Pierre Toutant v. Minister of National Revenue, [1978] CTC 2671, [1978] DTC 1499

Guy Tremblay [TRANSLATION]:—This case was heard- on June 10, 1977 in Montreal, Quebec.

1. Point of Issue

The Board must decide whether in respect of the 1974 taxation year the appellant, who is unmarried, is entitled to claim a personal exemption for Louise Di Césare, his common-law wife, and the mother of his two children.

2. Burden of Proof

The burden is on the appellant to show that the respondent’s assessment is incorrect. This burden of proof derives not from one particular section of the Income Tax Act, but from a number of judicial decisions, including the one delivered by the Supreme Court of Canada in R W S Johnston v MNR, [1948] CTC 195; 3 DTC 1182.

3. Facts

The facts are straightforward and not in dispute.

3.1 The appellant, who is unmarried, has for a number of years lived with Louise Di Cesare, with whom he has had two children, Nicolas and Sonia.

3.2 The appellant claimed, in respect of 1974, a married exemption for Louise Di Césare in the amount of $1,492, and $320 for each of his two children. Both children and Louise Di Césare were wholly dependant upon him during this year.

3.3 On July 21, 1975 the respondent, in assessing the appellant’s income tax return, disallowed the exemption of $1,492 for Louise Di Césare, but allowed $1,492 for his son, Nicholas, and $320 for his daughter Sonia under paragraph 109(1)(b) and paragraph 109(1)(d) respectively of the new Act. The appellant submitted that since no money was allowed for Louise Di Césare, the amount of tax payable was increased by $50.

3.4 On September 10, 1975, the appellant filed an objection to this assessment to which the Minister replied on April 30, 1976, upholding the notice of assessment.

3.5 On June 24, 1976 the appellant appealed to the Board.

4. Arguments, Act and Comments

4.1 In the appellant’s view, tax is not a question of ideology but of money. The fact that there was no church or civil marriage should not influence the application of the Income Tax Act.

In order to render its decision the Board must, of necessity, take into consideration the section that provides for the married exemption, namely, paragraph 109(1 )(a) of the new Act, which reads as follows:

Section 109. Deductions permitted by individuals.

(1) For the purpose of computing the taxable income of an individual for a taxation year, there may be deducted from his income for the year such of the following amounts as are applicable:

(a) Married status.—in the case of an individual who, during the year, was a married person who supported his spouse, an amount equal to the aggregate of

(i) $1,600, and

(ii) $1,400 less the amount, if any, by which the spouse’s income for the year while married exceeds $300.

In view of the fact that the Board is bound by the section of the Act, it does not have the right to disregard the words making up the section in question. It is bound by the words contained therein. The section refers to an individual who is a “married person”. However, according to the evidence submitted, the appellant was unmarried. Thus, the respondent was entitled to disallow the married exemption claimed by the appellant.

4.2 The Board considered whether an exemption for Louise Di Césare in the amount of $1,492 might not be claimed under paragraph 109(1 )(b) in view of the fact that she was wholly dependant upon the taxpayer and lived in the same establishment.

This article does not permit such an exemption in Louise Di Césare’s favour, since one of the conditions to be met requires the person to be connected with the taxpayer by blood relationship, marriage or adoption.

Paragraph 109(1)(b) reads as follows:

109. (1) (b) Wholly dependent persons.—in the case of an individual not entitled to a deduction under paragraph (a) who, during the year,

(i) was an unmarried person or a married person who did not support or live with his spouse and was not supported by his spouse, and

(ii) whether by himself or jointly with one or more other persons, maintained a self-contained domestic establishment (in which the individual lived) and actually supported therein a person who, during the year, was

(A) wholly dependant for support upon, and

(B) connected, by blood relationship, marriage or adoption, with the taxpayer, or the taxpayer and such one or more other persons, as the case may be,

an amount equal to the aggregate of

(iii) $1,600, and

(iv) $1,400 less the amount, if any, by which the income for the year of the dependent person exceeds $300.

In The Queen v Adolf Scheller, [1975] CTC 601; 75 DTC 54, Cattan- ach J of the Federal Court of Canada disallowed the exemptions claimed by a taxpayer for the woman to whom he was not married and for her brother, precisely because he was not connected with them by blood relationship, marriage or adoption. Even the exemption claimed by the taxpayer for his child as a wholly dependent person under paragraph 109(1)(d) was disallowed by the court because this child did not live with the taxpayer in a self-contained domestic establishment.

In the case at bar, the Board is of the opinion that the respondent was justified in allowing the taxpayer to claim for his son Nicolas the exemption for a wholly dependent person set forth in paragraph 109(1)(b).

4.3 The Board also considered whether the appellant was entitled to the child care expenses set forth in section 63 of the new Act. This section reads as follows:

Section 63. Child care expenses

(1) There may be deducted in computing the income for a taxation year of a taxpayer who is

(a) a woman, or

(b) a man

(i) who at any time in the year was not married,

(ii) who at any time in the year was separated from his wife pursuant to a written agreement,

(iii) whose wife is certified by a qualified medical practitioner to be a person who,

(A) by reason of mental or physical infirmity; and her confinement throughout a period of not less than 2 weeks in the year to bed, to a wheelchair or as a patient in a hospital, 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, or

(iv) whose wife was confined to prison throughout a period of not less than 2 weeks in the year,

amounts paid by the taxpayer in the year as or on account of child care expenses in respect of the taxpayer’s children, to the extent that

(c) payment of the amounts is proven by filing with the Minister receipts each of which contains the social insurance number of any individual payee who issued the receipt, and

(d) the aggregate of the amounts so paid by the taxpayer in the year does not exceed the least of

(i) $2,000,

(ii) the product obtained when $500 is multiplied by the number of the taxpayer’s children in respect of whom the child care expenses were incurred, and

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

According to the evidence submitted, there is no doubt that Louise Di Césare looked after the taxpayer’s children during the year, but the evidence did not show that the conditions stated above in paragraphs (c) and (d) were met. No proof was submitted that the appellant had paid Louise Di Césare. Further, subsection 63(4) of the new Act would prevent the application of this deduction:

63. (4) For the purposes of this section, it shall be assumed that a child of a woman and a man who were living together without being married to each other was ordinarily in the custody of the woman and not in the custody of the man.

The Board cannot, therefore, allow the appellant to include child Care expenses in computing his income.

5. Conclusion

The appeal is dismissed in accordance with the above reasons for judgment.

Appeal dismissed.