Christie, A.C.J.T.C.C.:—This appeal is governed by the informal procedure prescribed by section 18 and following sections of the Tax Court of Canada Act.
In computing his income for 1990 the appellant deducted $8,000 for child care expenses. The deduction relates to two children: Khirstyn born November 16, 1986, and Hillary born January 27, 1989. Deductions of this kind are authorized under section 63 of the Income Tax Act, R.S.C. 1952, c. 148 (am.
S.C. 1970-71-72, c. 63) (the "Act"). He also deducted $20,400 in alimony payments. Deductions for alimony are authorized under paragraph 60(b) of the Act. Both deductions were disallowed on reassessment by the Minister of National Revenue. The first notice of appeal was filed in the registry of the Court on August 20, 1992. It appealed from the disallowance of both deductions. An amended notice of appeal filed on November 6, 1992, dropped any reference to alimony payments. It refers only to the child care deduction. The grounds of appeal in the amended notice of appeal in their entirety are:
Section 63 of the Income Tax Act infringes the right to equality under subsection 15(1) of the Charter of Rights and Freedoms in that amounts paid for child care do not qualify for deductions if the care is provided by certain persons related to the child, constituting discrimination on the basis of family status.
The appellant has been married to Catherine Ross for seven years. He paid the $8,000 claimed as a deduction to her. Payment was in cash. The rate was $83.33 per week for 48 weeks or a total of $4,000 for each child. Catherine Ross provided child care services for their children and the children of two additional families. The services were provided in the Ross residence. A maximum of three children, in addition to Khirstyn and Hillary, were involved. The income and expenses related to the provision of the services were reported in a return of income for 1990 filed by Catherine Ross. The reason given by the appellant for entering into these arrangements is: "We were concerned for the welfare of our children. We had some very bad experiences to the point of one of my daughters going to the hospital because of inadequate day care in the past.” He added that they also "saw a business opportunity” and desired to give their children personal quality care "so that we could pass on our values as successful citizens to our children.” The appellant is an electrical engineer and works in the area of product design. In 1990 he was employed by Bell Northern Research. The appellant was asked about how his wife supplying child care services to their children affected his duties of employment. He replied: "Very dramatically” and went on : ” Having the peace of mind of knowing my children were well cared for and not have to adhere to an external day care schedule I was able to stay later at work, work substantial overtime that year which generated substantial tax revenues, and my career has flourished as a result.” Two tables of tax calculations prepared by the appellant were placed in evidence to show that for the Ross “family” to benefit from a child care deduction it would have to be made in computing the appellant's income. This concluded his evidence-in-chief.
In cross-examination the appellant was asked how $83.33 per week for each child was arrived at. He replied: “If I had to pay Cathy any more we would have ended up at a tax liability to our family. It would have been a losing proposition to pay her any more because I would not have been able to deduct anything more and it would become income for Cathy that would be basically double taxed. That income in excess of $8,000 is subject to tax in my hands and in Cathy's hand also.”
Catherine Ross testified that the rate for the children other than her own was $25 per day ($125 per week) for full-time care. This is 33.5 per cent more than was charged for the Ross children. The rate for half-time was $15 per day and $6 per day before and after school.
In 1990 she filed a return of income that included a statement of revenues and expenses regarding day care. Revenue was $14,321, expenses $5,027.75 for a net profit of $9,293.25. Her net income including the $8,000 received from her husband was $8,437. This is considerably less than that of her husband. Excluding the $8,000 her net income was $437.
To my mind it is clear that applying the currently prevailing approach to the construction of section 63 of the Act the appellant is not entitled to a deduc- tion for child care expenses in computing his income for 1990. My understanding is that counsel for the appellant does not dispute this, but he relies on certain provisions of the Canadian Charter of Rights and Freedoms as overriding the impediments in section 63 to making the deduction and allowing this Court to fashion a remedy permitting the deduction to be made. In opening his argument he said:
The ground for the appeal is that section 63 of the Income Tax Act infringes the equality rights under subsection 15(1) of the Charter in that amounts paid for child care do not qualify for deductions if the child care is provided by certain persons related to the child and in particular the mother of the child which constitutes discrimination on the basis of family status. That is the hub of this case.
