Docket: 2004-3009(IT)I
BETWEEN:
DEANNA BAILEY,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Appeal
heard on January 11, 2005, at Halifax, Nova Scotia
Before: The Honourable
Justice Gerald J Rip
Appearances:
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For the Appellant:
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The
Appellant herself
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Counsel for the Respondent:
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Christa MacKinnon
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____________________________________________________________________
JUDGMENT
The appeal from the assessment of the
Minister of National Revenue for the 2002 taxation year with respect to the
Child Tax Benefits is allowed, with costs, if any, and the matter is referred
back to the Minister of National Revenue for reconsideration and reassessment
on the basis that the appellant is entitled to claim the $2,962 that she paid
to Crossroads Academy in 2002 in respect of child care expenses.
Signed at Ottawa, Canada,
this 29th day of April 2005.
"Gerald J.
Rip"
Citation: 2005TCC305
Date: 20050429
Docket: 2004-3009(IT)I
BETWEEN:
DEANNA BAILEY,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Rip J.
[1] Mrs. Deanna Bailey appeals from an
assessment under the Income Tax Act ("Act") for the
2002 taxation year in which the Minister of National Revenue disallowed a
portion of the amount she claimed for child care expenses. It is the position
of the Minster that the amount in issue was paid by Mrs. Bailey for the
education of her daughter and not the care of the child.
[2] During the relevant period both Mrs. Bailey
and her husband worked full‑time and during the time they worked, required that their two
children be supervised by responsible persons. Prior to 2002, Mrs. Bailey had
enrolled her elder daughter at Point Pleasant Child Care centre in Halifax. In the fall of 2002, Mrs. Bailey sought to enrol her
daughter for her primary year in a Halifax public
school. However, her daughter, who was to turn five years of age on October 11, 2002,
could not enter primary year in Nova Scotia as the provincial regulations
required children to "be five years old on or before the first day of
October" to enter the public school system.
[3] Since Mrs. Bailey's daughter was 10 days
too young to enter any public school in Halifax,
Mrs. Bailey considered two options. She could either send her daughter back to
Point Pleasant Child Care center at a cost of $5,000 per year or send her
daughter to Crossroads Academy for $4,000 per year. She chose to send her daughter to Crossroads Academy.
[4] Crossroads Academy was described by Mrs. Bailey as a private elementary
school teaching grades grade primary
to grade 6. Her daughter attended grade primary and there is no question that
in grade primary the child receives education. The school also provides
activities both before and after the general curriculum. The school is open
from 7:30 a.m. to 5:00 p.m. Mrs. Bailey's daughter remained at school the
entire time. In reassessing the appellant the Minister determined that the
portion paid for the four hours when curriculum was taught was for education
and not for child care. In other words, the time the child attended grade
primary is education, the time spent at school during the day immediately
before and after attending grade primary is child care.
[5] The issue in this appeal to whether $2,962
paid to Crossroads Academy in 2002 was
in respect of child care expenses.
[6] Section 63 provides a limited tax deduction
for parents who require their children to be supervised because they are
employed outside the home. Subsection 63(3) provides for a general
deduction of expenses a working parent pays for the purpose of caring for their
children. This deduction is restricted when the amount was paid for various
other services such as education, hospital care or board and lodging.
[7] Subsection 63(3) of the Income Tax Act
provides the following definition of "child care expense":
"child care expense" means an expense incurred in a
taxation year for the purpose of providing in Canada, for an eligible child of the taxpayer, child care services
including baby sitting services, day nursery services or services provided at a
boarding school or camp if the services were provided
(a) to enable the taxpayer, or the supporting
person of the child for the year, who resided with the child at the time the
expense was incurred,
(i) to perform the duties of an office or employment,
...
except that
...
(d) for greater certainty, any expenses
described in subsection 118.2(2) and any other expenses that are paid for
medical or hospital care, clothing, transportation or education or for board
and lodging, except as otherwise expressly provided in this definition, are not
child care expenses;
[8] To determine what is meant by a child care
expense it is helpful to consider the definition of the word "care".
