Citation: 2009TCC22
Date: 20090202
Docket: 2008-1162(IT)I
BETWEEN:
MARK D. SEARS,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Margeson J.
[1]
This appeal is from the
Minister’s assessment for the 2006 taxation year in which the Minister denied
the Appellant the dependent credit for his child, Jack Sears, in the
amount of $7,505. The Notice of Confirmation was dated
April 11, 2008.
Evidence
[2]
The parties agreed that
the assumptions of facts as set out in the Reply are correct with the exception
that the $100 of arrears for the 2005 taxation year was included in the $13,800
payments made pursuant to the Order in the 2006 year. The Appellant said that
he was never in arrears and there was no evidence presented which contradicted
that evidence. In any event this assumption was of no significance to the issue
in this case.
[3]
The assumptions that
were relevant in the Minister’s decision were as follows:
(a)
the Appellant and Mrs.
Sears are parents of two boys, Jack and Michael, who were born April 22, 2000
and September 25, 2002 respectively;
(b)
throughout the 2006
taxation year the Appellant and Mrs. Sears lived separate and apart because of
a breakdown of the marriage;
(c)
In December 2005, the
Queen’s Bench (Family Division) issued a final Order (“Order”) whereby, among
other things, the Appellant was required to:
i.
Pay Mrs. Sears, for the
support of Jack Sears and Michael Sears, the sum of $860 per month; and
ii.
Pay Mrs. Sear’s spousal
support of $350 per month;
(d)
The Appellant made
payments pursuant to the Order totalling $13,800 to Mrs. Sears during the 2006
taxation year.
This was the salient evidence given in the matter.
[4]
The only issue before
the Court is whether or not the actions of the Minister, in denying the
Appellant’s claimed deduction in the year, under the provisions of subsection
118(5) of the Income Tax Act (“Act”), were a denial of the
Appellant’s rights and freedoms or an infringement thereof, as guaranteed by
the Canadian Charter of Rights and Freedoms (“Charter”).
[5]
The Minister’s position
is that neither the operation of the Act or the assessment has denied or
infringed such rights.
[6]
Alternatively, the
Minister took the position that if any of the Appellant’s rights and freedoms
were denied, infringed or affected by the operation of the Statute or the
assessment, such infringement, denial or affection of such rights as guaranteed
by sections 7 and 15 of the Charter represent a reasonable limit
prescribed by law as can be demonstrably justified in a free and democratic
society within the meaning of section 1 of the Charter.
[7]
It was agreed that the
Constitutional Question was properly before the Court. The Appellant said that
the arguments that he was advancing have never before been dealt with by any
court.
[8]
He said that under
subsection 15(1) and section 7 of the Charter, everyone is entitled to
equal protection and benefit of the law without discrimination. Section 1 of
the Charter says that such rights are subject only to reasonable limits
as prescribed by law as can be demonstrably justified in a free and democratic
society. Subsection 118(5) suffers from vagueness and overbreadth by denying a
lifetime of dependent eligibility credit. This cannot be saved by section 1 of
the Charter.
[9]
He referred to the case
of Re B.C. Motor Vehicle Act, [1985] 2 S.C.R. 486, and argued that such
action as here cannot be justified except perhaps in times of war or national
emergencies.
[10]
In R. v. Heywood,
[1994] 3 S.C.R. 761, the Supreme Court of Canada said that overbreadth
legislation, which involves the violation of the principles of fundamental
justice cannot be justified. Here is an example of the state imposing
legislation that goes too far and it violates section 1 of the Charter.
It denies all persons who paid child support.
[11]
He referred to Ontario
v. Canadian Pacific Ltd., [1995] 2 S.C.R. 1031, in support of his argument
that the law in question in this case was too “vague” when considered within
the larger context and not “in abstracto”. This section gives no
guidance for legal debate. He suggested that the impugned section imposes a
stigma on those taxpayers who are penalized by it. The government creates the
image that such parents are different and less deserving than other parents.
See Rodriguez v. British Columbia
(Attorney General), [1993]
3 S.C.R. 519.
[12]
The fact that parents
are treated differently based solely on the fact that they pay support cannot
be justified as supporting the principles of fundamental justice under the Charter.
[13]
The case of Blencoe
v. British Columbia (Human Rights Commission), 2000 SCC 44, [2000] 2
S.C.R. 307, speaks to the issue of human dignity and the need to have respect
for it under the legislation.
