Citation: 2007TCC195
Date: 20070412
Docket:
2006-2149(IT)I
BETWEEN:
MANON LABRECQUE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR
JUDGMENT
Favreau J.
[1] This
is an appeal by informal procedure from a new notice of assessment dated
November 1, 2004, concerning the appellant's 2003 taxation year, by which the
Minister of National Revenue (the "Minister") disallowed a deduction
in the amount of $635 for child care expenses, as defined at subsection 63(3)
of the Income Tax Act (Canada) (the "Act").
Facts
[2] The
appellant and her spouse, Richard Joly, are both professionals who held full-time
employment in 2003 in the field of finance and accounting. The couple's normal
work week was approximately 40 hours from Monday to Friday between 9:00 a.m. and 5:00 p.m. The couple has two
children, the elder of whom, Simon (born March 11, 1997) is a non-verbal autistic child for whom
child care expenses were claimed for services rendered on Saturdays. The
appellant claimed the deduction for child care expenses because she had a lower
net income than her spouse in 2003.
[3] According
to the documentation consulted (www.autisme.qc.ca and the Guide pour parents
et responsables d’enfant autistique by the Quebec Society for Autism), autism
is part of a group of pervasive developmental disorders characterized by impairments
in social interaction and verbal and non-verbal communication, and by repetitive,
stereotypic behaviours in all activities.
[4] Autistic
children require constant attention and supervision. They have a tendency to
run away and self-harm. They often have sleep disorders and are generally very
agitated. The slightest change in their habits may entail hysterical temper
tantrums. The behavioural problems of autistic children and their inability to
communicate can make family life very difficult. Parents of older autistic
children, educators and professionals working with autistic children agree that
it is practically impossible for parents to shoulder the entire burden of
taking care of an autistic child in a home setting, and this is why it is
important for parents to learn to judiciously delegate responsibilities to
third parties and to structure their daily activities as best they can.
[5] The
child care expenses for which the deduction is contested were paid to the Association
de Parents de l’Enfance en Difficulté de la Rive-Sud de Montréal (the
"Association"). The objectives of this parents' association are as
follows:
·
support parents in developing their parenting skills and in
obtaining the services required to keep their child with the family;
·
end the isolation of parents by giving them a chance to meet
with support groups or participate in training sessions or information evenings;
and
·
promote the needs and defend the rights and interests of
young people and their families.
[6] To
attain its objectives, the Association actively participates in the development
of resources for youngsters and their parents: respite care, leisure
activities, support groups, toy library, training sessions and information
evenings.
[7] Activities
and services for youngsters include "Loisirs du samedi". Essentially,
this is a child care service for autistic children available Saturdays from
10:00 a.m. to 3:45 p.m. The ratio of supervision is
one instructor for every two children. Services are given in a recreational
context and are adapted to the moods and specific limitations of the children who
attend.
Nature
of the case
[8] This
case essentially concerns the deduction of child care expenses for an autistic
child for services rendered on various dates, but always on Saturdays. Because
neither of the parents works on Saturday, the Minister is of the opinion they
are not eligible for a deduction for child care expenses because the expenses
were not incurred to perform
the duties of an office or employment.
[9] The
Act defines "child care expense" at subsection 63(3). Therefore, the question
to be determined is whether it is absolutely necessary for the taxpayer to hold
employment at the precise moment when child care services are rendered, or
whether it is enough to show that the services in question allowed the taxpayer
to hold and maintain employment at any time during the other days of the week
(from Monday to Friday in this case).
Relevant
provisions of the Act
[10] Subsection
63(3) of the Act defines the expression "child care expense" as
follows:
"child
care expense" means an expense incurred in a taxation year for the
purpose of providing in Canada, for an eligible child of a taxpayer, child care services
including baby sitting services, day nursery services or services provided at a
boarding school or camp if the services were provided
(a) 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,
(i)
to perform the duties of an office or employment,
(ii)
to carry on a business either alone or as a partner actively engaged in
the business,
(iii)
[Repealed]
(iv)
to carry on research or any similar work in respect of which the taxpayer
or supporting person received a grant, or
(v) to attend a designated educational
institution or a secondary school, where the taxpayer is enrolled in a program
of the institution or school of not less than three consecutive weeks duration
that provides that each student in the program spend not less than
(A) 10 hours per
week on courses or work in the program, or
(B) 12 hours
per month on courses in the program, and
(b) by a resident of Canada other than a person
(i)
who is the
father or the mother of the child,
(ii)
who is a
supporting person of the child or is under 18 years of age and related to the
taxpayer, or
(iii) in
respect of whom an amount is deducted under section 118 in computing the tax
payable under this Part for the year by the taxpayer or by a supporting person
of the child,
except that
(c) any such expenses paid in
the year for a child's attendance at a boarding school or camp to the extent
that the total of those expenses exceeds the product obtained when the periodic
child care expense amount in respect of the child for the year is multiplied by
the number of weeks in the year during which the child attended the school or
camp, and
(d) for
greater certainty, any expenses described in subsection 118.2(2) and any other
expenses that are paid for medical or hospital care, clothing, transportation
or education or for board and lodging, except as otherwise expressly provided
in this definition, are not child care expenses;
[11] For
the purposes of these proceedings, it is admitted that Simon is an eligible
child and that the services provided through "Loisirs du samedi" are child
care expenses and not eligible medical expenses. To be eligible, the expenses
must have been incurred for
the purpose of providing in Canada, for an eligible child, child care
services if the services were provided to enable the taxpayer to
perform the duties of an office or employment.