The Canadian Oxford English Dictionary
defines care as "the process of looking after or providing for someone or
something; the provision of what is needed for health or protection".
[9] The French version confirms the importance
of protecting the child as the phrase for child care expenses is «frais de
garde d'enfants» which literally means costs of minding the children.
[10] The Minister submits that the fees paid to Crossroads Academy for grade primary is an amount paid for education and
is thus excepted from the definition of "child care expense". The
Minister's argument is premised on the belief that due to the exception in
paragraph 63(3)(d) a child care expense cannot include some form of
education. In doing so he is missing the distinction between the "to"
and "for". A plain reading of subsection 63(3) suggests "for"
has an intent or purpose and thus the subsection is not concerned with to
whom the amounts are paid but for the purpose they are paid.
[11] Section 12 of the Interpretation Act requires that each enactment be
given a fair, large and liberal construction and interpretation that best
ensures the attainment of its objects. Although it is unnecessary to look at the legislative intent when the
provision is clear, doing so, here, provides further support for this
interpretation. Such an interpretation requires section 63 is be read in the context of the whole
statute and with the 'object and spirit' and purpose of that provision in mind.
[12] In Symes v. The Queen,
Iacobucci J. noted the object and spirit behind the deduction for child care
expenses when he referred to the Proposals for Tax Reform (1969), (E.J. Benson,
Minister of Finance).
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2.7 We propose to permit
deduction of the child care expenses that face many working parents today.
The problem of adequately caring for children when both parents are working,
or when there is only one parent in the family and she or he is working, is
both a personal and a social one. We consider it desirable on social as well
as economic grounds to permit a tax deduction for child care expenses, under
carefully controlled terms, in addition to the general deduction for
children.
...
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2.9 This new deduction for child
care costs would be a major reform. While it is not possible to make an
accurate forecast of the number who would benefit from this new deduction, it
seems likely to be several hundred thousand families. It would assist many
mothers who work or want to work to provide or supplement the family income,
but are discouraged by the cost of having their children cared for ...
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[13] The legislative
intent in enacting this provision was to assist parents who work by subsidizing
child care expenses in the form of a deduction. Given that goal, it is
difficult to accept the Minister's conclusion that any expense related to looking after the child of
a working parent should be denied solely because it included an educative
element. Such an interpretation would clearly undermine the intent of the
Parliament for it would likely exclude all types of child care expenses,
especially those in respect of a young child; for to a young child almost all
positive interaction serves as education – be it through discipline, television
shows, stories or games.
[14] That being said,
the relevant question is what was Mrs. Bailey primary reason for enrolling her
daughter in Crossroads?
[15] As noted above,
Mrs. and Mr. Bailey worked full time and required their children to be cared
for. Mrs. Bailey was not required to enroll her daughter in school but
testified that she preferred that her daughter attend school rather than her
previous day-care. As a consequence, I find Mrs. Bailey's purpose for putting
her daughter in Crossroads Academy was
for reasonably priced child care services and any education received was an
incidental benefit.
[16] The appeal is
allowed, with costs, if any.
Signed at Ottawa, Canada, this 29th day of April 2005.
"Gerald J. Rip"
CITATION: 2005TCC305
COURT FILE NO.: 2004-3009(IT)I
STYLE OF CAUSE: DEANNA BAILEY AND HER MAJESTY THE QUEEN
PLACE OF HEARING: Halifax,
Nova Scotia
DATE OF HEARING: January 11, 2005
REASONS FOR JUDGEMENT BY: The
Honourable Justice Gerald J. Rip
DATE OF JUDGMENT: April 29, 2005
APPEARANCES:
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For the
Appellant:
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The Appellant herself
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Counsel for the
Respondent:
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Christa MacKinnon
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COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the
Respondent: John H. Sims, Q.C.
Deputy
Attorney General of Canada
Ottawa,
Ontario
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