Citation: 2014 TCC 115
Date: 20140703
Docket: 2012-2713(IT)I
BETWEEN:
JEAN-CLAUDE DUBUC,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
AMENDED REASONS FOR JUDGMENT
Masse D.J.
[1]
This case involves the
constitutional validity of subsection 118(5) of the Income Tax Act,
R.S.C., 1985, c. 1 (5th Supp.) (the ITA). The appellant submits that
subsection 118(5) of the ITA is discriminatory and infringes his constitutional
right to equality protected by subsection 15(1) of the Canadian Charter of
Rights and Freedoms, Part I of the Constitution Act, 1982,
constituting Schedule B to the Canada Act, 1982 (U.K.),
1982, c. 11 (the Charter).
Factual background
[2]
There is no dispute
concerning the factual background of this case. The appellant and Johanne
Martineau were married on September 10, 1994, and had three children. The
marriage ended and the two parents stopped living together on June
19, 2005. Their divorce was obtained on February 17, 2010. They have
shared custody of their three minor children since their separation. Both
parents support the children’s standard of living when they are with him or
with her and share specific expenses 50/50. The appellant pays his former
spouse child support. For the 2010 taxation year, the appellant entered an
agreement with his former spouse. Said agreement (see Exhibit A‑1,
tab 4) provided that the appellant file a claim for a dependent tax credit
for one of their three children, which the appellant did.
[3]
On December
19, 2011, the Minister of National Revenue (the Minister) in applying the
provisions of subsection 118(5) of the ITA, issued a Notice of Reassessment in
respect of the taxation year stating that the Minister was disallowing the
amount of $10,382 for wholly dependent persons as well as the child amount of
$2,101 used to compute the non-refundable tax credit that he had claimed for
one of his children. The Minister stated that the appellant could not file a
claim for tax credit for a child when he made or was required to make support
payments for the child.
[4]
Paragraph 118(1)(b.1)
of the ITA provides a tax credit for a taxpayer’s dependents, who are under the
age of 18 years. Subsection 118(5) of the ITA provides that this credit is not available for a child in respect of whom
the taxpayer has paid child support amounts to his spouse or former spouse.
The appellant appeals the Notice of Reassessment by challenging the
constitutionality of subsection 118(5) of the ITA.
The appellant’s position
[5]
The appellant submits
that the Act is discriminatory, unjust and unfair in this case. He supports his
children when they are with him, which means 50% of the time. He is a single
parent living alone with his children and also pays child support to his former
spouse. Subsection 118(5) of the ITA precludes the appellant from claiming tax
credits in respect of his children. While parents in a partnership are free to
agree on which of the two parents will claim the tax credit, separated parents
are denied this freedom by a statutory provision applied blindly.
[6]
The appellant submits
that subsection 118(5) of the ITA is unconstitutional, because it
infringes his right to contractual agreement solely on the basis of his marital
status, ground of discrimination analogous to the grounds of discrimination
prohibited by subsection 15(1) of the Charter. The appellant states that this
discrimination is unjustifiable in a free and democratic society.
[7]
The appellant requests
that subsection 118(5) of the ITA be invalidated under section 52 of the
Charter, or alternatively, the appellant asks for a broad interpretation of
subsection 118(5.1) of the ITA to include respect for the contractual freedom
between former spouses, thus restoring equality between the appellant, a
divorced father paying child support and, and his counterparts in a
partnership, to freely enter into an agreement with the mother of their
children on tax credits for the children.
The respondent’s position
[8]
The respondent submits
that subsection 118(5) of the ITA provides that the wholly
dependent person credit or the amount for a child under the age of 18 may not
be deducted under paragraphs 118(1)(b) and 118(1)(b.1) of the
ITA by a taxpayer required to pay a support amount
(within the meaning assigned by subsection 56.1(4) of the ITA. The
respondent submits that subsection 118(5) of the ITA does not violate the right
to equality protected by subsection 15(1) of the Charter. Therefore, the
appeal must be dismissed.
Statutory provisions
[9]
Subsection 15(1)
of the Charter reads as follows:
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.