[14]
He referred to the case
of Cornelius v. The Queen, [2007] T.C.J. No. 592, where Justice Rossiter
commented on the “grievous injustice” of this section and in spite of the
unfavourable decision given to the taxpayer there, he said that the present
arguments were not before the Court in that case as there was no Charter
argument made.
[15]
On the question of
justification, he referred to R. v. Oakes, [1986] 1 S.C.R. 103, in arguing
that for the prescribed law to be reasonably and demonstrably justified in a
free and democratic society, it must be of sufficient importance to warrant the
overriding of a constitutionally protected right or freedom.
[16]
In accordance with Andrews
v. Law Society of British Columbia, [1989] 1 S.C.R. 143, not
everyone has to be treated exactly the same but an unreasonable distinction
cannot stand.
[17]
In the case at bar, the
denial amounts to discrimination either directly or incidentally. This denial
rests on one of the grounds enumerated in subsection 15(1) of the Charter
or on analogous ground. Here the Appellant argues that he is an “analogous
group” being a parent who pays child support. Discrimination on that basis
touches the essential dignity and worth of an individual in the same way as
other recognized grounds of discrimination which violate fundamental human
rights or norms.
[18]
With respect to the
remedy to be applied in this case, the section should be struck down or certain
reasonable limitations should be read into the section. There are no limits as
the section now stands.
[19]
He suggested that the
section should allow judges hearing the case to make a favourable decision for
the taxpayer where both parents have equal custody or equally support the
children.
[20]
He takes his parenting
very seriously and he was offended that he could not obtain the same benefit as
other parents. The statute is saying that he is not an eligible parent and the
children are not eligible children. The appeal should be allowed with costs.
Argument of the Respondent
[21]
Counsel argued that the
plain meaning of subsection 118(5) of the Act is to deny the Appellant
the deduction that he seeks because he is required to pay a support amount to
his former spouse in respect of the children pursuant to a Court Order as
he lived separate and apart from his spouse during the year. Does
subsection 118(5) of the Act violate sections 7 and 15 of the Charter?
[22]
It is well‑settled
law that this subsection does not violate the Charter. The arguments
raised by the Appellant here are not new.
[23]
The case of Nelson
v. R., [2000] 4 C.T.C. 252, stands for the proposition that this subsection
does not violate the Charter. The facts in that case were not different
from the facts here. It decided that the differential treatment created by
subsection 118(5) is not based on one of the enumerated grounds found in
subsection 15(1) or any analogous ground. The differential treatment was
not discriminatory in the Charter sense. This section did not offend the
taxpayer’s dignity, intrinsic worthiness or self-respect. Likewise, Calogeracos
v. R., 2008 DTC 389 is to the same effect. In that case Justice
Webb held the provisions of subsection 118(5) of the Act are clear and
are not vague and that section 7 of the Charter does not apply to
subsection 118(5). This is not a case dealing with the imprisonment of the
Appellant. All of the other cases he referred to were.
[24]
It is not clear that
section 7 of the Charter can apply to protect economic rights. Second,
even if it could, the Appellant has not shown that the tax refund was necessary
for his survival.
[25]
The same issue was canvassed
by the Tax Court of Canada in Donovan v. R., [2006] 6 C.T.C. 2041, where
Justice Hershfield considered the three broad inquiries as set out by the
Supreme Court of Canada in Law, supra, in finding that the Charter
was not engaged. In Calogeracos, Giorno and Frégeau, this Court found
that the Charter was not engaged on the second inquiry as referred to in
Donovan, supra. See Giorno v. R., [2005] 2 C.T.C. 2146 and Frégeau
v. R., 2004 DTC 2726.
[26]
Even where courts have
considered the third inquiry, (while not conceding that the first two have been
met) they have also found that the Charter has not been engaged as in Donovan,
supra.
[27]
The comparator group
cited by the Appellant was the same one identified by the Federal Court of
Appeal in Nelson, supra, namely a single parent who lives with and
supports a child in a shared custody arrangement with the child’s other parent
but who has no legal obligation to pay child support to the other parent. The
Court found that this differential treatment resulting from
subsection 118(5) did not constitute discrimination under subsection 15(1)
of the Charter.
[28]
There is no merit to
the Appellant’s argument that fathers are treated differently under subsection
118(5) than females because they pay support. In Calogeracos, supra, the
Court found that this subsection does not draw a distinction between males and
females.
