Reid v. MNR, 91 DTC 1443, [1991] 2 CTC 2715, [1991] 2 CTC 2697 (TCC)

Bowman, T.C.J.:—This is a sad case but one in which I am unfortunately unable to grant any relief to the appellant. June Dillon Reid has lived for about 30 years with Stewart Reid. Some years ago, he divorced his first wife and continued to live with the appellant. They nave never gone through a formal marriage although apart from the absence of the formality of a marriage certificate, their relationship has all the other conjugal attributes. She works in a factory at Carp. He is a carpenter. She and Mr. Reid have two children, both of whom are grown up. She has taken his name and is seen in the community as his wife. In February 1986, he was injured and went on Workers' Compensation and has not worked since. He received in 1988 and 1989 small amounts of income from the Canadian Pension Plan and Workers' Compensation Board. The appellant is aware of the obligation that she has towards Mr. Reid under the Family Law Act of Ontario.

In computing her income for 1988 and 1989 she claimed a credit of $5,000 and $5,055 respectively pursuant to either paragraph 118(1)(a) or 118(1)(b) of the Income Tax Act either on the basis that Mr. Reid was her spouse or that he was wholly dependent upon her.

Fairness and common sense would permit this lady her deduction. The Income Tax Act, however, does not. She believes, not surprisingly, that 30 years of living with the same man, raising his children and ministering to his needs are sufficient evidence of a commitment and of a status within the community to entitle her to the deduction she claims.

Although I cannot give Mrs. Reid the relief that she seeks, she has appealed to this Court in good faith from a situation that she conceives to be unfair and I believe she is entitled to more than an out-of-hand dismissal of her case.

Paragraph 118(1)(a) permits deductions in the computation of the tax of an individual who is a married person who supports his or her spouse. As much as a person may feel that in his own eyes or in the eyes of the community he or she is married, this is insufficient to meet the requirements of the section. The only case to which I was referred by counsel for the Minister was Sokil v. M.N.R., [1968] Tax A.B.C. 337; 68 D.T.C. 314, where a marital exemption was claimed in respect of a person with whom the appellant was living. The appellant in that case was legally married to a wife in the Ukraine, although he did not support her. The case has no application to this situation. In the Sokil case, there was a legal impediment to the appellant's marriage and he therefore lacked the capacity to marry the woman with whom he was living.

There have however been a number of cases in this Court and the Federal Court. In The Queen v. Adolf Scheller, [1975] C.T.C. 601; 75 D.T.C. 5406 Cattanach, J. stated at 605 (D.T.C. 5408):

The incontrovertible fact is that the defendant is not legally married to Liidia Palts. That being so the defendant is not a married person and is not within section 109(1)(a) of the Income Tax Act.

The same conclusion was reached in this Court in McPhee v. M.N.R., [1980] C.T.C. 2042; 80 D.T.C. 1034; Shapiro v. M.N.R. (1966), 29 Tax A.B.C. 80; 66

D. T.C. 157; The Queen v. Taylor, [1984] C.T.C. 244; 84 D.T.C. 6234 and Toutant v. M.N.R., [1978] C.T.C. 2671; 78 D.T.C. 1499.

The appellant might well agree with the observation of Rouleau, J. of the Federal Court in Fluxgold v. Canada, [1990] 1 C.T.C. 176; 90 D.T.C. 6187 where he said at pages 181-82 (D.T.C. 6191):

I would like to briefly comment on the deeming provisions of section 251. This, as we know, is an irrebuttable presumption and all transfers of property between husband and wife are considered to be "not at arm's length".

The Income Tax Act does not define the expression "married" for the purposes of this section; it is obvious that only parties that are the subject of a solemnized marriage are included. The Income Tax Act fails to take into account "commonlaw" relationships which are accepted as a part of everyday life in modern society; these relationships are clearly recognized in most jurisdictions. Parties who cohabit, without the benefit of solemnized marriage, are acknowledged as having acquired certain rights as if a formal pronouncement of vows had been entered into; such parties would not be included within the deeming provisions of section 251. On the other hand, parties solemnly married, but having lived apart for several years, and not having pursued divorce or other legal remedies to declare the marriage at an end, are still presumed to be acting in concert. May I suggest that this deeming provision should, at the very least, be made rebuttable, and brought into conformity with current thinking and the prevailing family law. This archaic notion begs for amendment.

Judges are not, however, legislators and any erosion of the principle that the income tax consequences of marriage must be based on formal relationships

— a principle that permeates the Income Tax Act—would have far-reaching implications, some of which could be detrimental to taxpayers. Parliament has, for example, recognized the so-called "common law” spousal relationship in subsection 146(1.1). Any further changes in the principle must be effected by Parliament and not by the courts.

So far as any claim for a deduction under paragraph 118(1)(b) is concerned, it is sufficient to say that Mr. Reid is not related to the appellant by blood, marriage or adoption and accordingly no deduction is available to her under that section.

The appeal is therefore dismissed.

Appeal dismissed.