[10]
The relevant provisions
of the ITA are as follows:
56.1(4) “support amount” means an amount payable or
receivable as an allowance on a periodic basis for the maintenance of the
recipient, children of the recipient or both the recipient and children of the
recipient, if the recipient has discretion as to the use of the amount, and
(a) the recipient is the spouse
or common-law partner or former spouse or common-law partner of the payer, the
recipient and payer are living separate and apart because of the breakdown of
their marriage or common-law partnership and the amount is receivable under an
order of a competent tribunal or under a written agreement; or
(b) the payer is a legal parent of a child of the recipient and the
amount is receivable under an order made by a competent tribunal in accordance
with the laws of a province.
. .
.
118(5) No amount may be deducted under
subsection (1) in computing an individual’s tax payable under this Part for a
taxation year in respect of a person where the individual is required to pay a
support amount (within the meaning assigned by subsection 56.1(4)) to the
individual’s spouse or common-law partner or former spouse or common-law
partner in respect of the person and the individual
(a) lives separate and apart from
the spouse or common-law partner or former spouse or common-law partner
throughout the year because of the breakdown of their marriage or common-law
partnership; or
(b) claims a deduction for the year because of section 60 in respect of
a support amount paid to the spouse or common-law partner or former spouse or
common-law partner.
118(5.1) Where, if this Act were read without reference to this
subsection, solely because of the application of subsection (5), no individual
is entitled to a deduction under paragraph (b)
or (b.1) of the description
of B in subsection (1) for a taxation year in respect of a child, subsection
(5) shall not apply in respect of that child for that taxation year.
Analysis
[11]
Paragraph 118(1)(b)
of the ITA provides a personal credit for the taxpayer who supports the wholly
dependent person. Paragraph 118(1)(b.1) of the ITA provides a personal
credit for the taxpayer who supports a child. However, based on subsection
118(5) of the ITA, no amount may be deducted under subsection 118(1) of
the ITA by the taxpayer in respect of a person where the taxpayer is required
to pay a support amount (as defined in subsection 56.1(4) of the ITA) in
respect of the person.
[12]
In the case at bar, the
appellant and his former spouse agreed that the appellant would be entitled to
claim the tax credits for dependent persons and children.
[13]
However, it is clear
that the agreement of the parties cannot change the
requirements of the Act
and, further, cannot bind the tax authorities. In Ross J. Cunningham v. The
Queen, 2012 TCC 279 (CanLII), the taxpayer and his former spouse agreed
that the taxpayer was entitled to the tax credit for a dependent person.
Justice Boyle of the Tax Court of Canada held as follows at paragraph 16:
[16] I am not unsympathetic to the fact that the
Appellant is not receiving the benefit of the child credit in 2009 even though
he and his ex-wife agreed he would be the one entitled to claim it during that
year of shared custody. Instead, I am told that she claimed the deduction in
2009. However, the agreement of the parties cannot change the requirements of
the Act. I am also not unsympathetic to the fact
that the Appellant, a tax professional, cannot discern a policy basis or other
reason for such differing tax results in the cases of shared custody and split
custody. Nonetheless, it is clear that the provisions of the Guidelines and of
the child tax credit, as they are worded and as they have been interpreted by
the Courts, do not allow Mr. Cunningham's appeal to succeed.
[14]
In Daniel Beaudoin
v. The Queen, 2010 TCC 600 (CanLII), the father of a child had to pay the
mother child support according to the terms of a divorce judgment. The parents
were granted shared custody of their child with
alternating weeks of custody. The Superior Court amended the divorce
judgment by allocating to the father all child amounts for taxation years 2007
and following. The Minister disallowed the father’s
claim for the wholly dependent person credit under paragraph 118(1)(b) of the ITA and the child amount under paragraph 118(1)(b.1) of the ITA. The father appealed to the Tax Court of
Canada. Justice Favreau dismissed the appeal finding that a Superior Court
judgment in which all child amounts are allocated to one parent cannot derogate from the requirements of the ITA and particularly those of subsection 118(5) of the ITA. A judge who does so exceeds the jurisdiction of his or her court.
[15]
In the case at bar, the
appellant submits that subsection 118(5) of the ITA is discriminatory and
infringes the right to equality protected by subsection 15(1) of the Charter.
One must therefore ask, what is discrimination? Justice McIntyre of the Supreme
Court defined discrimination as follows in Andrews v. Law Society of British
Columbia, [1989] 1 S.C.R. 143, at pages 174‑175:
. .
