Thibodeau v. R., [1996] 1 CTC 2132, 96 DTC 3249 (Informal Procedure)

Lamarre J.T.C.C.— This is an appeal under the informal procedure from an assessment in respect of the appellant’s 1984 taxation year. In computing her taxable income for the 1984 taxation year, the appellant deducted the sum of $710 for her daughter Geneviève, born on April 17, 1985, claiming the deduction for wholly dependent children of an individual provided for in paragraph 109(l)(d) of the Income Tax Act, 1970-71-72 S.C., c. 63, as amended (hereinafter “the Act”).

In assessing the appellant, the Minister of National Revenue (“the Minister”) disallowed the deduction “of an amount for dependent children” on the ground that “the child in question [was] not eligible for that amount.”

Facts

The parties agreed that Geneviève was born on April 17, 1985, and that she was conceived, but not yet born, at the end of the 1984 taxation year. The appellant testified to explain what she had experienced during her pregnancy and the changes caused by that pregnancy, both financial and in her life-style (food, clothing, pace of life, help in taking care of her first daughter, who was two years of age in 1984, frequent hospital visits, reduction of her working time). The appellant, who is a lawyer by profession, admitted that she had no medical expertise, but simply a mother’s knowledge. She said she had incurred expenses during the pregnancy, including taxi expenses in order to go to the hospital, vitamin supplements, a new crib and books on childbirth. She admitted that her husband and she both shared in domestic responsibilities.

Counsel for the appellant contended in his argument that, although Geneviève was not born at the end of the 1984 taxation year, she was, under paragraph 109(l)(d) of the Act, a wholly dependent child of the appellant in that same year, 1984. He claimed, first, that the respondent had admitted in her notices of assessment and confirmation that Geneviève was a child in 1984; he further submitted that the burden was now on the Minister to prove that she was not a child within the meaning of the Act. On this point, I do not accept counsel’s claims since the mere mention in the assessment that the child in question was not a dependent child is certainly not conclusive on a question of law which it is ultimately up to the judge to determine in order to establish the validity of that assessment.

Second, citing a number of definitions found in common dictionaries as well as certain court decisions, counsel stated that a child conceived but not yet born is a child within the ordinary meaning of the term. He claimed that nothing in the Act required that a child have a legal personality separate from its mother. In his view, the purpose of paragraph 109(1 )(d) of the Act was not to confer rights on the child. The child did not therefore have to be a person within the legal meaning of the term.

Last, counsel for the appellant contended that the child was wholly dependent on the appellant in 1984. In support of his claims, he stated that the word “dependent” is not defined in the Act and that the economic question is only one aspect of the issue. The tax statute also constituted a tool for promoting a social policy, and in this context, he contended that a child conceived but not born must necessarily be considered dependent on its mother within the meaning of the Act. According to counsel for the appellant, the purpose of paragraph 109(1)(d) of the Act is to allow the deduction of a lump sum amount for each wholly dependent child and there is nothing in the Act preventing the mother from deducting from her income the said amount for an unborn child.

Counsel for the respondent, for her part, relying on the wording of paragraph 109( l)(d) of the Act and taking into account the general scheme of the Act, contended that an exemption cannot be allowed for an unborn child. She argued that the deduction was formulated so as to benefit the appellant, not the child, and in this context, all decisions in which the fetus was considered to be a person applied only if the rights of the child were in issue. Moreover, the Act made no reference to unborn children, but always to the age of the child. It is specifically stated in section 30 of the Interpretation Act, S.C., c. I-21, that a person is deemed not to have attained a specified number of years of age until the commencement of the anniversary, of the same number, of the day of that person’s birth. She further referred to decisions by this Court and the Federal Court-Trial Division, in which the fetus had not been considered to be a child within the meaning of the Act. Lastly, she contended that, if Parliament had wanted to include the fetus in the definition of dependent child, it would have specifically indicated so in the Act.

Analysis

During the 1984 taxation year, an individual could, upon meeting certain specific conditions, deduct a certain sum from his income for each of his children who had been wholly dependent on him during the year. Paragraph 109(l)(d) of the Act, as it then read, provided for this deduction in the following terms:

109. Deductions permitted by individuals.

(1) For the purpose of computing the taxable income of an individual for a taxation year, there may be deducted such of the following amounts as are applicable:

(d) Children. — for each child or grandchild of the individual who, during the year, was wholly dependent upon him for support and was

(i) under 21 years of age,

(ii) 21 years of age or over and dependent by reason of mental or physical infirmity, or

(iii) 21 years of age or over and in full-time attendance at a school or university,

an amount equal to

(iv) if the child or grandchild has not attained the age of 18 years before the end of the year, $710 less half of the amount, if any, by which the income for the year of the child or grandchild, as the case may be, exceeds $2,350, and