In addition section 1, subsections 24(1) and 32(1) of the Charter and subsection 52(1) of the Constitution Act, 1982, were referred to in the course of argument. They and subsection 15(1) provide:
1. The Canadian Charter of Rights and Freedoms guarantees the rights and freedoms set out in it subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society.
15. (1) Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and, in particular, without discrimination based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.
24. (1) Anyone whose rights or freedoms, as guaranteed by this Charter, have been infringed or denied may apply to a court of competent jurisdiction to obtain such remedy as the court considers appropriate and just in the circumstances.
32. (1) This Charter applies
(a) to the Parliament and government of Canada in respect of all matters within the authority of Parliament including all matters relating to the Yukon Territory and Northwest Territories; and
(b) to the legislature and government of each province in respect of all matters within the authority of the legislature of each province.
52. (1) The Constitution of Canada is the supreme law of Canada, and any law that is inconsistent with the provisions of the Constitution is, to the extent of the inconsistency, of no force or effect.
Reverting to section 63 the appellant focuses in particular on clauses (A) and (B) of subparagraph 63(3)(a)(ii) and subsection 63(2) of the Act.
” Child care expense" is defined in paragraph 63(3)(a) of the Act and clauses (A) and (B) are part of that definition. What is relevant to this appeal therein provides that “child care expense" means an expense incurred in a taxation year for the purpose of providing in Canada, for an eligible child of a taxpayer, child care services including babysitting services or day nursery services if the services were provided 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, to perform the duties of employment or to carry on a business and the services were provided by a resident of Canada other than a person who is the father or the mother of the child or who is a supporting person of the child. Paragraph 63(3)(d) defines "supporting person”. That portion of the definition relevant for present purposes states that a supporting person of an eligible child of a taxpayer for a taxation year means a parent of the child if the parent resided with the taxpayer at any time during the year and at any time within 60 days after the end of the year.
The effect of subsection 63(2) of the Act, when read in conjunction with subsection 63(1), is that where a taxpayer's income exceeds the income of a supporting person of the child for the year the deduction for child care expense must generally be claimed by the supporting person. The exceptions to this general rule are in subparagraphs 63(2)(b)(iii) to (vi). They need not be explored in these reasons.
Counsel for the appellant requests a determination that pursuant to subsection 52(1) of the Constitution Act, 1982 the words "other than a person who is the father or the mother of the child or who is a supporting person of the child” in clauses 63(3)(a)(ii)(A) and (B) are "of no force or effect". He also requests: "A determination that to the extent that subsection 63(2) requires Catherine Ross as opposed to William T. Ross to claim the deduction for child care expenses, that subsection is to be treated as having no force or effect with respect to the appellant in the 1990 taxation year.” In other words the general rule requiring the spouse with the lower income to deduct child care expense is being constitutionally challenged.
“Family status” is not a ground of discrimination enumerated in subsection 15(1). The appellant relies on the phrase as being an analogous ground of discrimination. If a ground of discrimination is properly recognizable in law as being analogous to the enumerated grounds, it is settled by the Supreme Court of Canada that such discrimination carries with it the same consequences as discrimination based on the enumerated grounds. The Court accepts, for the purposes of this appeal, that family status can be an analogous ground of discrimination.
In 1969 in a publication entitled “Proposals for Tax Reform—E. J. Benson, Minister of Finance" the government of the day addressed the matter of financial difficulties relating to the major social development of working parents with dependent children. Paragraph 2.7 of that paper reads:
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.
The policy decision adopted by Parliament in this regard was embodied in section 63 of the Act as enacted by Statutes of Canada 1970-71-72, c. 63. Amendments to section 63 followed. All of this is set out in more detail in the reasons for judgment delivered by Mr. Justice Décary for the Federal Court of Appeal in The Queen v. Symes, [1991] 2 C.T.C. 1, 91 D.T.C. 5397 at page 4 (D.T.C. 5400) under the heading "Fiscal history of child care expenses".