. discrimination may be described
as a distinction, whether intentional or not but based on grounds relating to
personal characteristics of the individual or group, which has the effect of
imposing burdens, obligations, or disadvantages on such individual or group not
imposed upon others, or which withholds or limits access to opportunities,
benefits, and advantages available to other members of society. Distinctions
based on personal characteristics attributed to an individual solely on the
basis of association with a group will rarely escape the charge of
discrimination, while those [page175] based on an individual's merits and
capacities will rarely be so classed.
[16]
The test to be applied
when determining whether an Act infringes subsection 15(1) of the Charter
was set out by the Supreme Court of Canada in Law v. Canada (Minister of
Employment and Immigration), [1999] 1 SCR 497, 1999 CanLII 675:
1. whether a law imposes differential treatment
between the claimant and others, in purpose or effect;
2. whether one or more enumerated or analogous grounds of
discrimination are the basis for the differential treatment; and
3. whether the law in
question has a purpose or effect that is discriminatory within the meaning of
the equality guarantee.
[17]
Chief Justice McLachlin
and Justice Abella of the Supreme Court of Canada restated the test in Kapp
v. Canada, 2008 SCC 41. They established a two-part test for assessing a s. 15(2) claim at
paragraph 17:
(1) Does the law create a distinction
based on an enumerated or analogous ground?
(2) Does the distinction create a
disadvantage by perpetuating prejudice or stereotyping?
These were divided, in Law, supra, into
three steps, but in the Court’s view the criteria set out in Kapp, supra,
are, in substance, the same as in Law, supra. Thus, in my view,
case law centred on the application of the analysis based on Law, supra,
remains authoritative.
[18]
It is settled law that
subsection 118(5) of the ITA does not infringe the equality guarantee in
subsection 15(1) of the Charter: see Nixon v. The Queen, [1999]
T.C.J. No. 885 (QL); Nelson v. Canada (AG), 2000 CanLII 16332
(FCA); Keller v. The Queen, [2002] 3 C.T.C. 2499; Werring v. The
Queen, [2002] 3 C.T.C. 2876; Frégeau v. R., 2004 TCC 293
(CanLII); Giorno v. R., 2005 TCC 175 (CanLII); Donovan v. R., 2005 TCC
667 (CanLII); Calogeracos v. R., 2008 TCC 389 (CanLII); and Sears v.
R., 2009 TCC 22 (CanLII).
[19]
Nelson v. Canada, [2000] 4 CTC 252, is a case where the
facts are analogous to those of the case at bar. Mr. Nelson and his former
spouse had joint custody of their children. He paid child support to his former
spouse for the children. He claimed a tax credit in respect of one of his
children under paragraph 118(1)(b) of the ITA which was disallowed
under subsection 118(5) of the ITA. Mr. Nelson appealed to the Tax Court of
Canada arguing that his equality rights protected by subsection 15(1) of
the Charter were breached under subsection 118(5) of the ITA. The Tax Court
Judge dismissed his appeal. In the Federal Court of Appeal, Justice Sharlow
dismissed the application for judicial review
because Mr. Nelson did not comply with the requirements of
subsection 57(1) of the Federal Courts Act, R.S.C. 1985, c. F‑7,
which requires that notice of the constitutional question be served on the Attorney General of Canada and the attorney general of
each province. As for the constitutionality of subsection 118(5) of the
ITA, Justice Sharlow rules as follows:
[10] Mr. Nelson’s argument is that subsection 118(5),
in denying him the equivalent to married tax credit for his son, resulted in a
disadvantage to him that amounts to a breach of his rights under subsection
15(1) of the Charter. . . .
[11] As explained above, the critical fact that led
to the application of subsection 118(5) is Mr. Nelson’s obligation to pay child
support to his former spouse in respect of his son even though he lives with
and supports his son and has joint custody. I would identify the relevant
comparator group in Mr. Nelson’s case as a single parent who lives with and
supports a child in a shared custody arrangement with the child's other parent
but who has no legal obligation to pay child support to the other parent.
[12] In my view, the differential treatment created
by subsection 118(5) of the Income Tax Act is not based on one of the
grounds enumerated in subsection 15(1) of the Charter or an analogous ground.
Subsection 118(5) does not draw a distinction between Mr. Nelson and the
comparator group based on personal characteristics, or the stereotypical
application of presumed group or personal characteristics, and does not bring
into play the purpose of subsection 15(1) of the Charter in remedying such ills
as prejudice, stereotyping, and historical disadvantage. Nor does the operation
of subsection 118(5) of the Income Tax Act offend Mr. Nelson’s dignity,
intrinsic worthiness or self-respect. Therefore, the differential treatment
resulting from subsection 118(5) is not discriminatory in the Charter sense.
