Mary Conroy appealed an assessment to the Tax Court in which the Minister of National Revenue ("MNR") determined that she was not eligible to receive the Child Tax Benefit (2005 TCC 177). The MNR requested that she return amounts paid to her in the years 2000, 2001 and 2002, totalling $12,119.62. The facts were not in dispute. Mary was previously married and had two children with her husband. In July 1997, the Conroys separated and thereafter the two children resided with their father.
Before the separation, Mrs. Conroy received Child Tax Benefit payments, which were deposited directly into a CIBC bank account in the joint names of the taxpayer and her husband. When they separated, Mary removed her name from the CIBC bank account and had no further access to funds from the account.
The CRA continued to make direct deposits to the CIBC bank account until September 2003. The taxpayer did not notify the MNR that she had ceased to be eligible for the Child Tax Benefit. The Court summarized the facts as follows:
"Firstly, Mrs. Conroy did not give specific notice to the Minister that she was no longer eligible for the Child Tax Benefit... Secondly, ... Mrs. Conroy received no payment of Child Tax Benefits. All payments were made to the CIBC bank account, the sole owner of which was Mr. Conroy."
The Court observed that at no time did Mrs. Conroy say that she was responsible for her children. She reported on all her tax returns that she had no dependents.
The Court came to a reasonable conclusion. It is unclear why the CRA could not have arrived at the same conclusion:
"It would be intolerable if Mrs. Conroy had to return money she never received and, at the same time, the Tax Authority would pay Mr. Conroy a second time Child Tax Benefits he already received for the period in issue."
It is not clear why the CRA did not know that the taxpayer never had access to these funds. All they had to do was ask the taxpayer.
Unfortunately, the taxpayer had to waste time and money on a tax court appeal to arrive at the obvious answer.
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