Date:
20091210
Docket: A-432-08
Citation: 2009 FCA 367
CORAM: BLAIS
C.J.
NOËL
J.A.
TRUDEL
J.A.
BETWEEN:
L. PILETTE
Appellant
and
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT
TRUDEL J.A.
Introduction
[1]
Ms.
Pilette is appealing a judgment of Justice Lamarre-Proulx (the Judge) of the
Tax Court of Canada concerning the credit for a wholly dependent person under
paragraph 118(1)(b) of the Income Tax Act, R.S.C. 1985, c. 1 (5th
Supp.) [the Act], (2008 TCC 336, June 6, 2008).
[2]
The
constitutional question the appellant is inviting us to rule on in this case is
whether clause 118(1)(b)(ii)(D) of the Act infringes subsection 15(1) of
the Canadian Charter of Rights and Freedoms, Part I of the Constitution
Act, 1982, being Schedule B to the Canada Act 1982 (U.K.), 1982, c.
11 (the Charter), on the basis that it establishes a distinction based on (a)
age with respect to the tax credit for a wholly dependent person (the TCWDP)
and also (b) the family and economic status of the appellant who, during the
relevant period, was living alone with her daughter, who was over the age of 18
and not mentally or physically infirm.
[3]
In
my view, the question must be answered in the negative in this case. Accordingly,
the appellant is not entitled to the TCWDP which she was denied by the Minister
of National Revenue (the Minister) for the 2005 tax year.
Legislation
[4]
In
order to properly grasp the appellant’s position, I am reproducing in the Annex
paragraph 118(1)(b) of the Act (in force at the relevant time), which
deals with various personal credits. The conditions under which these
credits are granted vary, among other things, according to an individual’s
personal circumstances and whether any children or persons with disabilities
are dependent on that individual and the age of those children or persons.
These variations are at the heart of the arguments of
the appellant, who is invoking a combination of grounds to plead discrimination.
[5]
The
legislation shows that the credit sought by the appellant is offered to an
individual who satisfies the following conditions: he or she is single,
divorced, separated or widowed and, whether alone or jointly with one or more
other persons, maintains a self-contained domestic establishment (in which the
individual lives) and actually supports in that establishment a third party. The
third party must be resident in Canada (except if he or
she is a child of the individual), be related to the individual, be under 18
years of age or be the parent or grandparent of the individual, or be suffering
from a mental or physical infirmity.
Relevant facts
[6]
In
2005, the appellant met only the conditions relating to family circumstances
and housing, since her daughter was over the age of 18, having been born on
June 10, 1986, and was not suffering from a physical or mental infirmity. These
facts are not in dispute.
[7]
Subsection
118(1) sets out the applicable formula for calculating the basic personal
amount, the spousal amount (118(1)(a)) and the amount for a dependent
(118(1)(b)) (equivalent to spouse credit). The formula is
similar in both paragraphs. The amount
eligible for the credit corresponds to the personal tax credit amount less the
spouse’s or the dependent’s net income during the qualifying period.
Appellant’s position
[8]
According
to the appellant, this formula places all taxpayers who are breadwinners,
whether they are married or not, on an equal footing. In the
appellant’s opinion, this is the only prescriptive rule that is immune from
review of the provision under section 15 of the Charter.
[9]
Consequently,
the exclusion claimed by the Minister—according to her, the only exception to this
general rule—creates a discriminatory distinction under the Charter. The
reason for the alleged discrimination is, according to the appellant, a ground
enumerated in section 15 of the Charter, namely the age of the wholly
dependent person. She further argues that the exclusion is based on
the family status of taxpayers living alone with a young adult over the
age of 18, thus constituting an analogous category of grounds for
discrimination.
[10]
The
essence of the appellant’s argument can be found at paragraphs 29 to 31 of
her memorandum:
[Translation]
29. The
appellant draws the Court’s attention to the fact that the impugned exclusion
creates two categories of taxpaying breadwinners: spouses, who deserve lifetime
tax relief, regardless of the age of their principal if not sole dependant, and
the breadwinners of single-parent families, who may or may not be deserving of
tax relief, depending on the age of their dependent.