[13] The premise underlying Mr. Nelson’s argument is
that Parliament should provide equal tax relief to all single parents who
support their children in a shared custody arrangement. While that may be a
laudable public policy objective, it is not one that can be advanced through a
claim under subsection 15(1) of the Charter. Mr. Nelson’s remedy lies with
Parliament alone.
[20]
This decision is still
authoritative on this issue and can in itself warrant the dismissal of the
appeal. However, I will perform an analysis under the criteria set out in Kapp,
supra.
[21]
In Withler v. Canada
(Attorney General), 2011 SCC 12, Chief Justice McLachlin and Justice Abella
of the Supreme Court of Canada established that the analysis under the two
steps in Kapp, supra, reflect the fact
that not all distinctions are, in and of themselves, contrary to s. 15(1) of
the Charter.
Equality is not about sameness and s. 15(1) of
the Charter does not protect a right to identical
treatment. Rather, it protects every person's equal right to be free from
discrimination. Accordingly, in order to establish a violation of s. 15(1),
a person must show not only that he or she is not
receiving equal treatment before and under the law or that the law has a
differential impact on him or her in the protection or benefit accorded by law
but, in addition, must show that the legislative impact of the law is
discriminatory: (see Withler, supra, paragraph 31).
The first stage—does
the law create a distinction based on an enumerated or analogous ground?
[22]
The appellant submits
that the obligation to pay child support applies primarily to men and therefore
subsection 118(5) of the ITA amounts to indirect or adverse
effect discrimination
against men which is based on an enumerated ground, sex. I disagree.
[23]
Support amounts are
determined on the basis of each parent’s income and not on the basis of the sex
of the parent. Although historically, fathers’ income have been higher than the
income of their children’s mother, in cases where the mother’s income is higher
than that of the father, which is becoming more and more frequent, the father
would not have to pay support and would be entitled to claim tax credits. Thus,
paying support and entitlement to claim a tax credit have nothing to do with
the sex of the payer or of the beneficiary.
[24]
In Calogeracos v. R.,
2008 TCC 389, the Tax Court of Canada concluded that the legislation here under
review does not draw a distinction between males and females. Justice Webb, now
of the Federal Court of Appeal, stated as follows from paragraph 20 to
paragraph 22:
[20] The Appellant submitted some statistical data to
establish his basis for claiming that in general it is males who are required
to make support payments in shared custody situations.
. . . The data that was submitted did show that in
joint custody situations it is generally, by a significant margin, the male who
is paying child support.
[21] However it is subsection 118(5) of the Act that
is to be analyzed to determine whether this subsection of the Act draws a
distinction between males and females. . . .
[22] In this case the provision in question neither
makes a formal distinction between males and females nor does it fail to take
into account the Appellant's already disadvantaged position within Canadian
society. It draws a distinction based on whether the individual is paying child
support, which is based on the income levels of the parents since the
obligation to pay child support is based on the relative income of the parents. The fact that in most
joint or shared custody arrangements it is the male who is making child support
payments cannot be grounds for a claim for discrimination by the Appellant as
males who make more money than females are not in a disadvantaged position in
Canadian society.
I am in complete agreement with Justice Webb.
[25]
The appellant also
alleges that the obligation to pay support disproportionately impacts divorced
custodial parents, as they do not have the right to decide who can claim the
tax credits as is the case with parents who are not separated. Thus, subsection
118(5) of the ITA denies the appellant the right to enter into a contractual
agreement, thereby adversely affecting divorced custodial parents based on
their marital status, an analogous ground. Again, I disagree.
