Her Majesty the Queen v. Elizabeth C. Symes, [1991] 2 CTC 1, 91 DTC 5397

Décary, J.A.:—The appellant is challenging a judgment of Cullen, J. rendered on May 11, 1989. A that time the trial judge, as requested by the respondent, vacated notices of reassessment by which the minister of National Revenue had, first, disallowed deductions which the respondent was claiming for the salary she paid to her nanny and which she regarded as a business expense within the meaning of paragraph 18(1)(a) of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act"), and second, substituted for those deductions the ones authorized by section 63 of the Act for "child care expenses".

The notices of reassessment cover four taxation years. Depending on whether the respondent can avail herself of the provisions of paragraph 18(1)(a) of the Act, the amount of the eligible deductions will be $10,075, $11,200, $13,173 and $13,359 instead of $1,000, $2,000, $2,000 and $4,000 for the 1982, 1983, 1984 and 1985 taxation years respectively.

A brief review of the relevant facts is necessary.

Facts and Evidence

(a) Respondent's situation

The respondent has been married since 1969. She was admitted to the Ontario Bar in 1978 and practised as a lawyer by herself in Toronto before going into a firm with two colleagues in 1980, which she did not leave until Marc 1988. Her practice consisted mostly of litigation, primarily in labour law. She developed relations with her clients that were such as to make it difficult for her to delegate her work to her colleagues in any way. Few days went by without her having to go to court and her practice sometimes required her to travel outside Toronto. As a general rule she left her house at 8:30 a.m. and returned at about 6:30 p.m., and would even do two to three hours' work in the evenings. She could not have practised her profession from her home, neither could she have done so on a part-time basis or intermittently.

Her husband is a salaried employee whose income for the period at issue was about the same as her own. When the couple decided to have children, it was agreed that if it became necessary for one of them to remain at home to look after the children it would be the respondent that would give up her job, rather than her husband.

Their first daughter was born on November 26, 1981. The respondent explored the possibility of obtaining authorized day-care services, but such services were almost non-existent for very young children, did not offer any

flexibility after 6:00 p.m. without paying a considerable financial premium and were not available when a child was ill. In short, the only solution consistent with the practice of the respondent's profession was to hire the services of a nanny.

The respondent accordingly hired a Miss Simpson. She came to the house at 8:30 a.m. and did not leave until 6:30 p.m., when one of the parents returned. She looked after the child exclusively from Monday to Friday, and did no housework, laundry or shopping except in connection with the child's needs. Miss Simpson also looked after a second child, born on June 12, 1985.

The respondent and her husband agreed that Miss Simpson's salary would be paid from the respondent's income rather than from her husband's or from the couple's combined income. This, the respondent said, was a "family decision" based on the fact that in practice it was the respondent who was ultimately responsible for looking after the house and caring for the children. The respondent said they were jointly responsible but most of the burden fell onto her.

The respondent deducted tax withholdings from the salary she paid Miss Simpson as well as contributions to the pension and unemployment insurance plans, and gave her T-4 forms every year. In her own tax returns the respondent then deducted as a business expense the salary she paid her nanny. It is worth noting at this stage that this expense was treated not as an expense of the firm but as the respondent's personal expense. This approach was suggested by accountants for the firm and applied both to the nanny's salary and, for example, to automobile expenses incurred individually by each of the partners.

After accepting the deductions as claimed for the 1982 and 1983 taxation years, Revenue Canada changed its mind and, by notices of reassessment elated December 9, 1985 and November 7, 1986 told the respondent that she would have to be content with the deductions allowed by section 63 of the Act (“child care expenses"), that is $1,000 for 1982 (only one child, deduction allowed $1,000 per child), $2,000 for each of 1983 and 1984 (one child, deduction allowed raised to $2,000 per child). In the opinion of Revenue Canada, the salary paid to the nanny was not an expense incurred by the taxpayer to earn business income (which would be deductible under paragraph 18(1)(a) of the Act, but an expense in the nature of personal or living expenses (which are not deductible under paragraph 18(1)(b) ).

