s. 118(5). The Tax Court "has consistently dismissed taxpayers' appeals in cases of shared custody" (para. 11). Boyle J. stated (at para. 11):
In each of these cases, it was decided that in shared custody arrangements governed by the [Federal Child Support Guidelines], there are not two offsetting support payments payable by the parents and that there is only one parent required to make support payments.
Subsection 118(6) - Definition of dependant
See Also
Savoy v. The Queen, 2011 DTC 1086 [at 479], 2011 TCC 73
In determining that the taxpayer's quadriplegic brother was the taxpayer's dependant, Hogan J. stated (para. 3):
The renovations were done so that the Appellant's brother would have suitable accommodation where he could be properly cared for near his family. In my opinion, this is precisely the type of support that is contemplated by the definition of dependent.
Subsection 118(7) - Definitions
See Also
Létourneau v. The Queen, 2010 DTC 1098 [at 3020], 2009 TCC 614
Upon his retirement as partner in a professional accounting firm, the taxpayer began to receive an annual allowance of $41,607 subject to an annual cost of living increase of up to 3% per annum, which was calculated based on the maximum number of units he had held in the partnership. Lamarre J. found that as the partnership agreement provided that retired partners would be allocated partnership income equal to their allowances (and also given that the payments to retired partners were limited to 15% of firm profits), the taxpayer was deemed by s. 96(1.1) to receive his allowances as a share of partnership profits. As s. 96(1.1) applied "notwithstanding any other provisions of this Act," it followed that the allowances were not eligible pension income.
Morin v. The Queen, 92 DTC 1069 (TCC)
Periodic amounts received by the taxpayer, who was permanently disabled, from Sun Life under the Consumers' Gas sickness, disability and rehabilitation plan were taxable under s. 6(1)(f) and did not constitute pension payments or pension benefits. "A pension is essentially a payment received on or after retirement on a periodic basis by an employee".
Pension Income
See Also
Taylor v. The Queen, 2014 DTC 1108 [at 3229], 2014 TCC 102
The taxpayer had discretion as to when and in what amount to withdraw from her RRSP. Woods J found that the taxpayer's decision to make annual withdrawals did not bring the withdrawals under the definition of an "annuity," and therefore the taxpayer was ineligible for a pension tax credit based on the s. 118(7) definition of "pension income."
Cantin v. The Queen, 2014 DTC 1076 [at 3061], 2014 TCC 20,
The taxpayer, an electrical engineer at Ontario Hydro, suffered chronic depression and became eligible under for long-term wage-loss benefits under his employer's group disability plan. When he turned 65, the wage-replacement plans changed to pension supplement payments, also paid by the insurer.
Masse DJ found that the taxpayer was ineligible to split the payments with his wife, as the payments were not "pension income." There was nothing in the taxpayer's insurance policy to indicate any intention to establish a pension plan, the fact that the insurance provided that benefits were paid in a different form after age 65 did not change the payments' character and the payments were not provided by a pension fund, a pension plan, a RRIF or an RRSP.
Administrative Policy
6 May 2014 May CALU Roundtable Q. , 2014-0523311C6
Would "qualified pension income" include payments in respect of a life annuity out of a locked-in RIF (LRIF) or Life Income Fund (LIF) where the locked-in account is funded with amounts transferred from a RPP and the recipient is under 65 years of age. CRA responded:
[LRIFs and LIFs] are treated simply as a RRIF… . [A] RRIF is not a superannuation or pension plan, and amounts transferred into a RRIF from a pension plan (or indirectly via an RRSP) do not retain their identity as pension income when paid out of the RRIF.
…[T]he stream of income payable from a LRIF or LIF would not be considered a life annuity, as the annual payments are determined each and every year by reference to the current fair market value of the property of the LRIF or LIF, and the annuitant has discretion to select the total payments to be made each year within the range permitted by the applicable income tax and pension rules.
25 June 2012 T.I. 2011-0398691E5 - Conversion of U.S. Traditional IRA into Roth IRA
CRA stated that, where a Canadian-resident individual converts a traditional US Individual Retirement Account ("IRA") to a Roth IRA, the amount of the IRA will be included in the taxpayer's income. Because payments out of an IRA are not "eligible pension income" under s. 118(7), pension splitting under s. 60.03 is not available.
4 January 1993 Memorandum 923244 (November 1993 Access Letter, p.505, ¶C117-207)
Re distinction between annuity income and gain from disposition of an annuity contract.