30. A
breadwinner living with a thirty- or forty-year old spouse can benefit from a
major tax credit even if he has the same income as a breadwinner living with
her eighteen-year old student daughter who is not entitled to that credit. This
tax relief exclusion is the product of vexatious stereotypes that undermine the
dignity of families whose sole breadwinner is a single parent.
. . .
31. The
impugned exclusion contradicts the rational, appropriate criteria of
subsection 118(1) for the subtraction of the dependent person’s actual
income; it also contradicts the civil law in effect, at least in the province
where the appellant was residing at the relevant time. If federal law can
define tax parameters, the constitutional interpretation of its rules cannot
encroach on civil law. As the appellant pointed out before the Tax Court of
Canada, a parent’s obligation of support, in civil law, is neither reserved
specifically for minors nor inferior to the obligation of spouses. Both the Civil
Code and the legislative scheme governing financial assistance for
education expenses are contrary to such prejudice.
[11]
The
appellant’s position is tantamount to saying that as long as she alone is
actually supporting her daughter, regardless of her daughter’s age and mental
or physical health, she is entitled to the TCWDP. Regardless of the fact that,
in this case, it was the appellant’s choice to support her daughter, whom, in
exchange, she had asked to focus on her studies and to only engage in
housekeeping in the shared domestic establishment (appeal book, at pages 6–7) without,
in addition, trying to hold a part-time job (appeal book, transcript of the
hearing before the Tax Court of Canada, at page 92).
[12]
Lastly,
according to the appellant, the exclusion cannot be justified under
section 1 of the Charter. In her opinion, nothing in the respondent’s
evidence explains the objectives of the legislation [translation] “in enacting
the impugned exclusion, let alone how this exclusion is commensurate with a
pressing objective” (appellant’s memorandum, at paragraph 49).
Respondent’s position
[13]
The
respondent submits that the Judge did not commit a reviewable error in finding
that the appellant had not demonstrated discrimination based on the analogous
ground chosen in this case. Otherwise, discrimination based on these grounds
would be justified under section 1 of the Charter.
[14]
The
respondent argues that the distinction based on family status is not an
analogous ground. Furthermore, the credit provided by paragraph 118(1)(b)
can also not be claimed by individuals who are married or in a common-law
partnership and living together. The Judge did not commit a palpable and
overriding error when she found that the appellant had not demonstrated that
the economic situation of single-parent families is a homogeneous economic
situation involving a vulnerable group. Even though the respondent is of the
opinion that the analysis need go no further, the distinction provided by
paragraph 118(1)(b) of the Act does not create a disadvantage through
the perpetuation of prejudice or stereotyping (respondent’s memorandum, at
paragraphs 30 and 31–40).
[15]
Moreover,
the respondent accepts that age by association is a distinction based on an
analogous ground, even though this ground has never been generally recognized.
However, according to the respondent, the appellant has failed to demonstrate
that young people over the age of 18 are a historically disadvantaged group
through the perpetuation of prejudice or stereotyping (ibid, at
paragraphs 52–54, 58 and 62).
Tax Court of Canada’s decision
[16]
The Judge dismissed
the appellant’s arguments, hence this appeal. Even though I agree with the
judgment under appeal, my reasons differ in part from the Judge’s. I will
therefore deal with the Judge’s reasons in my analysis. In fact, I propose
dismissing the appeal by concluding that the benefit sought by the appellant is
not one provided for by the Act and that subsection 15(1) of the Charter
has therefore not been infringed. In short, I will examine the appeal in light
of Auton (Guardian ad litem of) v. British Columbia (Attorney General), [2004] 3 S.C.R.
657 [Auton] and the more recent Ali v. Canada, 2008 FCA 190 [Ali].
Standard
of review
[17]
A question of constitutionality requires the standard of
correctness, while the application of subsection 15(1) of the Charter to
the facts of a case is reviewable on a standard of palpable and overriding
error. The Judge’s findings on the evidence she accepted are therefore subject
to the latter (Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at paragraphs
8, 10 and 26).
Analysis
[18]
Subsection 15(1)
of the Charter “. . . is aimed at preventing discriminatory
distinctions that impact adversely on members of groups identified by the
grounds enumerated in section 15 and analogous grounds” (R. v. Kapp, 2008
SCC 41, [2008] 2 S.C.R. 483 [Kapp], at paragraph 16). [Emphasis
added.]