(b) Situation of professional women in labour market

Relying on the sworn statement and testimony of an expert in sociology, Dr. Pat Armstrong, the respondent submitted evidence of a major social development which she expected to make use of in her interpretation both of the Income Tax Act and section 15 of the Canadian Charter of Rights and Freedoms (the Charter). Essentially, that evidence was that when women moved into the labour market in the 1970s this radically altered the landscape and the way in which business was conducted; that women who have young children have no choice if they want to work, and they do, but to make use of day-care services; that women bear by far the greatest burden of caring for children, even when they work away from home; that women who are self-employed incur additional problems when the time comes to have their children looked after, in particular because their working hours are unpredictable, they find it very hard to be away from their work when a problem arises involving the children, and if they are to go on operating their businesses they have greater need of day-care services which are reliable and responsible in all respects and at all times. At the risk of simplifying Dr. Armstrong's testimony, it seems advisable to set out what the trial judge concluded from this:

Armstrong’s evidence supports the notion that the availability of child care increases productivity by enhancing the peace of mind of employees. Enhancing productivity is something that is totally in keeping with well established business practices. Moreover, Armstrong's evidence indicates that the absence of child care is a barrier to women's participation in the economy, in terms of paid work and income-generating work and therefore lowering the barrier by arriving at a satisfactory means of dealing with the cost of child care, would make good business sense.

(judgment, page 15)

. . . women bear by far the largest burden of child care . . .

(judgment, page 26)

Armstrong's evidence seems to indicate that something is "wrong" and that according to government reports, the present system is not delivering child care in sufficient quantities for Canadian women. The cost of child care takes up a considerable portion of women's income (approximately one-fifth) and is considered a high price item. As a high price item it constitutes a barrier to women's access to the economy.

(judgment, page 30)

(c) Fiscal history of child care expenses

In 1966, the “Report of the Royal Commission on Taxation” (the "Carter Report") expressly recommended that "Such things as commuting expenses, the costs of child care, and recreational club memberships should be explicitly denied as deductions from income" [1] and favoured instead the granting of tax credits to mothers working outside the home.

In 1969, the “Proposals for Tax Reform" (the White Paper) moved away from this recommendation and proposed the following: [2]

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 he or she 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.

In 1972, as part of a major tax reform, Parliament accepted the proposals contained in the White Paper and adopted section 63 of the Income Tax Act. That section allowed a woman, and in certain well-defined cases a man, to deduct child care expenses of $500 per child from their income, with a maximum of $2,000 per family, and made this deduction subject to a considerable number of conditions.

In 1976, section 63 was amended. The deduction allowed per child rose from $500 to $1,000, and the total allowable per family rose from $2,000 to $4,000.

In 1983, section 63 was again amended. The deduction allowed per child rose from $1,000 to $2,000, and the total allowed per family rose from $4,000 to $8,000. Additionally, to correct what the Canadian Human Rights Tribunal had found to be discriminatory, [3] Parliament allowed men the same right to claim deductions as it had granted to women. In his budget speech on April 19, 1983 Hon. Marc Lalonde, Minister of Finance, said that this amendment was one of four measures designed to assist lower-income families, working parents and others in need [4] and in the "Budget Papers” tabled by the Minister at that time, there is the following: [5]

Through the Family Allowance program, the child tax credit, the child tax exemption, and the child care expense deduction, the federal government provides a comprehensive system of child benefits.

[Emphasis added.]

Finally, in 1988, section 63 was one again amended. The deduction allowed per child rose from $2,000 to $4,000 for children six years and under, and the total of $8,000 allowed per family was dropped. In his budget speech on February 10, 1988, the Minister of Finance noted that this amendment and several others had been made to the Income Tax Act to give effect in tax legislation to the new government policy on child care, announced by the Minister of National Health and Welfare in December 1987. [6]

(d) Government policies on child care expenses

Certain ministerial statements made in the debates on budget or on other measures are worth examining.

On April 21, 1983 Hon. Monique Bégin, Minister of National Health and Welfare, said the following in the budget debate: [7]

One of the areas that has brought forth a great deal of discussion is the child care expense deduction. The growing consensus . . . is that the current child care expense deduction is totally inadequate . . . The Government has responded through the budget, and I am pleased about that.

This measure is an excellent one. I realize it does not cover the entire cost of child

care, but it has never been the policy of this Government to subsidize the total cost of child care. Our objective is to support the family in its role of bringing up children in a society where all family partners are working.

[Emphasis added.]

On February 12, 1988 Hon. Michael Wilson, Minister of Finance, in answer to an Opposition M.P. who charged that he was not doing enough for child care, said: [8]

. . . the program put forward on behalf of the Government by the Minister of National Health and Welfare is a much more balanced program and provides a much broader response to the needs of Canadian working women and other women than would the more narrow approach which the Hon. Member would follow.

