Date: 20000316
Docket: 98-3463-IT-I
BETWEEN:
NEIL B. McFADYEN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Bowie J.T.C.C.
[1] The Appellant applied for a goods and services tax (GST)
credit under section 122.5 of the Income Tax Act (the
Act) for the taxation year 1996. The Minister of National
Revenue advised him on July 11, 1997 that he was not entitled to
the credit, and that his application for it was denied. He
appeals from that decision.
[2] The following facts are not in dispute. The
Appellant's net income for the 1996 taxation year was
$3,873.00. If he had been assessed as an unmarried individual he
would have been entitled to the credit. Throughout 1996, he was
married to an individual whose net income for that year was
$41,670.00. He was denied the credit because his adjusted income,
as that expression is defined in subsection 122.5(1) of the
Act, for the 1996 taxation year was $45,453.00 ($3,873.00
+ $41,670.00).
[3] Section 122.5 of the Act, so far is it is relevant
to this appeal, reads as follows:
122.5(1) In this section,
"adjusted income" of an individual for a taxation
year means the total of all amounts each of which is the income
for the year of
(a) the individual, or
(b) the individual's qualified relation for the
year;
...
"eligible individual" for a taxation year means an
individual (other than a trust) who, at the end of December of
that year, is resident in Canada and is
(a) married,
(b) a parent of a child, or
(c) 19 years of age or over;
"qualified dependant" of an individual for a
taxation year means a person who is
(a) a person in respect of whom the individual or the
individual's qualified relation for the year is the only
person who deducts an amount under section 118 for the year,
or
(b) a child of the individual residing with the
individual at the end of the year,
and who is not
(c) an eligible individual for the year,
(d) the qualified relation of an individual for the
year, or
(e) a person in respect of whom an amount is deemed
under this section to be paid by any other individual for the
year;
"qualified relation" of an individual for a taxation
year means the person, who, at the end of the year, is the
individual's cohabiting spouse (within the meaning assigned
by section 122.6).
...
122.5(3) Where a return of income (other than a return of
income filed under subsection 70(2), paragraph 104(23)(d) or
128(2)(e) or subsection 150(4)) is filed under this Part for a
taxation year in respect of an eligible individual and the
individual applies therefor in writing, 1/4 of the amount, if
any, by which the total of
(a) $190,
(b) $190 for a person who is the qualified relation of
the individual for the year,
(c) $190, where the individual has no qualified
relation for the year and is entitled to deduct an amount for the
year under subsection 118(1) by reason of paragraph (b) thereof
in respect of a qualified dependant of the individual for the
year,
(d) the product obtained when $100 is multiplied by the
number of qualified dependants of the individual for the year,
other than a qualified dependant in respect of whom an amount is
included by reason of paragraph (c) in computing an amount deemed
to be paid under this subsection for the year, and
(e) where the individual has no qualified relation for
the year, the lesser of
(i) $100, and
(ii) 2% of the amount, if any, by which
(A) the individual's income for the year
exceeds
(B) the amount determined for the year for the purposes of
paragraph 118(1)(c),
exceeds
(f) 5% of the amount, if any, by which
(i) the individual's adjusted income for the year
exceeds
(ii) $25,921,
shall be deemed to be an amount paid by the individual on
account of the individual's tax payable under this Part for
the year during each of the months specified for that year under
subsection (4).
"Cohabiting spouse" is defined in section 122.6:
"cohabiting spouse" of an individual at any time
means the person who at that time is the individual's spouse
and who is not at that time living separate and apart from the
individual and, for the purpose of this definition, a person not
be considered to be living separate and apart from an individual
at any time unless they were living separate and apart at that
time, because of a breakdown of their marriage, for a period of
at least 90 days that includes that time;
[4] The Appellant's position is set out in his Notice of
Appeal in the following words:
A. Reasons of Appeal
My reason for appeal is that I have been denied the Goods and
Services Tax Credit because of my spouses income. I have been
discriminated against based on my marital/family status which is
a violation of Section 15 of the Canada Charter of Rights and
Freedoms, the Canadian Human Rights Act, The Universal
Declaration of Human Rights, The International Covenant on
Economic, Social and Cultural Rights, The United Nations Charter,
and The Convention on the Elimination of all Forms of
Discrimination Against Women. It is also illegal to add my
wife's income to mine because it violates the Married Womens
Property Acts, Article 2.
[5] If section 122.5 is contrary to the Canadian Charter of
Rights and Freedoms then the Court may, to the extent
necessary, strike it down for that reason.[1] The various international conventions
which are referred to in the Notice of Appeal may inform the
construction of the statute, but they cannot render it invalid.[2] The Appellant, in
argument, did not suggest that the Minister had misconstrued the
Act. Nor did he address any argument to the possible
effect that the Canadian human Rights Act[3] might have on the issue he
has raised.
[6] The Appellant argued his own case, largely by reading a
written brief of some 57 pages. The thrust of that brief, as I
understood it, was that married women have historically been
subject to discrimination generally, and in particular by the
system of income taxation. They are, as the Appellant put it,
victims of "the male breadwinner family model"
stereotype. He sought to support this thesis by reference to a
number of monographs, and to the dissenting judgment of
L'Heureux-Dubé J. in Symes v. Canada.[4] He referred, as
well, to an extract from a publication of Statistics Canada to
establish the fact that, on average, women in the workforce earn
less than men.