[19]
As the Judge
pointed out, it follows that not all distinctions are discriminatory (reasons
for judgment, at paragraph 25). In Thibaudeau v. Canada, [1995] 2
S.C.R. 627, at paragraph 91, Justice Gonthier noted that “[i]t is of the
very essence of the [Act] to make distinctions, so as to generate revenue for
the government while equitably reconciling a range of necessarily divergent
interests”.
[20]
Moreover,
subsection 15(1) of the Charter will not be infringed where the benefit
sought is not granted to anyone (Auton and Ali, supra). Chief
Justice McLachlin’s comments in Auton are relevant in that respect:
41 It
is not open to Parliament or a legislature to enact a law whose policy
objectives and provisions single out a disadvantaged group for inferior
treatment: Corbiere v. Canada (Minister of Indian and Northern Affairs),
[1999] 2 S.C.R. 203. On the other hand, a legislative choice not to accord a
particular benefit absent demonstration of discriminatory purpose, policy or
effect does not offend this principle and does not give rise to s. 15(1) review.
This Court has repeatedly held that the legislature is under no obligation
to create a particular benefit. It is free to target the social programs it
wishes to fund as a matter of public policy, provided the benefit itself is
not conferred in a discriminatory manner: Granovsky v. Canada (Minister
of Employment and Immigration), [2000] 1 S.C.R. 703, 2000 SCC 28, at para. 61; Nova Scotia (Attorney General) v. Walsh, [2002] 4 S.C.R. 325, 2002 SCC 83, at
para. 55; Hodge, supra, at para. 16.
[Emphasis added]
[21]
My collegue
Ryer, J.A., stated as follows in Ali:
14. It is
apparent from the passage in Auton that a legislative choice to accord a
particular benefit under the legislation under consideration can potentially
give rise to a valid claim that subsection 15(1) of the Charter has been
infringed. Paragraph 42 of Auton informs that such an infringement
can arise if the legislation discriminates directly, by adopting a
discriminatory policy, or indirectly, by effect. With respect to the more
difficult issue of discrimination by effect, the Supreme Court of Canada stated, in
that paragraph, that the non-inclusion of a benefit is unlikely to be
discriminatory if that non-inclusion is consistent with the purpose and scheme
of the relevant legislation.
[Emphasis added]
[22]
In this
case, how do the facts apply to the principles arising from Auton and Ali?
To answer this question, I will start by examining the first analogous ground
chosen by the appellant, that of age.
Age
[23]
The
appellant, as I have indicated, alleges that the distinction based on her daughter’s
age is an enumerated ground (appellant’s memorandum, at paragraph 22), while
the respondent concedes that the distinction is an analogous ground within the
meaning of subsection 15(1), since [translation]
“it is not the appellant’s age that is at issue but that of the dependent
person . . .” (respondent’s memorandum, at paragraphs 49 and
51).
[24]
For the
purposes of this appeal, I need not resolve this dispute. Nevertheless, I must
note that the respondent could not have expected this Court to simply
acknowledge the respondent’s acquiescence to recognizing a new analogous ground,
namely [translation] “age by association”,
without further legal demonstration.
[25]
No
individual, regardless of his or her family status, is entitled to a tax credit
for a dependent child 18 years of age or older who is not suffering from a
mental or physical infirmity. Yet this is the benefit sought by the appellant.
[26]
I
recognize that the parties do not support the Auton or Ali
approach, but they have not convinced me of their arguments to the contrary. Specifically,
it appears to me that the parties are wrong about the scope of Ali. Ali
states clearly and simply that in the absence of direct or indirect
discrimination, a legislative choice not to accord a particular benefit (Auton,
ibid.) does not engage the right to equality set out in section 15.
Indeed, this was the principle laid down in Auton, in which the Supreme
Court reminded us that “[t]he specific role of s[ubsection] 15(1) in
achieving this objective is to ensure that when governments choose to enact
benefits or burdens, they do so on a non-discriminatory basis. This confines
s[ubsection] 15(1) claims to benefits and burdens imposed by law” (Auton,
at paragraph 28).