[26]
At paragraph 206
of Thibaudeau v. Canada, 1995 CanLII 99, [1995] 2 SCR 627 (SCC),
Justice McLachlin (as she then was) made it clear that the status of separated
or divorced custodial parent is an analogous ground
within the meaning of s. 15 of the Charter. However, with respect to
subsection 118(5) of the ITA, Justice Bédard in Frégeau v. R., 2004 TCC
293, unequivocally stated that the fact of being a
separated or divorced parent is not the reason why the appellant is not
entitled to the credit in paragraph 118(1)(b) of the ITA. The
distinction is not the marital status or the family status of the divorced custodial parent, but rather the fact that he pays
child support to his former spouse. Justice Bédard stated as follows at
paragraph 20:
[20] Is the
Appellant, because of subsection 118(5) of the Act, being treated differently
based on a personal characteristic? I must respond to that question in the
negative. Although the Appellant's Agents maintain that the differential
treatment endured by the Appellant results from his family status, the
differential treatment is, in my opinion, caused by his obligation to pay child
support. Therefore, it is not a personal characteristic analogous to those
listed in section 15 of the Charter. The obligation results from family status,
whether it is a personal characteristic or not. However, the fact of being a separated
or divorced parent is not the reason why the Appellant is not entitled to the
credit in paragraph 118(1)(b) of the Act. The Appellant was denied the
credit in paragraph 118(1)(b) of the Act because he pays child support
to his former spouse. Thus, the Appellant was treated differently than other
separated or divorced parents who do not pay child support. The distinction
depends on the pecuniary obligation resulting from an obligation to pay child
support. Section 15 of the Charter seeks to prohibit differential treatment
based on personal characteristics, i.e. characteristics tied to the dignity of
a person such as race, national or ethnic origin, colour, religion, sex, age,
physical or mental disability and all analogous grounds. Since a pecuniary obligation
is not a personal characteristic analogous to those set out in section 15 of
the Charter, the Appellant is not, in my opinion, being treated differently
under that section of the Charter.
[27]
In Calogeracos v. R.,
supra, Justice Webb, observed at paragraph 18:
[18] The reason that the obligation was imposed upon
the Appellant by the court order is because his income was higher than that of
his former spouse. Level of income is not a personal characteristic enumerated
in section 15 of the Charter nor is it analogous. The obligation to pay child
support (which is based on the relative level of income of the parents) is
therefore not an analogous ground. Therefore, this factor cannot be changed for
the comparator group.
[28]
To constitute an
analogous ground a personal characteristic that is
immutable or changeable only at unacceptable cost to personal identity must
exist: Corbière v. Canada (Minister of Indian and Northern Affairs),
[1999] 2 S.C.R. 203, paragraph 13. The obligation to pay child support,
which is based, inter alia, on income levels, cannot constitute an immutable personal characteristic: see Donovan v.
R., 2005 TCC 667, at paragraph 18; Sears v. R., supra,
at paragraphs 30 and 44; Calogeracos v. R., supra, at
paragraph 18; and Giorno v. R., 2005 TCC 175, at paragraph 21.
[29]
All parents, whether
divorced or not, separated or not, have an obligation to provide for their
children, whether the parent is married or not; whether the parent is separated
or not. The obligation imposed by a court or by an agreement to pay support is
merely a means to ensure that a separated and/or divorced parent is carrying
out his or her legal and moral duties of providing for his or her children. To
require a parent to provide for his or her children is not discriminatory and
does not disproportionately impact separated or divorced parents.
[30]
I find that
subsection 118(5) of the ITA does not infringe subsection 15(1) of the
Charter, as it does not create a distinction based on an enumerated or
analogous ground within the meaning of subsection 15(1) of the Charter.
The second stage—does
the distinction create a disadvantage by perpetuating prejudice or stereotyping?
[31]
Having found following
the analysis of the first stage that subsection 118(5) of the ITA does not
infringe subsection 15(1) of the Charter, it is not necessary to continue the
analysis. However, I must comment on the second stage.
[32]
A distinction based on
an enumerated or analogous ground is not in itself a justification to establish
that there is a violation of subsection 15(1) of the Charter. At the second
stage of the analysis, the Court must ask whether, having
regard to all relevant contextual factors, including the nature and purpose of
the impugned legislation in relation to the claimant’s situation, the impugned
distinction discriminates by perpetuating the group’s disadvantage or by
stereotyping the claimant’s group; see Withler v. Canada (Attorney
General), supra, at paragraph 71. In my view, the legislation
does not have a discriminatory effect, taking account of the tax purpose of the
law and the appellant’s situation. The legislation neither stigmatizes men nor
separated custodial parents and does not stereotype them.
[33]
In Donovan v. The
Queen, supra, Justice Hershfield of the Tax Court of Canada had to
consider whether the impugned law perpetuated
disadvantage or stereotyping. While Justice Hershfield discussed the
third branch of the test in Law, supra, his words are applicable
to the second branch of the test in Kapp, supra:
[19] As
to the third inquiry, to find that an impugned provision violates section 15
rights under the Charter, the burden imposed on the Appellant or
the benefit denied, must be reflective of a stereotypical application of a
presumed personal characteristic or have the effect of perpetrating the view
that the Appellant, as a custodial supporting parent, is less worthy of
recognition as a parent or less deserving of equal respect.