(e) Reports and Royal Commissions

Governments both federal and provincial have explored the problems connected with child care and have looked at a range of solutions, including direct grants, tax deductions, tax credits and grant[s] to private and public day-care centers. The parties referred in this connection to the "Report of the Task Force on Child Care", prepared in 1986 for Status of Women Canada [9] and to certain background papers; [10] to the Report by the National Council of Welfare, titled “Child Care: A Better Alternative”, prepared in December 1988; [11] to the "Study of Wages and Employment Conditions of Domestics and their Employers", prepared in 1985 by the Ontario Ministry of Labour; [12] and to the Report of the Task Force on Immigration Practices and Procedures, titled "Domestic Workers on Employment Authorizations". [13]

Arguments of Parties

In their simplest form, the parties’ arguments may be summarized as follows:

Respondent:

—child care expenses, inasmuch as the concept of a business expense is given a modern interpretation, are actually incurred by he taxpayer "for the purpose of gaining income from a business” within the meaning of paragraph 18(1)(a) of the Act and are not “personal or living expenses" within the meaning of paragraph 18(1)(h);

—the existence of a statutory deduction for child care expenses in section 63 of the Act does not in any way alter the taxpayer's right to rely on paragraph 18(1)(a);

—any other interpretation would mean that the inability of a self-employed taxpayer to claim a deduction for all the expenses reasonably incurred for child care would be a kind of discrimination prohibited by the Charter, and the courts cannot interpret legislation so as to make it contrary to the Charter;

Appellant:

—child care expenses are not business expenses, but personal or living expenses;

—in section 63 of the Act Parliament dealt expressly with the question of child care expenses;

—it is not for the courts to question the validity of the socio-economic policies adopted by governments;

—as the Charter confers no right to deduct child care expenses, it is in no way a breach of the Charter to interpret the Income Tax Act as not authorizing this deduction as a business expense.

Judgment A Quo

The trial judge first recognized that "Prior to 1972, child care expenses were treated as non-deductible personal expenses for income tax purposes". [14]

On paragraph 18(1)(a), the trial judge said that in his opinion that in his opinion that paragraph should be interpreted "in view of the social and economic realities of the times" and that he was not bound “ a cluster of cases decided in the 1950s and 1960s based on the reasoning of a decision made in 1891”. He found that the respondent "exercised good business and commercial judgment in deciding to dedicate part of her resources from the law practice to the provision of child care" and that this decision by the respondent “was acceptable according to business principles which include the development of intellectual capital, the improvement of productivity, the provision of services to clients and making available the resource which she sells, namely her time". He noted, referring to the testimony of Dr. Armstrong, that "the absence of child care is a barrier to women's participation in the economy, in terms of paid work and income-generating work and therefore lowering the barrier by arriving at a satisfactory means of dealin with the costs of child care would make good business sense". He concluded that "it can be said that there is a causal relationship between the dedication of resources generated in her practice to child care and the generation of those resources”.

On section 63, the trial judge, based on an admission made by counsel for the appellant, concluded “that if the nanny expense is a proper business expense pursuant to sections 3, 9 and 18 of the Act, then section 63 cannot prevent it from being allowed as such".

Finally, rather than stopping there, as he might have done, the trial judge considered the argument based on the Charter and concluded, with respect to taxation subsequent to April 17, 1985, that "an interpretation of the Income Tax Act which ignores the realities that women bear a major responsibility for child rearing and that the costs of child care are a major barrier to women's participation, would itself violate section 15 of the Charter".

Subsection 9(1), paragraphs 18(1)(a) and (h) and section 63 of the Income Tax Act

According to subsection 9(1) of the Act,

9. (1) . . . a taxpayer's income for a taxation year from a business or property is his profit therefrom for the year.

According to paragraphs 18(1)(a) and (h) of the Act:

18. (1) In computing the income of a taxpayer from a business or a property no deduction shall be made in respect of

(a) an outlay or expense except to the extent that it was made or incurred by the taxpayer for the purpose of gaining or producing income from the business or property;

(h) personal or living expenses of the taxpayer except travelling expenses (including the entire amount expended for meals and lodging) incurred by the taxpayer while away from home in the course of carrying on his business . . .

As the trial judge noted, the determination of profit and the question of whether an expenditure is a proper business expense to be included in the calculation of profit are questions of law. [15] As a general rule, in determining whether an expense can be deducted, the Court first decides whether the calculation of profit was made in accordance with ordinary business principles and the well-established principles of current business practice. If not, the Court does not have to go any further. If it was, the Court must then consider whether the expense was "made or incurred by the taxpayer for the purpose of gaining income from a business. . . ,". [16] In the case at the bar, I will reverse the usual order. I will deal first with paragraph 18(1)(a) and only consider subsection 9(1) if I come to the conclusion that the expense is not prohibited by that paragraph.

