Divorced Father Fights Taxman for Denying Deduction : CRA SOTW
Divorced father fights taxman for denying deduction
Rules make man ineligible for savings because he pays child support
Don Butler, The Ottawa Citizen
Published: Wednesday, April 02, 2008
George Calogeracos didn't set out to become a crusader for fair tax treatment for divorced fathers.
But after the Canada Revenue Agency disallowed his claim for a tax deduction, the 52-year-old cook from North Gower has taken up the cause on behalf of the growing number of men who share custody of their children after a divorce. He takes his case to an Ottawa tax court today.
Mr. Calogeracos's story begins in 2006, when he and his wife divorced. After a court battle that cost him $20,000 in legal fees, he won joint custody of their two daughters, Sabrina, now 13, and Victoria, 11. "I didn't want to be one of those dads who just see their kids once a week," he says.
Under the divorce settlement, the girls lived with him from Sunday afternoon until Wednesday at 8 p.m. "I had them for exactly half the week."
When he filed his 2006 tax return, Mr. Calogeracos claimed the "equivalent to spouse" deduction for one of his daughters. His ex-wife made the same claim for the other daughter.
The credit allows people who are single, divorced, separated or widowed to deduct about $7,500 from their taxable income for a dependent relative who lives with them.
His ex-wife's claim was accepted. But the Canada Revenue Agency told Mr. Calogeracos he wasn't eligible because he was paying $350 a month in child support.
Mr. Calogeracos called the revenue agency to object. "I didn't think this was fair," he says. But the person he spoke to explained that the rules were clear: anyone paying child support was disqualified from claiming the equivalent to spouse deduction.
The official told him his only recourse was to appeal to the Tax Court of Canada. "At the end of it all," recalls Mr. Calogeracos, "he says, 'good luck to you and all the other fathers in Canada.' So obviously a lot of people are in the same boat as I am."
Another revenue official told him he couldn't claim the deduction if he paid even a single dollar of child support in a given year. "That's what really blew my mind," he says. "It rubbed me the wrong way."
Mr. Calogeracos, who now has full custody of his daughters and no longer pays child support, was also miffed when the revenue agency informed him that, for tax purposes, "the kids aren't even my kids."
In an e-mail to the Citizen yesterday, the Department of Finance noted that those who pay child support generally have higher incomes than those who receive it.
"In recognition that the lower-income person has a reduced ability to pay personal income taxes, the Income Tax Act specifies that a parent who pays child support in respect of a child cannot claim the eligible dependent credit for that child."
The e-mail adds that parents sharing custody have the option of dividing the tax relief provided by the exemption informally between themselves.
A letter to Mr. Calogeracos last November from Finance Minister Jim Flaherty, to whom he had fired off a complaint, sheds further light on the tax man's rationale for the rule.
"It is important to recognize," the letter reads, "that the income tax system is general in its application, and cannot always be tailored to individual circumstances."
With respect to the equivalent to spouse deduction, the letter continues, "a general rule is in place because it is not appropriate or administratively feasible for the tax system to intervene when parents disagree" on who should make the claim.
"We never disagreed on that," Mr. Calogeracos notes. "We have two kids."
Mr. Flaherty's letter points out that support payments are determined in the context of a tax system in which only recipients of child support can claim the deduction.
If payers could claim it as well, "this might lead to changes to the child support guidelines, resulting in payers of child support receiving little or no net benefit," the letter adds.
To Mr. Calogeracos, disqualifying those who pay child support from eligibility for the deduction is a clear case of gender discrimination.
It's mostly men who pay child support, he points out, because many still earn more than their spouses. He plans to argue that amounts to a violation of equality rights under the Charter of Rights.
But last Friday, he received a thick package of legal documents from Sheherazade Ghorashy, a lawyer for the Canada Revenue Agency. She informed him the agency will try to block any Charter arguments unless he has complied with section 19.2 of the Tax Court of Canada Act.
Mr. Calogeracos looked up the section on the Internet. As best he could tell -- "I'm a cook, not a lawyer," he says -- it requires him to give 10 days' notice to federal and provincial attorneys general if he wants to make a Charter argument.
Mr. Calogeracos didn't do that, meaning he likely won't be allowed to argue today that the current rules discriminate against men.
Ms. Ghorashy's package also cited a long list of past court rulings that rejected earlier attempts by child support payers to claim the equivalent to spouse deduction -- including one applicant who unsuccessfully invoked the Charter of Rights.
All this has left him feeling "a little bit discouraged," he admits. "It's their rules. If I have to fight them on their battlefield ... it's all cut and dried, isn't it."
It doesn't help that he can't afford a lawyer. "I've been cooked by lawyers the last couple of years," he says. "I'm drained."
Still, Mr. Calogeracos soldiers on. "If nobody says anything," he points out, "nothing will ever be done."
He acknowledges that it's now more about principle than money. If the government were to offer a private deal so he could claim the deduction, he says he'd refuse. "That's not the right thing to do. Then I'd have to live with myself, knowing that I caved in."
Even if he loses today, he believes time is on his side, "because there's just too many fathers who are taking more charge. They want to stay close with their kids.
"I really do believe that in the near future, this will be changed," he says. "Because it's not a fair law."
© The Ottawa Citizen 2008
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Pop the link below into your browser to view the entire CRA SOTW Library!