The basic social purpose of the legislation is certainly within the legislative competence of Parliament and I cannot appreciate how this Court could properly set the legislation aside in whole or in part because of the requirement that the child care services in respect of which the deduction for child care expense is sought be provided by someone other than the father or the mother of the eligible child. This condition precedent is perfectly reasonable and understandable in the light of the purpose of section 63 and it does not constitute discrimination of the kind alleged in this appeal. The same applies to the general rule that the deduction shall be taken by the spouse with the lower income. It is not constitutionally prohibited discrimination. Presumably this general rule was chosen because it would have the lesser unfavourable impact on the Consolidated Revenue Fund. The making of such a choice by Parliament cannot, in the context of section 63, be said to transgress a taxpayer's rights or freedoms when regarded as fundamental values in the Canadian society. It is the guarantee of rights and freedoms so regarded that is the purpose of the Charter.
Further, even if it could be said that clauses 63(3)(a)(ii)(A) and (B) of the Act are of no force and effect by operation of subsection 52(1) of the Constitution Act, 1982, it does not follow, as was submitted in argument, that subsection 63(2) of the Act is consequently tainted in the sense that this Court thereby has jurisdiction to mutate what Parliament has enacted by resorting to reading down (severance) or reading in in respect of subsection 63(2) to produce a result that would authorize the appellant to take the child care expense deduction in computing his income. The appellant says that not only are he and his wife entitled to decide who should take the deduction, but the amount paid for the child care services and hence the deduction can be whatever amount yields the maximum benefit to them without reference to the actual market value of the child care services.
There being no discrimination, the applicability of the proviso in section 1 does not arise. Nor does a requirement for the creation of a remedy materialize.
In Symes, supra, Décary, J.A. said at pages 10-11 (D.T.C. 5404-05):
. . . the respondent cited the following extracts from the opinion of Lamer, J. (as he then was) and L’Heureux-Dubé, J. in, respectively, Slaight Communications Inc. v. Davidson, [1989] 1 S.C.R. 1038 at page 1078, and Hills v. Attorney-General (Canada), [1988] 1 S.C.R. 513 at page 558.
Although this Court must not add anything to legislation or delete anything from it in order to make it consistent with the Charter, there is no doubt in my mind that it should also not interpret legislation that is open to more than one interpretation so as to make it inconsistent with the Charter....
Lamer, I. Appellant, while not relying on any specific provision of the Charter, nevertheless urged that preference be given to Charter values in the interpretation of a statute, namely freedom of association. I agree that the values embodied in the Charter must be given preference over an interpretation which would run contrary to them ....
L'Heureux-Dubé, J.
I do not think that by these statements the Supreme Court of Canada intended to say that legislation should be minutely examined to determine whether, by an extreme interpretation, it might not be possible to implicate the Charter directly or indirectly. Strictly speaking any legislation is an invasion of a right, and in the field of taxation in particular, everything or nearly everything can be immediately or remotely connected in some way to the concept of equality.
Mr. Justice Décary also cited passages from the reasons for judgment in Smith, Kline & French Laboratories Ltd. v. Canada, [1987] 2 F.C. 359, 34 D.L.R. (4th) 584; Andrews v. Law Society of British Columbia, [1989] 1 S.C.R. 143, 56 D.L.R. (4th) 1; Ontario Public Service Employees Union v. National Citizens' Coalition Inc., [1987] 2 C.T.C. 59, 87 D.T.C. 5270 at page 61 (D.T.C. 5272) (Ont. H.C.J.) (aff'd on appeal to the Ontario Court of Appeal, [1990] 2 C.T.C. 163, 90 D.T.C. 6326) and Public Service Alliance of Canada v. Canada , [1987] 1 S.C.R. 424, 38 D.L.R. (4th) 249. These can usefully be repeated in relation to this appeal. In Smith, Kline, supra, Hugessen, J.A. said at pages 367-68 (D.L.R. 591):
The rights which [section 15] guarantees are not based on any concept of strict, numerical equality amongst all human beings. If they were, virtually all legislation, whose function it is, after all, to define, distinguish and make categories, would be in prima facie breach of section 15 and would require justification under section 1. This would be to turn the exception into the rule. Since courts would be obliged to look for and find section 1 justification for most legislation, the alternative being anarchy, there is a real risk of paradox: the broader the reach given to section 15 the more likely it is that it will be deprived of any real content.
