Ayala v. The Queen, 79 DTC 5083, [1979] CTC 111 (FCTD)

Collier, J:—This is an appeal from a decision of the Tax Review Board. The plaintiff, in 1974, sought to deduct, for income tax purposes, an amount of $984. That sum had been paid by him in respect of daycare expenses for his two pre-school children.

The plaintiff was employed as a social worker. His gross income for 1974 was $10,611.87. He was married. His wife, in that year, was a full-time law student at the University of Alberta. He and his wife were not separated “pursuant to a decree, order or judgment of a competent tribunal or pursuant to a written agreement”.

Obviously child care was required in order for these two parents to carry on, at the same time, their occupational pursuits.

I note, from the agreed statement of facts, the plaintiff claimed, in respect of his wife, a married exemption. His wife’s net income in 1974 was $685.64. He claimed, as well, a deduction of $400 in respect of his wife’s educational studies.

The authority for deducting child care expenses (up to certain maximums) is found in section 63 of the Income Tax Act SC 1970-71-72, c 63 as am. I set out the relevant portions of s 63:

63.(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 decree, order or judgment of a competent tribunal or 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

It was common ground, before the Tax Review Board and this court, the plaintiff did not fall within any of the categories set out in paragraph 63(1)(b). It seems clear that if the plaintiff’s wife had, in 1974, earned taxable income and paid the child care expenses, she would have been entitled to deduct them.

The plaintiff’s case is this. Section 63 creates discrimination by reason of sex, leading, in the case of the plaintiff, to inequality before the law. The Canadian Bill of Rights, RSC 1970, Appendix III, is, it is said, applicable; the offending portions of section 63 should be declared inoperative.

The Assistant Chairman of the Tax Review Board rejected the plaintiff’s appeal [1978] CTC 2299; 78 DTC 1262 from the Minister of National Revenue’s assessment disallowing the claimed deduction. The appeal to this court followed.

At this stage, I set out the well-known, but pertinent, portions of the Canadian Bill of Rights:

PART I

Bill of Rights

1. It is hereby recognized and declared that in Canada there have existed and shall continue to exist without discrimination by reason of race, national origin, colour, religion or sex, the following human rights and fundamental freedoms, namely,

(a) the right of the individual to life, liberty, security of the person and enjoyment of property, and the right not to be deprived thereof except by due process of law;

(b) the right of the individual to equality before the law and the protection of the law;

(c) freedom of religion;

(d) freedom of speech;

(e) freedom of assembly and association; and

(f) freedom of the press.

2. Every law of Canada shall, unless it is expressly declared by an Act of the Parliament of Canada that it shall operate notwithstanding the Canadian Bill of Rights, be so construed and applied as not to abrogate, abridge or infringe, or to authorize the abrogation, abridgment or infringement of any of the rights or freedoms herein recognized and declared, and in particular, no law of Canada shall be construed or applied so as to

The plaintiff founds his case on F? v Drybones, [1970] SCR 282. The effect of the Drybones case was succinctly stated by Martland, J in R v Burnshine, [1975] 1 SCR 693 at 706:

It was felt by the majority in that case that the section deliberately created a specific type of offence, subject to punishment, which could be committed only by Indians, and that, in consequence, an inequality before the law had been created, based upon racial grounds. The scope of this judgment was spelled out by Ritchie, J, who delivered the majority reasons, at 298, as follows:

It appears to me to be desirable to make it plain that these reasons for judgment are limited to a situation in which, under the laws of Canada, it is made an offence punishable at law on account of race, for a person to do something which all Canadians who are not members of that race may do with impunity; in my opinion the same considerations do not by any means apply to all the provisions of the Indian Act.

The plaintiff applies the Drybones result, to his situation, as follows: section 63 permits the deduction of child care expenses (subject to certain conditions); those deductions can be claimed by all female taxpaying parents; only certain male taxpaying parents are given the same right; a large segment of male taxpaying parents, such as he, is excluded; “in consequence, an inequality before the law [has] been created, based upon ..discrimination by reason of sex.

Federal statutes need not apply to all individuals in the same manner. That principle was repeated in Prata v MMI, [1976] 1 SCR 376 at 382. Prata had been ordered deported. He appealed to the Immigration Appeal Board, seeking the exercise of its discretion on compassionate or humanitarian grounds. But a certificate was filed by two Ministers of the Crown pursuant to section 21 of the relevant statute. Section 21 stripped the Immigration Appeal Board of its discretionary power where the certificate, “based upon security or criminal intelligence reports”, stated it would be contrary to the national interest for the Board to intervene by way of its discretionary power. Prata endeavored to invoke the Bill of Bights. Martland, J said:

The second ground of appeal is that the provisions of the Canadian Bill of Bights prevent the application of section 21 in accordance with its terms, in the circumstances of the present case.