[29]
Counsel agrees that on
the first inquiry, there is a distinction between the Appellant and the
comparator in the sense that the Appellant must pay support in respect to the
child for which he claims the credit, but the distinction is not based on a
personal characteristic (as is required by the first inquiry).
[30]
Even if the Appellant
is correct that he is being treated differently based on a personal
characteristic (which is not admitted) the Charter argument fails at the
second inquiry level because the differential treatment is not grounded on an
enumerated or analogous ground. The obligation to pay child support is based on
the level of income, which is not an immutable personal characteristic.
[31]
Since the Charter
is not engaged at the second level it is not necessary to go further.
[32]
However the third inquiry
is also met here because the burden imposed upon him of being denied the credit
must be a stereotypical application of a presumed personal characteristic to
have the effect of perpetuating the view that the Appellant, as a custodial
supporting parent, is less worthy of recognition as a parent or less deserving
of equal respect.
[33]
Being denied the tax
credit sought here is not demeaning nor does it indicate that his dignity or
self worth as a custodial parent are being attacked.
[34]
The impugned legislation
may be based on bad tax policy and hard to defend but it does not perpetuate a
negative stereotype in these circumstances.
[35]
The Charter cannot
be employed merely because an identifiable group is
treated fiscally unfairly. This whole appeal is about protecting against what
the Appellant conceives as bad tax policy. It is not about human dignity, it
does not demean the Appellant’s merit as a parent. It does not stigmatize
supporting custodial parents. His position within Canadian society has not been
marginalized by the denial of the tax credit.
[36]
The Charter is
not engaged at the level of the third inquiry. Nelson, supra, is binding
on this Court and necessitates a finding that subsection 118(5) does not
violate the Charter.
[37]
The appeal should be
dismissed.
Analysis and Decision
[38]
The Court does not
accept the Appellant’s argument that the issues made manifest in this case have
never been considered before. Indeed the cases referred to have dealt with the
very same issue, that is whether or not subsection 118(5) of the Act
violates the Charter, particularly sections 1, 7 and 15, thereof.
[39]
The Appellant argued
that the impugned subsection is too vague and suffers from overbreadth. However
the Court is satisfied that this is not the case.
[40]
The provision is anything
but vague and it is also relatively limited in its application. It is true that
it “catches” a whole group of taxpayers, i.e. those who are parents, who pay
child support to the taxpayer’s spouse or common‑law partner, or former
spouse or common-law partner, but this is not the broad net that
indiscriminately traps unwary taxpayers as the Appellant suggests. Everyone
reading the subsection knows immediately what group is being referenced. “The
ambit of its application is not difficult to define.” There is “sufficient
provision” in the legislation to inform the taxpayer as to who is to be
affected by its provisions.
[41]
The Appellant argued
that his dignity and worth as a supporting parent were being demeaned by the
legislation. The Court rejects that proposition outright.
[42]
The Court is satisfied
here that the right sought to be protected is an economic right and as Justice Rothstein
opined in Mathew v. R., (2003 FCA 371 (F.C.A.)) “If there is a right at
issue in a reassessment in income tax it is an economic right”. He further
indicated that there is real issue as to whether section 7 was broad
enough to encompass economic rights generally or in particular with respect to
income tax reassessments.
[43]
This view was accepted
by Justice Webb in Calogeracos, supra, where he found that the refund
was not to be used for human survival but to fund a family vacation.
[44]
The Court is satisfied
with the discussion set out by counsel for the Respondent in her argument with
respect to the three broad inquiries, as set out by the Supreme Court of Canada
in Law, supra, and adopts her conclusions in that regard.
[45]
The Court is satisfied
that it is bound by the decision of the Federal Court of Appeal in Donovan,
supra, and it agrees that there is nothing in the case at bar that
distinguishes it from Donovan, supra, and the case necessitates a
finding that subsection 118(5) does not violate the Charter.
[46]
The Appellant cannot
find much solace in the obiter of Justice Rossiter in Cornelius, B. v. The
Queen, Court File 2007-1130(IT)I dated December 6, 2007, whereby he
suggested to the Respondent that he recommend to the Minister to make an
amendment to the Act so that circumstances similar to those existent
here do not occur.
[47]
The appeal in that case
was dismissed and in any event it did not deal with the Charter issue as
pursued here and in the other cases discussed.
[48]
The appeal is dismissed
and the Minister’s assessment is confirmed.
Signed at Ottawa, Ontario, this 2nd day of February 2009.
“T. E. Margeson”
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