[27]
According
to the parties, this criteria cannot apply in this case since, in contrast to Auton
and Ali, the Act clearly creates [translation]
“a distinction based on the alleged grounds of discrimination, namely family
status and the age of the dependent child” (respondent’s submissions, October 2,
2009, at page 3; appellant’s representations on Ali et Markel v. R.,
October 7, 2009, at paragraph 1), causing the respondent to state
that [translation] “discrimination
by effect” does not even arise in this case (ibid., at paragraph 7).
[28]
I do not
think that there is reason to narrow the scope of Auton in respect of
the specific facts of this case. In Auton, the Supreme Court was dealing
with a legislative scheme that funded a number of programs for autistic
children, to the exclusion of funding ABA/ICI therapy for all autistic children
between the ages of three and six, because of, inter alia, financial
constraints and the emergent and controversial nature of this therapy. The
Supreme Court dismissed the discrimination argument on the grounds that
exclusion was “an anticipated feature of the legislative scheme” (Auton,
at paragraph 43) and that it was not established that the government had “excluded
autistic children on the basis of disability” (Auton, at paragraph 3).
[29]
In Ali,
this Court was dealing with the effect of the Act’s provisions on the tax
credit for the purchase of drugs prescribed by a medical practitioner or
dentist and recorded by a pharmacist, which excluded the expenses incurred to
purchase natural health products suggested by a naturopath.
[30]
Similarly,
this Court is dealing with the effect of the Act’s provisions on the tax credit
for a dependent person, which excludes dependent children over the age of 18
not suffering from a mental or physical infirmity. I cannot see how this
sequence of facts is immune from the analytical approach proposed in Auton.
We may also ask whether the legislative scheme is discriminatory, since it accords
a benefit to some groups while denying it to certain individuals (see Auton,
at paragraph 39). In order to determine this, we can also examine the
impugned provision to see whether it has a discriminatory purpose (direct discrimination)
or effect (indirect discrimination).
[31]
This is
the exercise I am compelled to do. If I do not identify any discrimination, a
section 15 analysis will not be necessary (Auton, at
paragraph 41).
[32]
Clause 118(1)(b)(ii)(D)
does not systematically exclude all dependent children aged 18 and over, only
those who do not suffer from a mental or physical infirmity, regardless of the
family status of the parent or parents they depend on.
[33]
This
age-based distinction is one of the many distinctions contained in the Act,
including in:
·
section 63:
the deduction for child care expenses for children under the age of 16;
·
paragraph 118(1)(b.1):
the child amount for children under the age of 18;
·
paragraph 118(1)(c.1):
the caregiver amount, for which the individual has attained the age of 18 years
or the age of 65 years;
·
paragraph 118(1)(d):
the credit for dependants 18 years old and over;
·
subsection 118(2):
the age credit for individuals 65 years old and over;
·
subsection 118.01(2):
the adoption expense tax credit, for which the “eligible child” has not
attained the age of 18 years;
·
subsection 118.02(2):
the transit pass tax credit, for which a child of the individual who has not,
during the taxation year, attained the age of 19 years is considered to be a “qualifying
relation”;
·
subsection 118.03(2):
the child fitness tax credit for children under 16 years of age, or under 18
years of age where the credit for mental or physical impairment is claimed
under section 118.3;
·
section 122.6:
the Canada Child Tax Benefit, for which a “qualified dependant” has not
attained the age of 18 years;
·
section 122.7:
the Working Income Tax Benefit, for which an “eligible individual” was 19 years
of age or older and an “eligible dependant” was under the age of 19 years.
[34]
The
appellant alleges that the exclusion in question is the result of an [translation] “opinion of Parliament
that legal age automatically means financial independence” (appellant’s
memorandum, at paragraph 26).
[35]
But
several other federal statutes set at 18 the age for exercising rights, such as
the right to vote (Canada Elections Act, S.C. 2000, c. 9, section 3)
and the right to contribute to a pension plan (Canada Pension Plan, R.S.C.
1985, c. C-8, section 12). Subsection 5.1(2) of the Citizenship
Act, R.S.C. 1985, c. C-29, stipulates that the Minister shall on
application grant citizenship to a person who was adopted by a citizen on or
after January 1, 1947, while the person was at least 18 years of age.
