2014-September-download file

Air conditioner scams

During the summer months when outdoor temperatures are rising, so too are the complaints to our clinic about "air conditioner scams." A rash of similar fact scams have been received at the clinic from clients who were approached at their home and duped into entering leasing agreements for their heating or cooling systems. 

The scams all begin in a similar manner:  a salesperson arrives at the door sometimes giving a misleading impression to the homeowner that they were sent on behalf of either the energy company or the government to inspect the furnace; the salesperson informs the homeowner that their furnace is leaking gas or carbon monoxide but their warranty covers them for a new heater or air conditioner and that this will be provided “free of charge”.    In some instances, customers were pressured to do a “telephone registration” which they subsequently learned was a verbal consent to a rental agreement.  In other instances, the homeowner’s signature was allegedly copied onto a rental agreement afterwards.

Legal Implications

In order for a contract to be valid and legally binding, there are certain conditions that must be present.  For instance, both parties must be of sound mind, have the where withal to understand the terms they are agreeing to, and be free of duress.  Further, false representations that induce others to enter contracts they otherwise would not have can also void a contract.  In the alleged cases of signature fraud, there may also be criminal implications as well. 

What can be done if this happens to you?

Several remedies are available to parties that fall victim to these scams.  First, it is good to be aware that there is a 10-day cooling-off period that is afforded to all Ontarians under the Consumer Protection Act (CPA).  This applies to all contracts signed in your home.  During this 10-day period it is important to establish a paper record of any dealings with the company.  It is best that correspondence be conducted through email or fax and may include questions to the company, requests for the contract to be cancelled, and a record of the homeowner trying to contact the business.  If an acceptable agreement cannot be reached with the company, customers can contact the Ministry of Consumer Services to make a complaint against the company.

After the 10-day cooling-off period has passed, civil remedies, like a law suit, may be filed against the company in order to claim the contract as void and have the contract rescinded.

Lastly, as a preventative measure, beware of the persons and companies you deal with; don’t let yourself be pressured into agreeing to accept any goods or services.  Always be clear about what you are signing and always read the fine print!      

Common-law Relationships and the Child Tax Benefit

Periodically, the Canada Revenue Agency (CRA) focuses on particular issues in an attempt to identify non-compliance.  Recently, many clients have come to the clinic reporting that the CRA has sent them validation letters and questionnaires which are designed to ascertain their eligibility for certain benefits and credits.  The consequence of not cooperating in this process could be the decrease or loss of any benefits you are currently receiving.  In some cases, you may even be required to pay back some of the benefits or credits you previously received.[1] 

For those in receipt of the Canada Child Tax Benefit (CCTB), the three main topics of review are: your marital status, your residency, and who the primary caregiver is.  More specifically, the CRA is interested in knowing whether you have a spouse or common-law partner, whether you are a resident of Canada for tax purposes, and whether you live with the child and are primarily responsible for the care and upbringing of the child.  

The legal problem

The issue at hand for many of the clients that have come to the clinic for help occurs where the relationship with a former spouse has disintegrated, but the client has continued to live with their ex-spouse for financial or other reasons, and the CRA is of the view that they are in a common-law partnership, which has the effect of decreasing or eliminating the CCTB which the client has been receiving.

This largely has to do with how the CRA defines a common-law relationship: 

"It is also important to note that a common-law relationship begins on the earlier of the following two events:

  • after you live together for a period of 12 months; or
  • the day you have a child by birth or adoption together."[1]

The CRA may also request supporting documentation, including bills and letters that can verify that you and your partner are not in a common-law relationship and are no longer living together.  Note that the CRA is looking for proof that you and your ex-spouse are not living together; not necessarily proof that you are not in a common-law relationship.  

Living together but not together

In a 2008 Tax Court of Canada case, the issue considered by the judge was whether two individuals who, during the relevant period, were living together, shared certain financial responsibilities and jointly assumed responsibility for the care and upbringing of their child were in a common-law partnership for tax purposes.  The Minister of National Revenue had disallowed the CCTB because they considered the applicants to be common-law partners.  

The judge, however, determined that mere fact that the parents were living together at the same residence was not enough to establish a common law relationship.  "It is settled law that the mere fact that two people live together is not sufficient to conclude that they are common-law partners."[1]   Living together, continued the judge, is only one of the factors that must be taken into account.  The judge then laid out a 7-part test for what constitutes "cohabitation or a conjugal or marriage-like relationship:" which included some of the following factors:[1] 

1.     Shelter:   What were the sleeping arrangements?

2.     Sexual and personal behaviour:  Did the parties have sexual relations?  What were their feelings toward each other? Did they eat their meals together?  What, if anything, did they do to assist each other with problems or during illness?

3.     Services: What was the conduct and habit of the parties in relation to preparation of meals, washing and mending clothes, shopping, household maintenance?

4.     Social: Did they participate together or separately in neighbourhood and community activities?  What was the relationship and conduct of each of them towards members of their respective families and how did such families behave towards the parties?

5.     Societal: What was the attitude and conduct of the community towards each of them and as a couple?

 6.    Support (Economic):   What were the financial arrangements between the parties regarding the provision of or contribution towards the necessaries of life (food, clothing, shelter, recreation, etc.)? What were the arrangements concerning the acquisition and ownership of property?

7.     Children: What was the attitude and conduct of the parties concerning children?

The outcome of the case was ultimately in favour of the separated parents.  The judge ruled that the majority of facts did not support the existence of a common-law relationship

The Take Away

The next time CRA decides to audit your tax return and you receive a questionnaire or a validation letter, relax, take a breath and remember that simply because the CRA claims you are living in a common-law relationship that does not necessarily make it so.  There are a number of objective factors which the courts would look at to determine whether a common-law relationship exists.  Prepare your response to the CRA along the lines of the factors set out by the court and get further help if you need.

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[1] ibid.

2 ibid.

3 Aukstinaitis v. The Queen, 2008 TCC 104 para 21

4 ibid para 14

Do you know?

The new citizenship certificate:

As of February 1, 2012, the plastic wallet sized citizenship card will not longer be issues; new Canadians will receive the new citizenship certificate which has more information than the old commemorative certificate that came with the citizenship card.  The new certificate has no photo and contains a unique number and basic information about its holder, such as names, date of birth and gender. Citizenship certificates issued before February 1, 2012, remain valid. This means that any Canadian who currently holds a citizenship certificate does not need to apply for a replacement. .   If you apply to update or replace your citizenship card, you will get the new citizenship certificate.

Social insurance number:

As of March 31, 2014, Service Canada began issuing SINs in a paper format (confirmation of SIN letter). Production of the plastic SIN cards has stopped. SIN cards that are not expired and are currently in circulation can still be used.  You have to apply for SIN in person at Services Canada Centre with your original proof of ID; the SIN will be issues on spot once the application is completed.