And at page 369 (D.L.R. 592):
While the generalization will no doubt require refinement, it would seem to me that, since the Charter's primary focus is upon personal rights, liberties and freedoms, categories whose main impact is elsewhere, such as on property and economic rights, will be less subject to scrutiny.
And at page 371 (D.L.R. 594):
To succeed, plaintiffs have to urge, as they do, that section 15 guarantees absolute equality to every individual in every conceivable circumstance and that every possible distinction that can result in one receiving a benefit or incurring a disadvantage which is not enjoyed or suffered by all can only be justified, if at all, under section 1 .... As I have attempted to indicate, that view seems to me to be untenable.
In Andrews, supra, Madam Justice Wilson said at page 154 (D.L.R. 34):
If every distinction between individuals and groups gave rise to a violation of section 15, then this standard might well be too stringent for application in all cases and might deny the community at large the benefit associated with sound and desirable social and economic legislation.
Mr. Justice La Forest said at page 194 (D.L.R. 38):
That having been said, I am convinced that it was never intended in enacting section 15 that it become a tool for the wholesale subjection to judicial scrutiny of variegated legislative choices in no way infringing on values fundamental to a free and democratic society. Like my colleague, I am not prepared to accept that all legislative classifications must be rationally supportable before the courts. Much economic and social policy-making is simply beyond the institutional competence of the courts: their role is to protect against incursions on fundamental values, not to second guess policy decisions.
Mr. Justice Maclntyre said at pages 168-69 (D.L.R. 13):
It is not every distinction or differentiation in treatment at law which will transgress the equality guarantees of section 15 of the Charter. It is, of course, obvious that legislatures may—and to govern effectively—must treat different individuals and groups in different ways. Indeed, such distinctions are one of the main preoccupations of legislatures. The classifying of individuals and groups, the making of different provisions respecting such groups, the application of different rules, regulations, requirements and qualifications to different persons is necessary for the governance of modern society.
In Ontario Public Service Employees Union, supra, Mr. Justice Galligan said at page 61 (D.T.C. 5272):
The argument advanced with respect to subsection 15(1) is that the circumstances disclosed in paragraphs 10 and 11 of the statement of claim show that certain taxpayers could be disentitled to equal benefit of the tax laws. I have some difficulty in understanding how tax laws can be said to bestow benefits on taxpayers. But, having said that, it is clear that some taxpayers are entitled to certain deductions from their income while others are not. The Income Tax Act is full of examples where one taxpayer for certain reasons has certain deductions which another taxpayer does not have. Also, certain taxpayers are called upon to pay more taxes than others. Some taxpayers are called upon to pay taxes at a higher rate than others.
The Charter, as it has been said in many, many cases, too numerous to mention, is an important piece of legislation which constitutionally protects important rights and freedoms of people who live in this country. It seems to me that it comes very close to trivializing that very important constitutional law, if it is used to get into the weighing and balancing of the nuts and bolts of taxing statutes.
In Public Service Alliance of Canada, supra, Dickson, C.J., dissenting, said at page 442 (D.L.R. 261):
In my opinion, courts must exercise considerable caution when confronted with difficult questions of economic policy. It is not our judicial role to assess the effectiveness or wisdom of various government strategies for solving pressing economic problems. The question how best to combat inflation has perplexed economists for several generations. It would be highly undesirable for the courts to attempt to pronounce on the relative importance of various suggested causes of inflation, such as the expansion of the money supply, fiscal deficits, foreign inflation, or the built-in inflationary expectations of individual economic actors. A high degree of deference ought properly to be accorded to the government's choice of strategy in combatting this complex problem. Due deference must be paid as well to the symbolic leadership role of government. Many government initiatives, especially in the economic sphere, necessarily involve a large inspirational or psychological component which must not be undervalued. The role of the judiciary in such situations lies primarily in ensuring that the selected legislative strategy is fairly implemented with as little interference as is reasonably possible with the rights and freedoms guaranteed by the Charter.
The appeal is dismissed.
Appeal dismissed.
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