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Alan Baggett – Tax Collector’s Bible
Divorced father fights taxman for denying deduction
Rules make man ineligible for savings because he pays child support
Don Butler, The Ottawa Citizen
Published: Wednesday, April 02, 2008
George Calogeracos didn't set out to become a crusader for fair tax treatment for divorced fathers.
But after the Canada Revenue Agency disallowed his claim for a tax deduction, the 52-year-old cook from North Gower has taken up the cause on behalf of the growing number of men who share custody of their children after a divorce. He takes his case to an Ottawa tax court today.
Mr. Calogeracos's story begins in 2006, when he and his wife divorced. After a court battle that cost him $20,000 in legal fees, he won joint custody of their two daughters, Sabrina, now 13, and Victoria, 11. "I didn't want to be one of those dads who just see their kids once a week," he says.
Under the divorce settlement, the girls lived with him from Sunday afternoon until Wednesday at 8 p.m. "I had them for exactly half the week."
When he filed his 2006 tax return, Mr. Calogeracos claimed the "equivalent to spouse" deduction for one of his daughters. His ex-wife made the same claim for the other daughter.
The credit allows people who are single, divorced, separated or widowed to deduct about $7,500 from their taxable income for a dependent relative who lives with them.
His ex-wife's claim was accepted. But the Canada Revenue Agency told Mr. Calogeracos he wasn't eligible because he was paying $350 a month in child support.
Mr. Calogeracos called the revenue agency to object. "I didn't think this was fair," he says. But the person he spoke to explained that the rules were clear: anyone paying child support was disqualified from claiming the equivalent to spouse deduction.
The official told him his only recourse was to appeal to the Tax Court of Canada. "At the end of it all," recalls Mr. Calogeracos, "he says, 'good luck to you and all the other fathers in Canada.' So obviously a lot of people are in the same boat as I am."
Another revenue official told him he couldn't claim the deduction if he paid even a single dollar of child support in a given year. "That's what really blew my mind," he says. "It rubbed me the wrong way."
Mr. Calogeracos, who now has full custody of his daughters and no longer pays child support, was also miffed when the revenue agency informed him that, for tax purposes, "the kids aren't even my kids."
In an e-mail to the Citizen yesterday, the Department of Finance noted that those who pay child support generally have higher incomes than those who receive it.
"In recognition that the lower-income person has a reduced ability to pay personal income taxes, the Income Tax Act specifies that a parent who pays child support in respect of a child cannot claim the eligible dependent credit for that child."
The e-mail adds that parents sharing custody have the option of dividing the tax relief provided by the exemption informally between themselves.
A letter to Mr. Calogeracos last November from Finance Minister Jim Flaherty, to whom he had fired off a complaint, sheds further light on the tax man's rationale for the rule.
"It is important to recognize," the letter reads, "that the income tax system is general in its application, and cannot always be tailored to individual circumstances."
With respect to the equivalent to spouse deduction, the letter continues, "a general rule is in place because it is not appropriate or administratively feasible for the tax system to intervene when parents disagree" on who should make the claim.
"We never disagreed on that," Mr. Calogeracos notes. "We have two kids."
Mr. Flaherty's letter points out that support payments are determined in the context of a tax system in which only recipients of child support can claim the deduction.
If payers could claim it as well, "this might lead to changes to the child support guidelines, resulting in payers of child support receiving little or no net benefit," the letter adds.
To Mr. Calogeracos, disqualifying those who pay child support from eligibility for the deduction is a clear case of gender discrimination.
It's mostly men who pay child support, he points out, because many still earn more than their spouses. He plans to argue that amounts to a violation of equality rights under the Charter of Rights.
But last Friday, he received a thick package of legal documents from Sheherazade Ghorashy, a lawyer for the Canada Revenue Agency. She informed him the agency will try to block any Charter arguments unless he has complied with section 19.2 of the Tax Court of Canada Act.
Mr. Calogeracos looked up the section on the Internet. As best he could tell -- "I'm a cook, not a lawyer," he says -- it requires him to give 10 days' notice to federal and provincial attorneys general if he wants to make a Charter argument.
Mr. Calogeracos didn't do that, meaning he likely won't be allowed to argue today that the current rules discriminate against men.
Ms. Ghorashy's package also cited a long list of past court rulings that rejected earlier attempts by child support payers to claim the equivalent to spouse deduction -- including one applicant who unsuccessfully invoked the Charter of Rights.
All this has left him feeling "a little bit discouraged," he admits. "It's their rules. If I have to fight them on their battlefield ... it's all cut and dried, isn't it."
It doesn't help that he can't afford a lawyer. "I've been cooked by lawyers the last couple of years," he says. "I'm drained."
Still, Mr. Calogeracos soldiers on. "If nobody says anything," he points out, "nothing will ever be done."
He acknowledges that it's now more about principle than money. If the government were to offer a private deal so he could claim the deduction, he says he'd refuse. "That's not the right thing to do. Then I'd have to live with myself, knowing that I caved in."
Even if he loses today, he believes time is on his side, "because there's just too many fathers who are taking more charge. They want to stay close with their kids.
"I really do believe that in the near future, this will be changed," he says. "Because it's not a fair law."
© The Ottawa Citizen 2008
-----------------------------------------------------------------------------------------------------
Miss a Tax Tale Miss a lot!
Pop the link below into your browser to view the entire CRA SOTW Library!
http://canada.revenue.agency.angelfire.com
-------------------------------------------------------------------------------------------------------
Alan Baggett – Tax Collector’s Bible