Parliament's intent and case law
[12] To
highlight the purpose and spirit underlying the deduction for child care
expenses, in Symes v. The Queen, [1993] 4 S.C.R. 695, 94 DTC 6001,
Iacobucci J. cited the following excerpt from "Proposals for Tax
Reform" (1969) (E.J. Benson, Minister of Finance):
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 she or
he 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.
2.9 This new deduction for child care
costs would be a major reform. While it is not possible to make an
accurate forecast of the number who would benefit from this new deduction, it
seems likely to be several hundred thousand families. It would assist
many mothers who work or want to work to provide or supplement the family
income, but are discouraged by the cost of having their children cared for.
[13] In
Bailey v. The Queen, 2005 DTC 673,
Rip J. of this Court made the following comment about section 63 of the Act:
Section 63
provides a limited tax deduction for parents who require their children to be
supervised because they are employed outside the home. Subsection 63(3)
provides for a general deduction of expenses a working parent pays for the
purpose of caring for their children. This deduction is restricted when the
amount was paid for various other services such as education, hospital care or
board and lodging.
[14] In
Sawicki v. The Queen, 98 DTC 3355, Lamarre Proulx J. of this Court made
the following comment:
The child care services
included in the definition are baby-sitting services, day nursery services or
services provided at a boarding school or camp. It follows from the use of these
associated words that the child care services contemplated in s. 63 of the Act
are services provided for the care of children when the parent cannot provide
such care because of his employment or his business. It is in this sense that
the child care services enable the parent to perform his employment duties or
to carry on business.
[15] This
case involved child care expenses incurred on weekends and holidays so that the
taxpayer would be less prone to stress and depression while working weekdays.
The taxpayer's appeal was dismissed mainly because no evidence was adduced
apart from proof that the child care expenses were paid.
[16] In
Andrée d’Amours v. Minister of National Revenue, 90 DTC 1824, Lamarre Proulx J. stated the problem as
follows:
In a case such as this
we must analyse the child care expenses claimed and determine whether they were
related to the employment. I have concluded that the expenses claimed in this
appeal were incurred to enable the appellant to perform the duties of her
employment.
[17] Lamarre
Proulx J. allowed the appeal on the basis of the following facts:
The
appellant is a dental hygienist employed by the CLSC in Paspébiac. In late October 1984, when she was pregnant with her fourth child, she was
allowed to leave her work as a preventive measure. The child was born on
November 29, 1984. Under the collective agreement that applied to her, the
appellant continued to receive 95 per cent of her salary in accordance with the
following formula: the employee received the benefits to which she was entitled
under the unemployment insurance scheme and the employer made up the
difference.
The
appellant employed a babysitter in 1984 and kept this babysitter in her employ
in the first four months of 1985. Between May and August the babysitter agreed
temporarily to stop working for the appellant and began again in September, at
which time the appellant returned to the duties of her employment. It is the
expenses incurred for the services performed by this babysitter in the first
four months of 1985 that are the subject of the dispute.
[18] According
to Lamarre Proulx J., the legislation did not restrict the right to deduct
child care expenses to only those persons who are physically at work. She wrote
the following at page 1826:
(3) If
Parliament had wished to limit the application of this right to the period in
which the person is physically at work, why would it have included in the
definition of earned income certain sources of income other than earnings and
gratuities such as, for example, the benefits described in paragraph 6(1)(f).
Parliament could have limited the definition of earned income to wages,
salaries and other remuneration, including gratuities, received by the person
in respect of, in the course of or by virtue of offices and employments. If the
respondent's reasoning is taken to the limit, Parliament could even have
excluded income earned during vacations from the definition of earned income. I
am forced to conclude, therefore, that Parliament did not rule out situations
where the person receives benefits in respect of, in the course of or by virtue
of employment that he still holds, without being physically present at the work
place, to the extent that the expenses claimed were incurred to perform the
duties of the employment.
. . .
I believe that if I allow the
deduction claimed by the appellant, I am taking into account the economic
realities facing a parent who employs a babysitter, and I feel that my
interpretation is consistent with both the wording and the object of the tax
legislation.