At the nearing counsel for the parties went to great lengths to persuade the Court to adopt their own interpretations of the expression "for the purpose of" ("en vue de”) to be found in paragraph 18(1)(a). While the respondent invited the Court to give an interpretation that takes into account contemporary reality in the business world, and in particular the specific problems of child care faced by women in business, the appellant suggested a new concept which the trial judge described as the "business or revenue-producing circle": expenses incurred within the revenue-producing circle are properly speaking deductible, but those incurred by the taxpayer simply to approach the circle are not. The appellant relied in particular on the recent judgement of the Supreme Court of Canada, Mattabi Mines Ltd. v. Ont. (Min. of Revenue), [1988] 2 S.C.R. 175; [1988] 2 C.T.C 294 in which Wilson, J. said the following for the Court at 301 (S.C.R. 189): "The only. thing that matters is that the expenditures were a legitimate expense made in the ordinary course of business with the intention that the company could generate a taxable income sometime in the future" [emphasis added] and confirmed for all practical purposes the interpretation given by the federal government itself in an Interpretation Bulletin dated April 26, 1982, on paragraph 18(1)(a) at page 301 (S.C.R. 189-90):

I find support for this conclusion in the federal government's Interpretation Bulletin dealing with paragraph 18(1)(a). An Interpretation Bulletin does not, of course, have the binding effect of law (I discuss this later) but such Bulletins do have persuasive force in the event of ambiguity. The federal government's Bulletin IT-487, April 26, 1982, entitled "General Limitation on Deduction of Outlays or Expenses”, states in part:

(b) ”. . . for the purpose . . .". It is not necessary to show that the income actually resulted from the particular outlay or expenditure itself. It is sufficient that the outlay or expense was a part of the income-earning process.)

I reject at the outset the respondent's argument that the existence of a legal obligation to care for children [17] is a reason for treating child care expenses as a business expense. The legal obligation in the case at bar—which I stress is imposed equally on both spouses and is in any case a natural obligation—is imposed on the parents as parents, and follows them wherever they may be, whether they are absent on business, pleasure or for any other reason. The law does not impose an obligation on the respondent to look after her children because she is operating a business.

Mattabi Mines, supra, lends support to the appellant's argument that the words "for the purpose of" ("en vue de") paragraph 18(1)(a) of the Act should be interpreted as meaning "in the process of earning ("pendant le processus de gain"), and that the deductible expenses should be incurred "in the ordinary course of business" ("dans le cours ordinaire des affaires"). [18] However, that judgment did not deal with the question of child care or discuss the possibility of extending the traditional concept of a business expense in light of the new social reality referred to by the respondent and I would hesitate to regard Wilson, J.'s remarks as precluding respondent's contentions.

Like the trial judge and like the respondent, I consider the judicial interpretation is not cast in stone and must be sufficiently flexible and sensitive to adapt to changing circumstances. I have no problem with the idea that business tax law has developed in a context in which women had no place, and I have no hesitation in saying that concepts should be extended by the courts in order to take into account the presence of women in the business world, and in the labour market, provided that these concepts have been developed in relation to these circumstances which have since changed or that the legislature has not itself adapted its legislation to these new realities. But the concept of a business expense has been developed exclusively in relation to the commercial needs of the business, without any regard to the particular of those in charge of the business, and I have difficulty in seeing how a change in the particular needs of these persons could justify modifying an interpretation which has nothing to do with these needs. Having said that, I consider that the case at bar does not require a conclusion on this point for the simple reason that Parliament has itself already amended the Income Tax Act to provide for the specific situation relied on by the respondent.

In 1972, by adopting section 63 which in subparagraph (3)(a)(i) authorizes the deduction of child care expenses “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, (A) to perform the duties of an office or employment (B) to carry on a business either alone or as a partner actively engaged in the business . . . ” [emphasis added], Parliament has expressly covered self- employed parents as well as salaried parents. (I use the word "parent" to simplify the discussion; it is understood that section 63 deals more generally with an individual providing the support for a child and residing with the child at the time the expense was incurred.) In the case at bar, the respondent incurred the child care expenses to enable her "to carry on a business . . . as a partner actively engaged in a business”. Had section 63 been drafted to apply specifically to the respondent's case, it would not have been drafted otherwise.