Subsection 8(1) of the Tobacco Act, S.C. 1997, c. 13, provides that
no person shall furnish a tobacco product to a young person, namely a person
under 18 years of age, in a public place or in a place to which the public
reasonably has access.
[36]
Moreover,
the non-inclusion of the sought benefit is consistent with the purpose and
scheme of the impugned legislation (see Ali, above, at paragraph 16).
With regard to the legislative scheme of the Act, the Tax Court of Canada Judge
referred to the preliminary remarks made by Justice Tremblay-Lamer at
paragraph 29 of Canada v. Mercier (T.D.), [1997] 1 F.C. 560 [Mercier]:
At this
point, the specific characteristics of the Income Tax Act should be considered.
In determining whether the provision in question draws a distinction, I must
bear in mind the specific nature of the Act and the personal credit schemes it
establishes. In Thibaudeau ([1995] 2 S.C.R. 627, at page 702), the
Supreme Court of Canada held that it is intrinsic to the Income Tax Act
to create distinctions so as to generate revenue for the state while equitably
reconciling a set of interests that are necessarily divergent.
[37]
The
impugned legislative scheme is the result of the 1987 tax reform, which was
described in The White Paper: Tax Reform 1987 dated June 18, 1987, by
Minister of Finance Michael H. Wilson, as follows:
A credit of
$850 will also replace the current equivalent-to-married exemption but the
credit will only be claimable in respect of a parent or grandparent of the
taxpayer, a person related to the taxpayer who is infirm, or a dependant under
18 years of age. This latter restriction is consistent with the removal of
the exemption for dependent children 18 years of age and over, and reflects the
fact that the age of majority is now 18.
[Emphasis
added]
[38]
As one can
read at paragraph 46 of Mercier, at the same time, Parliament also chose
. . .
to make the system more consistent and harmonize it with other legislative
provisions in order to preclude, for example, a person being considered
independent under certain legislative provisions but dependent under others.
The reform was intended to provide tax relief to taxpayers with dependants
whose ability to be independent is limited, namely minors, adults with a mental
or physical infirmity and parents or grandparents.
[39]
Indeed,
the 1987 tax reform was designed to meet five broad objectives: fairness, competitiveness,
simplicity, consistency and reliability (respondent’s book of statutes,
regulations and authorities, Volume 2, Tab C). In that vein, the
exemption for dependent children 18 years of age and over was removed,
reflecting the fact that the age of majority was 18 (The White Paper: Tax
Reform 1987, respondent’s book of statutes, regulations and authorities, Volume 2,
Tab C; reasons at paragraph 26).
[40]
I
therefore find that Parliament’s decision not to broaden the credit in the
context at bar is not discriminatory.
[41]
Indeed,
this was the Judge’s conclusion, and even though she did not perform the
structured analysis generally required by an allegation of discrimination under
section 15 of the Charter within the meaning of Kapp and Andrews
v. Law Society of British Columbia, [1989] 1 S.C.R. 143, or an analysis
under Auton, a close reading of her reasons satisfies me that she had
the principles that apply in this regard in mind and that she did not commit a
palpable and overriding error in applying these principles to the relevant
facts.
[42]
Furthermore,
even if I were to adopt the approach suggested by the parties, I would have to
dismiss the appellant’s arguments as to age, since I was not satisfied that the
Judge committed a palpable and overriding error in finding that “I am far from
thinking that young adults over the age of 18 who remain dependent on their
parents are a group that suffers from social prejudice and that the provision
in issue arose out of that prejudice” (reasons, at paragraph 26). The
evidence on file allowed the Judge to find that the distinction under review
for healthy dependent children over the age of 18 was not inconsistent with the
purpose and scheme of the Act.
Family status
[43]
With
regard to this ground, the Judge also ruled that the appellant had not
discharged her burden. In light of the accepted evidence, the Judge found that
single-parent family incomes “can vary considerably” and that this was “not a
homogeneous economic situation involving a vulnerable group” (reasons, at
paragraph 27). Once again, I am not satisfied that she committed a
palpable and overriding error in concluding as she did.
Conclusion
[44]
Consequently,
I would dismiss this appeal with costs.
“Johanne
Trudel”
“I
agree.
Pierre Blais C.J.”
“I
agree.
Marc Noël J.A.
Certified
true translation
Johanna
Kratz
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