[20] Being
denied personal tax credits is not demeaning, in my view. A reasonable person
would not, in my view, suggest that one's personal dignity or self-worth as a
supporting custodial parent has been attacked by the denial of a personal tax
credit. Fiscal inequalities in these circumstances are not based on some
pejorative stereotype of joint custodial parents who are required by their
economic circumstances to contribute to the support of a child while in the
custody of the other parent. That the tax policy behind the impugned provision
may be difficult to defend, does not reflect or perpetrate a negative
stereotype in these circumstances. The Charter cannot be employed
simply because an identifiable group is treated fiscally unfairly. The purpose
of the Charter is not to protect against bad tax policy which at
best this appeal is all about. This is not about human dignity. This is not
about a provision that reflects a misunderstanding of the Appellant's merit as
a parent. This is not a provision that stigmatises supporting custodial
parents. The Appellant's place within Canadian society has not been marginalized
by the denial of a tax credit.
[21] Accordingly,
even allowing, and I do not, that the second enquiry has met (i.e. that
the impugned provision results in differential treatment based on an analogous
ground), these findings in respect of the third enquiry fall short of engaging
the Charter in this case.
I could not have stated it better.
[34]
In Sears v. The
Queen, supra, Mr. Sears argued that he was in an “analogous group”
on the basis that he is a parent who pays child support. He stated that discrimination
on that basis touches the essential dignity and worth
of an individual in the same way as other recognized grounds of discrimination
which violate fundamental human rights or norms. These contentions were
rejected by Justice Margeson of the Tax Court of Canada.
[35]
Justice Gonthier of the
Supreme Court of Canada, in discussing the nature and the operation of the ITA
in Thibodeau v. Canada, supra, stated at paragraph 91:
It is of the very essence of the ITA to make distinctions,
so as to generate revenue for the government while equitably reconciling a
range of necessarily divergent interests. In view of this, the right to the
equal benefit of the law cannot mean that each taxpayer has an equal right to
receive the same amounts, deductions or benefits, but merely a right to be
equally governed by the law. The basic purpose of s. 15 of the Charter was
explained by McIntyre J. in Andrews, supra, at p. 171:
It is clear that the purpose of s. 15 is to ensure equality
in the formulation and application of the law. The promotion of equality
entails the promotion of a society in which all are secure in the knowledge
that they are recognized at law as human beings equally deserving of concern,
respect and consideration.
That being the case, one should not confuse the concept of
fiscal equity, which is concerned with the best distribution of the tax burden
in light of the need for revenue, the taxpayers' ability to pay and the
economic and social policies of the government, with the concept of the right
to equality, which as I shall explain in detail later means that a member of a
group shall not be disadvantaged on account of an irrelevant personal
characteristic shared by that group.
[36]
In my view, the tax
credits in this case were not created in favour of the parents, but rather in
favour of children or dependents. It is clear that the purpose
of the impugned legislation is the distribution of the financial resources between
separated parents for the benefit of their children.
[37]
Furthermore, there is
another very important fact that weighs against the appellant’s position. The
support payable by the appellant was determined based on his income as well as
the income of his former spouse in accordance with the Federal Child Support
Guidelines. The Guidelines were designed taking into account the various
federal and provincial income taxes and credits. Thus, tax credits have already
been accounted for even before a court may establish the support amount in
under the Guidelines. Therefore, the fact that only the beneficiary of support
may claim tax credits does not create a disadvantage or prejudice to the payer
of said support. Justice Bédard, in Frégeau, supra, further
explains this and I repeat his dictum:
[30] The Appellant's Agents also state that the
distinction resulting from the application of subsection 118(5) of the Act is
discriminatory because Quebec's Regulation respecting the determination of
child support payments, like the Federal Child Support Guidelines, does not
take the credit for a wholly dependent person into account.