[7] The Appellant's argument is founded upon section 15 of
the Charter:
15(1) Every individual is equal before and under the law and
has the right to the equal protection and equal benefit of the
law without discrimination and, in particular, without
discrimination based on race, national or ethnic origin, colour,
religion, sex, age or mental or physical disability.
[8] Specifically, the Appellant argues that section 122.5,
because it is structured to make the entitlement to the credit
dependant upon the income of the family unit, and not simply that
of the individual, discriminates on the basis of marital status,
and so must be struck down.
[9] Marital status is a ground of discrimination analogous to
those enumerated in section 15.[5] If the Appellant had been an unmarried person in
1996, he would have been entitled to a GST credit of $199.00. It
does not follow from that, however, either that the distinction
made by section 122.5 of the Act is based on marital
status, or that it is a distinction which is discriminatory.
[10] The Federal Court of Appeal pointed out in Lister v.
The Queen[6]
that the GST, being a tax on consumption, is regressive in
nature, and that the GST credit was introduced into the Income
Tax Act to give some relief from it to those at the lowest
income levels. The credit is made available on the basis of
family income, in recognition of the fact that much of the
spending on the basic necessities of life is done on the basis of
the family unit, rather than at the individual level. For this
reason, the GST credit is given on a family unit, means-tested
basis. The distinction made by Parliament in section 122.5 is not
between persons who are married and those who are single, but
between those who belong to a family whose aggregate income
exceeds the threshold established by the Act, and those
whose aggregate family income falls below it. In other words, the
distinction is based not on marital status, but on aggregate
family income level. There is no evidence before me to suggest
that this could be considered an analogous ground for the
purposes of section 15. The Appellant directed neither evidence
nor argument to any ground other than marital status. For that
reason alone, the appeal fails.
[11] If I am wrong in my conclusion that this appeal fails
because the ground of distinction in section 122.5 is family
income rather than marital status, then I nevertheless conclude
that it cannot succeed because the distinction is not a
discriminatory one. In Lister, the Federal Court of Appeal
considered the claims of two children below the age of 19 that
the exclusion of those under that age from eligibility to receive
the GST credit is discriminatory, contrary to section 15 of the
Charter, and that paragraph (a) of the definition of the
expression "eligible individual" is therefore invalid.
In dismissing their appeals, Létourneau J.A., with whom
Robertson J.A. concurred, said:[7]
The purpose of section 122.5 of the Act was to redress
the inequity generated by regressive taxation, which necessarily
involved an assessment by Parliament of the various options and
means available in order to do so. At the end of the day, what
resulted was the selection of a system that would best achieve
the desirable equity, bearing in mind the practical constraints
associated with the cost-effective implementation of a selected
measure or program. Obviously, this selection process entailed
the preference of one approach over the other with the inevitable
result that some, but not all, taxpayers would have been better
off with a different option than the one selected and vice
versa.
There was nothing wrong for Parliament, in its search for an
equitable solution to the regressive nature of the GST tax, to
confer benefits upon those who suffer most from the imposition of
that tax, namely lower-income Canadians and their families.
In view of the evidence as to the remedial nature of the
impugned provision, the larger context in which it operates, and
the inherent limits in the implementation of such a benefit
program, I cannot say that the option finally selected by
Parliament creates, in its effects, a discriminatory and
prejudicial difference of treatment that the applicants can
justifiably complain of. It does cut the Gordian knot by creating
distinctions between dependent and non-dependent children,
the former being included in the family unit and receiving their
refundable tax credit through that channel, the latter being
considered, as any other unattached individual, a tax unit on its
own and receiving the tax credit personally.
[12] Heald J.A. reached the same result, although for
different reasons. Although section 15 analysis has developed
somewhat in the intervening years,[8] I do not believe that Lister
would be decided differently today. That decision is, of course,
binding on me. In my view, the considerations that
Létourneau J.A. relied upon apply equally in the present
case. This Appellant, as a family member, is treated no more
severely than children under the age of 19. In fact, he is
treated less severely, in that he might in some circumstances
qualify for the credit, which they never could.
[13] I have not overlooked the Appellant's statement made
during the course of the hearing to the effect that he felt
humiliated and demeaned by the effect of the legislation in
depriving him of the GST credit. I do, however, attach no weight
to it, for two reasons. First, I was not at all persuaded that it
was genuine. My impression of the Appellant was that he would say
whatever he felt might enhance his prospects of success in the
appeal. Second, the effect of the impugned legislation must be
considered objectively. The Appellant did not offer any objective
evidence to support his view that the legislation demeans the
family member whose income is below the GST credit threshold,
although the aggregate family income exceeds it. Nor is it a
proposition that I would accept as being self-evident. I do not
consider it demeaning to any member of a family that the
Act treats the family as an economic unit for this
purpose.
[14] The appeal is dismissed.
Signed at Ottawa, Ontario, this 16th day of March, 2000.
"E.A. Bowie"
J.T.C.C.
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