Suppose your spouse lives in the family house in San Francisco and you live in Vancouver. Your child occasionally visits you. Are you entitled to claim the Child tax credit for that child? Justice Woods says you can.
The unusual feature of this credit in ITA s. 118(1)B(b.1) is that it applies where “at any time in the year” your child is “wholly dependent for support on [you]” while in your home. Your child need not be a Canadian resident and she need not even live with you for any extended time during the year.
In this case, in its Reply, the Crown said of Mr. Severinov’s children:
(a) they were not in his care throughout the 2010 tax year;
(b) none of the children resided with him throughout the year;
(c) none of the children resided in Canada in 2010.
As Justice Woods said:
“[42] The test based on the expression “at a moment” in the year is a test that is much easier to satisfy than the test based on the expression “throughout the year”. To be able to claim the credit, all that must be established is the fact that the children were with their father in Vancouver and that he supported their needs, and did that during a part of the year. It’s not even necessary that the children were residents of Canada.”
(My translation from French.)
Because of a technical rule, the Crown had to prove that the children didn’t live with Mr. Severinov at any time in the year. But the Crown couldn’t show that; so Mr. Severinov was entitled to his tax credit.
(The Crown need only state in its Reply to the Notice of Appeal the list of facts that the CRA assumed when making its assessment. As a rule, the Crown need not prove any of those facts. Rather, the taxpayer must prove the facts that support his position. But if, as here, the Reply does not show that CRA assumed an essential fact (i.e., that none of the children lived with Mr. Severinov at any time during the year), then the Crown must prove that fact in order to support the assessment.)