[31] In my opinion, that claim is also
incorrect because the Federal Child Support Tables seem to have been designed
with a number of elements in mind, including the credit for a wholly dependent
person, as indicated in the Federal Child Support Guidelines (emphasis added):
6. The formula referred to in note 5 sets support
amounts to reflect average expenditures on children by a spouse with a
particular number of children and level of income. The calculation is based on
the support payer's income. The formula uses the basic personal amount for
non-refundable tax credits to recognize personal expenses, and takes other
federal and provincial income taxes and credits into account. Federal Child
Tax benefits and Goods and Services Tax credits for children are excluded from
the calculation. At lower income levels, the formula sets the amounts to take
into account the combined impact of taxes and child support payments on the
support payer's limited disposable income.
[32] Thus, in setting out the child support amounts,
the Federal Guidelines assume that the support payer will not be entitled to
the credit for a wholly dependent person. Consequently, although the taxpayer
paying child support does not benefit from the credit for a wholly dependent
person because he or she pays support, the support paid by that taxpayer was
established based on the fact that he or she is not entitled to receive the
personal tax credit in question.
[Emphasis added.]
[33] Without evidence refuting the legislator's claim
that the formula used to establish the Federal Guideline Tables takes into
account the denial of the tax credit in subsection 118(1) of the Act for the
taxpayer who pays child support, I cannot reach such a conclusion. The part of
the 1996 budget entitled "The New Child Support Package" indicates,
at page 12, that:
The Schedule amounts are fixed by a formula that calculates
the appropriate amount of support in light of economic data on average
expenditures on children across different income levels. The formula reserves a
basic amount of income for the payer's self-support, and adjusts for the impact
of federal and provincial income taxes. There are separate tables for each
province to take differences in provincial income tax rates into account. The
Schedules for each province and territory are included in the Annex.
The Honourable Paul Martin made the following comments
concerning the legislator's decision to change the tax treatment:
The equivalent-to-married credit is provided to a single parent
of a child under the age of 18. Currently, the Income Tax Act provides
that the recipient of child support, not the payer, is eligible to claim the
credit.
This treatment will continue to apply under the new rules.
This approach is consistent with the new federal child support guidelines,
under which award levels are set based on the assumption that it is the
recipient spouse who claims the equivalent-to-married credit.
And:
Subsection 118(5) of the Act provides that an individual
who is entitled to a deduction under paragraph 60(b), (c) or (c.1)
of the Act in respect of a support payment for the maintenance of a spouse or
child is not also entitled to claim a credit under section 118 in respect of
that spouse or child.
Subsection 118(5) is amended as a consequence of the
changes to the treatment of child support. As amended, subsection 118(5)
provides that an individual is not entitled to claim a credit under subsection
118(1) in respect of a person if the individual is required to pay a support amount
to his or her spouse or former spouse for that person and the individual either
is living separate and apart from the spouse or former spouse throughout the
year because of marriage breakdown or is claiming a deduction for support
payments.
Under this new wording, where an individual is required to
make child or spousal support payments in years following the year of marriage
breakdown, no credits under subsection 118(1) will be available to the
individual in respect of the spouse or child, even in cases where such support
payments are not made or, if made, are not deductible. In the year in which a
marriage breakdown occurs, an individual may be able to claim credits under
subsection 118(1) if he or she does not claim a deduction for support payments.
These amendments apply to the 1997 and subsequent taxation
years.
I must conclude that the Federal Child Support Guidelines
do take the credit for a wholly dependent person into account. Therefore, the
Appellant has not met the burden of proving the opposite effect and thus that
argument must be dismissed.
[38]
Having found that
subsection 118(5) of the ITA does not infringe section 15 of the
Charter, it is not necessary to determine whether subsection 118(5) of the ITA
constitutes a law, within reasonable limits, as can
be demonstrably justified in a free and democratic society under section 1 of
the Charter.
Conclusion
[39]
In conclusion, I am of
the view that subsection 118(5) of the ITA does not create a distinction
that is based on an enumerated ground, that is, sex, or an analogous ground,
that is, marital status. If such a distinction exists, the distinction does not
create a disadvantage by perpetuating prejudice or
stereotyping.
[40]
I therefore conclude
that subsection 118(5) of the ITA does not infringe the right to equality
protected by subsection 15(1) of the Charter.
[41]
Since the
constitutional issue was the sole ground of appeal, the appeal is dismissed.
These Amended Reasons for Judgment are issued in
substitution for the Reasons for Judgment dated April 28, 2014.
Signed at Kingston, Ontario, this 3rd day of July 2014.
“Rommel G. Masse”
Translation certified true
on this 18th day of July 2014
Daniela Guglietta,
Translator
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