It is contended that the application of section 21 has deprived the appellant of the right to “equality before the law” declared by paragraph 1(b) of the Canadian Bill of Rights. The effect of this contention is that Parliament could not exclude from the operation of s 15 persons who the Crown considered should not, in the national interest, be permitted to remain in Canada, because such persons would thereby be treated differently from those who are permitted to apply to obtain the benefits of s 15. The purpose of enacting s 21 is clear and it seeks to achieve a valid federal objective. This Court has held that paragraph 1(b) of the Canadian Bill of Rights does not require that all federal statutes must apply to all individuals in the same manner. Legislation dealing with a particular class of people is valid if it is enacted for the purpose of achieving a valid federal objective (R v Burnshine).

The plaintiff says there was a valid federal objective in section 21 of the Immigration Appeal Board Act, but that is not the case with section 63 of the Income Tax Act.

I disagree.

The Income Tax Act has a number of provisions in which certain taxpayers receive benefits in the form of deductions or other concessions, while others are not so favored. In respect of section 63 the legislators sought, as I see it, to provide some relief to a working parent, having custody of children, who incurred child care expenses.* [1] That, in my view, is a valid federal objective. It is not made invalid because one class of taxpaying parent (whether male or female) was given relief, and other classes of taxpaying male parents were not.

There is not, in section 63, to my mind, discrimination by reason of sex, inequality before the law, or both, or a combination. The legislation is directed to the status of certain parents who incur child care expenses. The qualifications for deductions, in respect of a female parent, are less restrictive than in the case of a male parent. One can speculate on the reasons for the difference: the role, historically at least, of women in providing most of child care during infancy; or perhaps, again historically, the economic earning power of the working woman compared to the working man.

In any event, the differences, and whatever the legislative reasons for them, do not, as I see it, run section 63 afoul of the Canadian Bill of Rights.

My conclusion is, I think, reinforced by the most recent decision of the Supreme Court of Canada dealing with the Canadian Bill of Rights, and inequality before the law: Bliss v A G Canada, [1978] 6 WWR 711 affirming Re A G v Bliss (1977), 77 DLR (3d) 609 (FCA). The appellant, because of pregnancy, ceased employment. She did not qualify for the special pregnancy benefits conferred by section 30 of the Unemployment Insurance Act. A few days after confinement she became capable of and available for work. She could not find employment. Her claim for “ordinary” benefits, as opposed to pregnancy benefits, was rejected. Section 46 of the Regulations denied benefits, subject to section 30, to pregnant claimants for a period of 8 weeks prior to confinement and 6 weeks after. The appellant invoked the Bill of Bights, alleging discrimination by reason of sex (males were not subject to the prohibitions of section 46), leading to inequality before the law. Alternatively, the appellant contended section 46, quite apart from any discrimination, created inequality before the law.

The appellant failed.

Ritchie, J, for the Court, said, in respect of the prescribing of conditions of entitlement to unemployment insurance benefits (p 713):

. . It Was, in my view, necessary for the effective exercise of the authority conferred by paragraph 91(2A) of the BNA Act that Parliament should prescribe conditions of entitlement to the benefits for which the Act provides. The establishment of such conditions was an integral part of a legislative scheme enacted by Parliament for a valid federal purpose in the discharge of the constitutional authority entrusted to it under paragraph 91(2A), and the fact that this involved treating claimants who fulfil the conditions differently from those who do not, cannot, in my opinion, be said to invalidate such legislation.”

Those words envelope, as I see it, the scheme of the Income Tax Act and the conditions, provided by section 63, entitling deductions.

Ritchie, J went on (p 718):

As I have indicated, s 46 constitutes a limitation on the entitlement to benefits of a specific group of individuals and as such was part of a valid federal scheme. There is a wide difference between legislation which treats one section of the population more harshly than all others by reason of race as in the case of R v Drybones, supra, and legislation providing additional benefits to one class of women, specifying the conditions which entitle a claimant to such benefits and defining a period during which no benefits are available. The one case involves the imposition of a penalty on a racial group to which other citizens are not subjected; the other involves a definition of the qualifications required for entitlement to benefits, and in my view the enforcement of the limitation provided by s 46 does not involve denial of equality of treatment in the administration and enforcement of the law before the ordinary courts of the land as was the case in Drybones.

The plaintiff, in this case, has further difficulties. Assuming that section 63 does offend the provisions of the Canadian Bill of Rights, what can this Court do in order to direct the Minister of National Revenue to permit the deduction the plaintiff claims? Manifestly, the whole of subsection 63(1) cannot be declared inoperative or sterilized. The plaintiff suggests the words of the subsection beginning with subparagraph 63(1 (b)(i) and ending with subparagraph 63(1)(b)(ii) be declared inoperative. The subsection would then permit all male or female parent taxpayers to deduct child care expenses.

I cannot accept that suggestion. It would, in my opinion, be equally logical to declare inoperative the unrestricted right of every female parent to the deductions. A declaration to the latter effect would, of course, not assist the plaintiff.

In respect of a somewhat similar difficulty in another case, I said:* [2]

There is, it seems to me, a further problem (again assuming discrimination): which part of section 10 is to be declared offensive, the requirement of one year’s residence on the part of the female spouse or the five-year residence requirement on the part of most other persons? To hold one way or the other would, to my mind, be amendment of the legislation, which is not contemplated by the Bill of Rights.

The plaintiff’s action is dismissed. The decision of the Tax Review Board is affirmed. The defendant is entitled to costs.