VanGhent v The Queen, 2012 TCC 245

2012 TCC 245 · Tax Court of Canada

Originally published on IncomeTaxAct.ca on 16 November 2016. The law may have changed since; check the current text in the tax wiki.

Can a Canadian Resident Claim a Deduction for Payments to a Non-resident Spouse

and/or claim the Personal Credit for a Dependent Non-resident Spouse?

The most interesting aspect of this decision is that Justice Woods expressed dismay at the failure of CRA to address the taxpayer’s fairness argument, and stated that “[t]he fair administration of justice in informal procedure cases is compromised when arguments that are clearly expressed in a notice of appeal are ignored by the Crown in its reply. Unfortunately, this situation is not at all unusual.”

This case involved two issues:

Can a Canadian resident spouse claim a dependent tax credit for a non-resident spouse?

Can a Canadian resident spouse claim deductions for payments made to a non-resident spouse?

The first issue appears to be resolved in the affirmative give that in this case the CRA did not deny the claim of the credit, but only the deduction of payments made for support.

Facts

The taxpayer was a Canadian resident, while her spouse was a resident of Columbia. The only reason the two live apart is because the spouse has been denied a visa to enter Canada.

The spouse’s income in Columbia is low, so the Canadian resident is required to provide support and regularly sends cheques for this purpose.

The taxpayer claimed a deduction for these support payments, and the personal tax credit for a dependent spouse. In claiming the deduction she relied on the 2009 General Income Tax and Benefit Guide published by the Canada Revenue Agency (CRA), at a passage found on page 31 which reads: ” You may be able to claim an amount for certain dependants who live outside Canada if they depended on you for support.“.

The MNR reassessed disallowing the deduction in computing the income.

Analysis

The taxpayer argued that it would be discriminatory to allow a deduction for those required to pay support on marriage breakdown, but deny it in her circumstances when the living apart is

involuntary but beyond her control.

The Court noted that although the taxpayer’s circumstances are sympathetic, no provision in the ITA allows a deduction for her circumstances., and that even if the guide is misleading a court cannot provide relief or mistaken information provided by the CRA.

• Sas Tullo, BSc BEd PC JD LLM PhD (exp) CPA In-Depth Tax 1, 2 &3

Sas Tullo, BSc BEd PC JD LLM PhD (exp) CPA In-Depth Tax 1, 2 &3