[19] In
Jo-Anne McCluskie v. The Queen, 94 DTC 1735, Rip J. of this Court allowed the appellant's appeal,
concluding that the amounts paid to a babysitter for the seven-day period
immediately preceding the appellant's return to work should be considered to be
child care expenses. The following excerpt from the reasons of Rip J. is relevant:
[31] To my mind the words "to perform the
duties of an office or employment" and "de remplir les fonctions
d'une charge ou d'un emploi" in paragraph 63(3)(a) means that the
child care expense must be incurred to enable the taxpayer to execute or
perform the job for which she was hired. If the taxpayer is not performing her
duties of employment (or office) during the period for which the expense is
incurred it may be argued by definition, she has not incurred a child care
expense.
[32] Now there may be times when a parent will be permitted a
child care deduction with respect to a period she or he is not physically
present at the work place. The parent may be on sick leave, for example. To
dismiss the baby-sitter on such occasion would be disruptive. The child care
deduction may also be available to permit the parents, the children and a newly
hired baby-sitter a period of time to get oriented with, and familiar to, each
other. It is not acceptable from a welfare point of view, for example, for a
newly hired baby-sitter to arrive at the taxpayer's door step early Monday
morning, when the parents leave for work, to start providing services without
prior introduction and some preparation. I cannot imagine that the costs
incurred during such periods were not contemplated by Parliament as a child
care expense. To include baby-sitting expenses incurred during such periods as
a child care expense is within the "object and spirit" of section 63.
However the lengths of leave and orientation would have to be reasonable,
depending on circumstances, and not remote from the time the taxpayer continues
to perform his or her occupation.
[20] In
Judy E. McLelan v. The Queen, 95 DTC 856, O’Connor J. of this Court
allowed a deduction for child care expenses for the amounts paid to a
babysitter during the appellant's maternity leave from August 2 to October 10, 1992, while the appellant was
still employed by the RCMP, even though she did not receive any pay during that
period. In that case, the babysitter had been hired to take care of the
appellant's three children so that the appellant would be mentally fit to
return to work on October 11, 1992.
Analysis
[21] Parliament's
intent, as reproduced in Symes, supra, offers few clues as to how
to interpret section 63 of the Act. Since this measure was enacted, labour
market conditions have changed considerably, and the social and economic
realities of families are now very different from what they were at the
beginning of the 1970s.
[22] The
definition of "child care expense" in subsection 63(3) of the Act is
vague in certain respects. However, this has the advantage of allowing some
flexibility in its interpretation and application. For example, contrary to
what one might have thought, the expression "at the time the expense was
incurred" found in paragraph (a) serves to qualify the taxpayer's
residence with the child rather than the performance of one of the eligible
activities described in subparagraphs (a)(i) and (ii). The difference in
the drafting of subparagraphs (a)(i) and (ii) also raises the question
as to whether subparagraph (a)(i) must be interpreted more restrictively
than subparagraph (ii), because subparagraph (ii) simply refers to an activity of
carrying on a business, whereas subparagraph (i) refers to the performance of
the duties of an office or employment. In my opinion, the expression
"perform the duties of an office or employment" is equivalent to "hold
an office or an employment" and must not be interpreted more restrictively
than subparagraph (a)(ii). Day nursery services or services provided at
a boarding school or camp are eligible to the extent that they do not exceed
the maximum amount calculated under paragraph (c) of the definition
of "child care expense". It is interesting to note that the maximum eligible
amount is calculated in relation to the number of weeks of the year during
which the child went to boarding school or camp, and that no reference is made
to the number of days during which the parent claiming the child care expenses engaged
in an eligible activity.
[23] The
definition does not specifically require that there be a connection between the
time when the child care services are given and the time when employment duties
are performed. If that was Parliament's intent, it would have been very easy to
state it explicitly.
[24] The
McLelan, McCluskie and D’Amours judgments, supra, clearly
show that it is not necessary for the child care services to be rendered at the
same time the employment duties are performed by the taxpayer to constitute eligible
child care expenses under the Act and still uphold Parliament's intent.
[25] Sawicki,
supra, does not in any way contradict the appellant's position. In a
context where one of the members of a family of four is an autistic child, it
must be understood that none of the usual domestic tasks, such as housekeeping,
shopping and groceries, can be done with Simon present. In these circumstances,
Simon has to be taken into care on Saturdays to allow the appellant to hold
full-time employment from Monday to Friday. Without child care services for
Simon on Saturdays, the appellant would have to give up her employment or hold
part-time employment, which is not at all easy to do in the case of a
professional.
Conclusion
[26] The Court is of the opinion that the appellant does indeed meet the conditions
under section 63 in the specific circumstances of this case and, consequently,
allows the appeal, without costs.
"Réal
Favreau"
Translation certified
true
on this 28th day of
September 2007
Michael Palles, Reviser
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