That is not all. The expression "earned income" in paragraph (3)(b) is defined as “the aggregate of (i) all salaries, wages and other remuneration . . . received . . . by virtue of offices and employments . . . and . . . (iii) his incomes from all businesses carried on either alone or as a partner actively engaged in the business" (my emphasis). The respondent's "earned income" in the case at bar is the income she derived from her partnership, and it is that income which is covered by section 63.

The intent of Parliament, referred to above, and the fact that self-employed mothers were covered by the very wording of the new legislation just as much as salaried mothers, are so clear that I was surprised to read in paragraph 60 of the respondent's submission: "Further, there is no indication either in the debates or in the permissive wording of section 63 itself that, in enacting this provision designed to redress the inferior economic position of women who were by and large employees in the labour market, the Legislature intended to preclude self-employed women from deducting reasonable costs of child care expenses incurred for the purpose of gaining income".

Whatever may have been the admission made at trial by counsel for the appellant on a point of law—which certainly cannot bind the Court, and which counsel hastened to withdraw in this Court—it is not possible to interpret paragraph 18(1)(a) of the Act without reference to reference to section 63. As Prof. Faye Woodman notes in her article mentioned above, at page 377, "surely the existence of section 63 is very important, if not determinative, in the interpretation of sections 9 and 18”. Section 63 is really a code in itself, complete and independent, and it does not matter in the circumstances whether it was inserted in one subdivision of the Act rather than another, as by its very wording, which is clear and not open to question, it covers apparent carrying on a business and income earned by the parent from the operation of a business.

Section 63 was adopted in 1972, and thus at a time when according to the testimony of Dr. Armstrong herself (transcript, page 217), an important social change was occurring and the entry of women of child-bearing age into the labour market. That section has been amended three times, in 1976, 1983 and 1988. In light of the evidence presented of Parliament's intent, it is difficult not to see this section as “liberalization” which, for obvious monetary reasons, the respondent would have preferred to see take the form of a deduction for business expenses rather than a deduction for parental expenses, a new deduction which is generally applicable and limited to specific amounts, applying to all parents whatever the nature of their work, whatever their income and whatever their sex.

I therefore come to the conclusion that the respondent's particular situation is, literally and fundamentally, one of those which Parliament clearly had in mind when it adopted and then amended section 63. As I have already said, I do not in so doing disregard the possibility of applying a contemporary approach to the interpretation of tax legislation; I am simply saying that in the case at bar Parliament in 1972 adapted the Act to contemporary reality when it established a system favouring salaried mothers and self-employed mothers.

As I have decided that in the case at bar child care expenses are not a business expense within the meaning of paragraph 18(1)(a), but a parental expense within the meaning of section 63, I do not nave to determine whether they have been correctly taken into account in determining the "profit" of the business within the meaning of subsection 9(1).

Section 15 of Charter

Although in a notice of a constitutional question the respondent indicated her intent to challenge the constitutionality of ss. 18 and 63 of the Income Tax Act, her counsel admitted at the hearing that notice was only pro forma and she was not challenging the constitutionality of those two sections as such. Her argument based on the Charter derives not from the actual wording of those two provisions but from the interpretation this Court would give them if by chance it held—as I have just decided—that child care expenses incurred by a parent are not business expenses. [19]

In support of this proposition, the respondent cited the following extract from the opinions 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 1078 and Hills v. Canada (A.G.), [1988] 1 S.C.R. 513 at 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 not 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, J.)

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-Dube, 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. On the question of economic rights and section 15, I adopt these observation of Hugessen, J.A. in Smith, Kline & French Laboratories Ltd. v. Canada, [1987] 2 F.C. 259; 24 D.L.R. (4th) 321 at 367-71:

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 oe deprived of any real content.

While the generalisation 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.

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.

which are essentially the same as those of La Forest, Wilson and Macintyre, JJ. in Andrews v. Law Society of British Columbia, [1989] 1 S.C.R. 143; 56 D.L.R.

(4th) 1:

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.

(La Forest, J., at 914)

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.

(Wilson, J., at 154)

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.

(Macintyre, J., at 168-69)

At bottom, the approach put forward by the respondent risks trivializing the Charter. As Galligan, J. of the Ontario High Court of Justice concluded in Ontario Public Service Employees Union v. National Citizens Coalition Inc., [1987] 2 C.T.C. 59; 87 D.T.C 5270 at 5272; aff'd by Ontario Court of Appeal [1990] 2 C.T.C. 163; 90 D.T.C. 6326, [20]

The argument advanced with respect to section 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. /t 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.