(v) in any other case, $550 less the amount, if any, by which the income for the year of the child or grandchild, as the case may be, exceeds $1,150;

The taxpayer was thus entitled to a maximum deduction of $710 if the child had an income not exceeding $2,540.! [1] This $710 deduction gradually diminished if the child had income greater than $2,540 and fell to nil when the child had income greater than $3,960 during the year. Furthermore, for the purposes of this deduction, subsection 109(3) of the Act established the presumption that, unless the contrary was established, a child who was not illegitimate was wholly dependent on his father. This subsection read as follows:

109(3) Dependent child. For the purpose of the deduction for a child under paragraph (l)(d), it shall be assumed, unless the contrary is established, that an illegitimate child was wholly dependent on his mother and that any other child was wholly dependent on his father.

It seems clear to me from a reading of the above provisions that the deduction provided by the Act was of an essentially economic nature since it was a direct function of the child’s income. I do not see how counsel for the appellant could claim that the word “dependent”, not being defined in the Act, could have another meaning. The very wording of the presumption established by Parliament in subsection 109(3) suggests that the depen- dency in question was of a strictly financial nature and that that arising from maternity in a broader sense was not contemplated therein.

In my view, it is the expression “child of the individual who, during the year, was wholly dependent upon him for support” which must be analyzed as a whole and in the overall context of the Act. I do not believe the word “child” can justifiably be analyzed in isolation without regard to the statute in which it is used. It is clear that the word “child” may have been defined on other occasions as including a fetus. Moreover, all the decisions on which counsel for the appellant relied addressed the issue in the specific context of the act that referred to it. It seems obvious that the terms of a statute must be interpreted having regard to the immediate and specific context of that statute, not of other statutes whose purpose is absolutely unrelated to the one in question. This is moreover the position the Supreme Court of Canada has adopted over the years. Gonthier J. stated the following in Québec (Communauté Urbaine) v. Corp. Notre-Dame de Bonsecours (sub nom. Corporation Notre-Dame de Bon-Secours v. Communauté Urbaine de Québec, [1994] 3 S.C.R. 3, [1995] 1 C.T.C. 241, 95 D.T.C. 5017, at S.C.R. page 17:

In light of this passage there is no longer any doubt that the interpretation of tax legislation should be subject to the ordinary rules of construction. At page 87 of his text Construction of Statutes (2nd ed. 1983), Driedger fittingly summarizes the basic principles: “the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament”. The first consideration should therefore be to determine the purpose of the legislation, whether as a whole or as expressed in a particular provision.

In other words, it is the teleological interpretation that will be the means of identifying the purpose underlying a specific legislative provision and the Act as a whole; and it is the purpose in question which will dictate in each case whether a strict or a liberal interpretation is appropriate or whether it is the tax department or the taxpayer which will be favoured.

In the instant case, the Act provides tax relief for an individual who has a child under 21 years of age, if that child does not suffer from a mental or physical infirmity or if he does not attend school on a full-time basis, but solely to the extent that the child does not have income and, if he does, that it does not exceed a certain amount. The only reference to age is a clear indication in my view that the fetus is not contemplated by this provision of the Act. Section 30 of the Interpretation Act, supra, provides as follows:

30. A person is deemed not to have attained a specified number of years of age until the commencement of the anniversary, of the same number, of the day of that person’s birth. R.S., c. 1-23, section 25.

According to this provision, age is calculated as of the birth, not the conception, of a child. It would moreover be illogical to calculate it in any other manner. That would yield results as absurd as saying that the deduc- tion the appellant sought would be disallowed as soon as her child had reached the age of 21 years less nine months, that is 21 years from the date of conception.

Furthermore, the Federal Court-Trial Division, this Court and the Tax Review Board have already ruled on this specific provision of the Act. [2] In no case has it been held that the fetus was contemplated by paragraph 109( l)(d) since the fetus could not be considered a dependent child within the meaning of that paragraph. Furthermore, in Adams, supra, Collier J. of the Federal Court stated in obiter that the fetus, being wholly dependent on the mother for its sustenance during pregnancy, could not be wholly dependent on the father for support in accordance with paragraph 109(l)(d). It is not my view that one must infer from the passage in question that the unborn child thus becomes dependent on the mother for support within the meaning of that paragraph. It seems to me that the presumption created by subsection 109(3) all the more confirms this point as I expressed it above.

For all these reasons, I conclude that Geneviève was not a child wholly dependent on the appellant for support during the 1984 taxation year and that the latter therefore could not receive the deduction provided for in paragraph 109( l)(d) of the Act.

The appeal is dismissed.

Appeal dismissed.