Elizabeth Planetta v. Minister of National Revenue, [1987] 2 CTC 2258, 87 DTC 554

Christie, A.CJ.T.C.:—This appeal relates to the appellant's 1984 taxation year. By agreement between the parties it was argued on these terse but sufficient facts.

In 1984 the appellant resided with her spouse Robert in Sydney, Nova Scotia. In order to enable her to perform the duties of her employment with the University College of Cape Breton in that year she incurred $1,500 in child care expenses. In computing her income for 1984 the appellant deducted the $1,500 in child care expenses. In computing her income for 1984 the appellant deducted the $1,500. Her net income during that period was not less than $16,188 and Robert's income during the same period was not greater than $5,925. In reassessing the appellant on January 2, 1986, the respondent said:

Available information indicates that you are not entitled to the child care expenses deduction. It may normally be claimed only by the spouse with the lower net income before claiming this deduction. We therefore propose to disallow your claim.

The reassessment of your return will be held in abeyance for thirty days to allow you the opportunity of providing, in writing, any additional information or explanations which you consider relevant.

In some instances, the spouse with the higher net income may claim child care expenses. These include periods during which:

(I) you were separated and living apart from your spouse for at least three months because of a breakdown in your marriage;

(II) your spouse was in full-time attendance at a designated educational institution; or

(III) your spouse, for a period of at least two weeks, was infirm (in which case we require a certificate from the attending physician stating the duration of the infirmity) or in an institution.

Should it be confirmed that your spouse is entitled to the claim, and where such a claim will result in a reduction of taxes payable, we will reassess your spouse's return. However, receipts will be required to verify the amount of the claim to which your spouse is entitled.

If we do not receive a reply within thirty days, your return will be reassessed as noted above.

In objecting to the reassessment the appellant did not invoke any of the things mentioned in paragraphs (1), (II) and (III) just cited or in subparagraph 63(2)(b)(v) of the Income Tax Act (infra). She stated that her husband did not earn enough in 1984 to enable him to take advantage of a deduction for child care expenses and said in conclusion: "I object to being taxed under a law which is incomplete and is consequently grossly unfair.”

The appellant's 1984 income tax return was filed as an exhibit. It shows that the child care expenses were on account of the daughter of the appellant and her spouse. The child is named Samantha and she was born on June 3, 1979.

Subsections 63(1) and (2) of the Act provide:

63. (1) Subject to subsection (2), there may be deducted in computing the income of a taxpayer for a taxation year the aggregate of all amounts each of which is an amount paid in the year as or on account of child care expenses in respect of an eligible child of the taxpayer for the year

(a) by the taxpayer, where he is a taxpayer described in subsection (2) and the supporting person of the child for the year is a person described in subparagraph (2)(b)(vi), or

(b) by the taxpayer or a supporting person of the child for the year, in any other case,

to the extent that

(c) the amount is not included in computing the amount deductible under this subsection by an individual (other than the taxpayer), and

(d) the amount is not an amount (other than an amount that is included in computing a taxpayer's income and that is not deductible in computing his taxable income) in respect of which any taxpayer is or was entitled to a reimbursement or any other form of assistance,

and the payment of which is proven by filing with the Minister one or more receipts each of which was issued by the payee and contains, where the payee is an individual, that individual's Social Insurance Number; but not exceeding the amount, if any, by which

(e) the least of

(i) $8,000,

(ii) the product obtained when $2,000 is multiplied by the number of eligible children of the taxpayer for the year in respect of whom child care expenses were incurred, and

(iii) /3 of the taxpayer's earned income for the year

exceeds

(f) the aggregate of all amounts each of which is an amount deducted, in respect of the eligible children of the taxpayer that are referred to in subparagraph (e)(ii), under this subsection for the year by an individual (other than the taxpayer) to whom subsection (2) is applicable for the year.

(2) Where the income for a taxation year of a taxpayer who has an eligible child for the year exceeds the income for that year of a supporting person of that child (on the assumption that both incomes are computed without reference to this section and paragraphs 56(1)(s) and (u)), the amount that may be deducted by the taxpayer under subsection (1) for the year as or on account of child care expenses shall not exceed the lesser of

(a) the amount that would, but for this subsection, be deductible by him for the year under subsection (1); and

(b) the product obtained when the lesser of

(i) $240, and

(ii) $60 multiplied by the number of eligible children of the taxpayer for the year in respect of whom the child care expenses were incurred is multiplied by the number of weeks in the year during which the child care expenses were incurred and throughout which the supporting person was a person described in one or more of the following subparagraphs:

(iii) a person in full-time attendance at a designated educational institution (within the meaning assigned by paragraph 110(9)(a)),

(iv) a person certified by a qualified medical practitioner to be a person who;

(A) by reason of mental or physical infirmity and confinement throughout a period not less than 2 weeks in the year to bed, to a wheelchair or as a patient in a hospital, an asylum or other similar institution, was incapable of caring for children, or

(B) by reason of mental or physical infirmity, was in the year, and is likely to be for a long-continued period of indefinite duration, incapable of caring for children,

(v) a person confined to a prison or similar institution throughout a period of not less than 2 weeks in the year, or

(vi) a person living separate and apart from the taxpayer, throughout a period of not less than 90 days commencing in the year, by reason of a breakdown in their marriage or similar domestic relationship.

“Child care expense", “eligible child” and “supporting person" are all defined in subsection 63(3) of the Act. The $1,500 is within the definition of child care expense and, in 1984, Samantha Planetta was an eligible child and Robert Planetta was a supporting person.

It is the position of the appellant that the reassessment by the respondent in the context of the facts pertinent to this appeal defeats the purpose of the legislation, which is to assist working mothers.

Where language employed by Parliament is clear, effect must be given to it by this Court. To do otherwise would be to infringe upon the functions of Parliament under the guise of interpretation of legislation. Further, as observed by Lord Greene in Howard De Walden v. E.T.R., [1942] 1 All E.R. 287 and 289: "It is illegitimate to force upon that language (of a taxing statute) a strained construction merely because it may otherwise lead to a result which to some minds may appear to be unjust.”

I have no difficulty in finding that the words in section 63 of the Act lead to the conclusion that, having regard to the facts of this case, the $1,500 is not deductible by the appellant even though the expenses that it represents were incurred by her. This is because her husband, the other supporting person, had a lower income in the taxation year under review. I am in agreement with this statement on the law in vol. 2 of the Canadian Tax Reporter at pages 6265-6:

By virtue of subsection 63(2), the supporting person with the lowest "earned income” will be the only one permitted to deduct child care expenses except in limited circumstances. Those limited circumstances are described in paragraph 63(2)(b) and arise when the supporting person with the lower earnings (i) is in full- time attendance at a designated educational institution, (ii) is certified by a doctor to be incapable of caring for children by reason of medical or physical infirmity,

(iii) is in prison for at least 2 weeks in the year or, (iv) is living apart for at least 90 days in the year by reason of marriage breakdown. In these limited circumstances the supporting person with the higher (or next highest) earned income can deduct child care expenses up to a maximum of $60 per eligible child (maximum 4) multiplied by the number of weeks during which the supporting person with the lowest earned income met one of the conditions (i) through (iv) above.

If Parliament had not specifically prescribed the circumstances where the supporting person other than the one with the lowest income is permitted to deduct child care expenses, then perhaps some other disposition of this appeal may have been possible. This is mere conjecture, however, and I must deal with this litigation on the basis of the law as it exists.

The appeal is dismissed.

Appeal dismissed.