[Emphasis added.]

Accepting the respondent's arguments would be to fall into the trap of overshooting against which the Supreme Court of Canada has constantly warned the courts. [21] As Dickson, C.J., dissenting, noted in Public Service Alliance of Canada v. Canada, [1987] 1 S.C.R. 424, at 442: [22]

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 respondent more or less submitted that if a situation of social or economic inequality is not redressed by the legislature in a given statute, the courts should interpret that statute so as to redress the inequality, otherwise the interpretation of the statute would be contrary to the Charter and the statute would itself become contrary to the Charter, in its application if not in its actual wording. With all due respect, I feel this would be giving the courts a function which the Charter has not given them and imposing on legislatures a burden which the Charter, far from imposing it on them, has been careful to avoid.

The Charter imposes on legislatures no obligation to redress all social or economic inequalities. Rather, in subsection 15(2), it allows them to adopt "any law, program or activity that has as its object the amelioration of conditions of disadvantaged individuals or groups”. It seems obvious to me that what legislators have a power to do they do not have a duty to do.

The respondent's proposition appears to mean, for all practical purposes, that through the right to equality recognized in section 15 the Charter guarantees individuals every right, whether or not included in those expressly defined in the Charter. For example, in the case at bar, though the right to work and the right to be in a position to work are not recognized by the Charter, an individual—on these facts a woman, a parent, but it could be anyone who can make use of the provisions of section 15—could under cover of section 15 require legislatures to adopt measures enabling him or her to work and be in a position to work. That is not the effect of section 15.

In my opinion, no one could have required Parliament to adopt section 63 and allow a parent to deduct child care costs. Parliament adopted section 63 in the enlightened exercise of its discretion, and I do not see on what basis a particular group of professional women or parents, benefiting from the deduction allowed by that section, could require that the section be amended by the legislature or interpreted by the courts so as to give the group the right to take a further deduction. It is the same as saying that when a social promotion program is adopted pursuant to subsection 15(2), Parliament must adopt as many sub-programs as there are sub-groups and the courts must determine which sub-program best corresponds to which sub-group. The situation would of course be different if in section 63 Parliament had provided that only women would be entitled to deduct child care costs. I note in this regard that it is precisely because in its original version section 63 applied to all women but only to some men that, in 1983, Parliament was obliged to give identical treatment to both. [23] I also note that in the case at bar the respondent, who is in some measure claiming privileged treatment for professional women and parents, does not argue that the Income Tax Act would create unlawful discrimination between professional and salaried taxpayers if her argument was allowed. As Prof. Faye Woodman argues, [24]

Certainly, in the Canadian context, one of the problems with Symes is that the “judicial interpretation” of sections 9 and 18 will affect other classifications, i.e. employed and self-employed. But even accepting that this result is appropriate, the question still remaining to be answered is whether it is salutary from a tax policy perspective. The answer is a resounding no. Under this new regime, the richer the taxpayer, the more her child care expenses will be subsidized by other Canadian taxpayers. The poorer the taxpayer, the less she will receive. The poorest will receive nothing.

By adopting section 63 and deciding to create a new type of personal deduction for parents applying to child care expenses, Parliament made a politic social and economic choice. On the evidence presented, that choice favours women more than men, and the respondent has no complaint about this. I do not see how a provision which favours all women could directly or indirectly infringe the right of women to equality, [25] and I am not prepared to concede that professional women make up a disadvantaged group against whom a form of discrimination recognized by section 15 has been perpetrated by the adopting of section 63, or would be perpetrated by this Court's refusal to interpret paragraph 18(1)(a) so as to give a self-employed mother an additional deduction for a business expense; and even if there were discrimination within the meaning of section 15, I consider in light of the ample evidence of justification submitted to the Court that it is not the function of this Court to substitute its choice for the one made by Parliament, with full knowledge of the options proposed and in keeping with an overall policy of assisting the family.

The Court is here being asked not only to fish in the most troubled socioeconomic waters, but also to swim against the tide of a solution expressly adopted by Parliament in preference to that proposed by the respondent. The Charter, the taxpayers and the legal system would be badly served by acceding to such a request.

Disposition of Case

I would allow the appeal and restore the notices of assessment issued by the Minister of National Revenue, with costs to the appellant at trial and on appeal.

Crown's appeal allowed.