Citation: 2010 TCC 496
Date: 20101006
Docket: 2010-844(IT)I
BETWEEN:
MICHAEL GEORGE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Woods J.
[1]
The issue in this appeal is
whether the appellant, Michael George, is entitled to a deduction for the cost
of child care for his severely disabled son pursuant to subsection 63(1) of the
Income Tax Act.
[2]
In the 2007 taxation year, the
appellant incurred expenses totalling $19,109 as remuneration for child care.
In his income tax return, the appellant claimed $10,000 of this amount as a
deduction under subsection 63(1) of the Act, which is the maximum amount
allowed under the provision. The balance of the expenditure, $9,109, was
claimed as an attendant care expense for purposes of the medical expense tax
credit.
[3]
The deduction under section 63 was
disallowed by the Minister of National Revenue on the basis that the deduction
is only available to the spouse with the lower income.
[4]
The appellant acknowledges that he
had the higher income in the relevant year, but he submits that the Minister’s
interpretation of the legislation is too restrictive. His reasons were
summarized in a well-presented argument as follows:
7. However, I
will show that this argument is
(i) too simplistic and too narrow an interpretation of the CCED
when applied against the complexities of supporting a child with severe and
prolonged disabilities, and
(ii) Not relevant as it relates to a child who requires 24 hrs/day
care, and
(iii) Punitive and unreasonable when the supporting person has no
financial means to afford the cost of necessary care for such a child, and
(iv)
Counter to the purpose of the legislative provisions regarding child
care expenses which is to provide financial relief for taxpayers while
achieving horizontal equity within the tax system.
[5]
Although the circumstances of this
case are extremely sympathetic, I am unable to give the relief that the
appellant seeks. By virtue of subsection 63(2) of the Act, the deduction
under s. 63(1) is not available if the taxpayer has a higher income than his
spouse for the relevant taxation year. Certain exceptions are provided, but
none of these are applicable here.
[6]
The denial of the deduction to the
higher income spouse is provided for by way of a formula which is not easy to
read. Nevertheless, it is clear that the formula denies the deduction to the
spouse with the higher income: Stone v. The Queen, 2003 FCA 268, 2003
DTC 5493.
[7]
Subsection 63(2) provides:
63(2) Where the income for a
taxation year of a taxpayer who has an eligible child for the year exceeds the
income for that year of a supporting person of that child (on the assumption
that both incomes are computed without reference to this section and paragraphs
60(v.1) and (w)), the amount that may be deducted by the taxpayer
under subsection (1) for the year as or on account of child care expenses shall
not exceed the lesser of
(a)
the amount that would, but for this subsection, be deductible by the taxpayer
for the year under subsection (1), and
(b) the
amount determined by the formula
A × C
where
A is
the total of all amounts each of which is the periodic child care expense
amount in respect of an eligible child of the taxpayer for the year, and
C is
the total of
(i) the number
of weeks in the year during which the child care expenses were incurred and
throughout which the supporting person was
(A) a student
in attendance at a designated educational institution or a secondary school and
enrolled in a program of the institution or school of not less than 3
consecutive weeks duration that provides that each student in the program spend
not less than 10 hours per week on courses or work in the program,
(B) a person
certified by a medical doctor to be a person who
(I) was
incapable of caring for children because of the person’s mental or physical
infirmity and confinement throughout a period of not less than 2 weeks in the
year to bed, to a wheelchair or as a patient in a hospital, an asylum or other
similar institution, or
(II) was in
the year, and is likely to be for a long, continuous and indefinite period,
incapable of caring for children, because of the person’s mental or physical
infirmity,
(C) a person
confined to a prison or similar institution throughout a period of not less
than 2 weeks in the year, or
(D) a person
who, because of a breakdown of the person’s marriage or common-law partnership,
was living separate and apart from the taxpayer at the end of the year and for
a period of at least 90 days that began in the year, and
(ii) the
number of months in the year (other than a month that includes all or part of a
week included in the number of weeks referred to in subparagraph (i)), each of
which is a month during which the child care expenses were incurred and the
supporting person was a student in attendance at a designated educational
institution or a secondary school and enrolled in a program of the institution
or school that is not less than 3 consecutive weeks duration and that provides
that each student in the program spend not less than 12 hours in the month on
courses in the program.
[8]
The appellant seeks an
interpretation of section 63 which provides greater financial relief to families
who care for severely disabled children. That may be a desirable from a policy
perspective, but it is not provided for in section 63. In order to grant the
relief sought, I would effectively have to ignore the legislative restriction
in subsection 63(2). Parliament has decided to restrict the child care
deduction to the spouse with the lower income, and it is within Parliament’s
prerogative to do so.
[9]
The appeal will be dismissed.
Signed at Ottawa,
Canada this 6th day of October 2010.
“J. M. Woods”
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