Jim R. Boland v. Minister of National Revenue, [1994] 1 CTC 2001, 93 DTC 1558

Teskey, J.T.C.C.:— The appellant appeals his assessment of income tax for the year 1989.

Issue

The issue herein is whether wages paid by the appellant to his wife, in 1989 were eligible child care expenses under section 63 of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act"). The appellant’s position is that he is not being treated equally under this section and therefore he is being discriminated against, from a tax point of view. He argues that because of this, section 63 of the Act is contrary to section 15 of the Constitution Act 1982 (the "Charter").

Facts

I must say at the outset that a great deal of the evidence before me was irrelevant, particularly the testimony given by Dr. William P. Sears, a practising paediatrician in California.

The appellant asked the Court to accept Dr. Sears as an expert witness on the psychological effects of daycare as opposed to home care and the benefits of attachment parenting. Essentially, Dr. Sears was called for the purpose of showing that staying at home to raise children is a reasonable choice in the societal context. I agree with the position of the respondent that the testimony of Dr. Sears as to what he has observed in his 20 years of practice is acceptable evidence. However, although his evidence may be of interest to others, it does not contribute to resolving the legal issue before me.

The only relevant facts before me are:

(a) In 1989 the appellant was a married man with a spouse who stayed home to look after their two children, ages four and seven.

(b) The appellant paid his spouse the sum of $500 per month to provide child care for their two infant children in their home pursuant to a written employment agreement (the respondent in no way attacked the employment contract). All normal deductions for CPP and UIC were deducted.

(c) The appellant claimed child care deductions pursuant to section 63 of the Act in his 1989 T1 tax return, which deductions were denied on assessment.

(d) In 1989, those married couples who chose to have one spouse stay home and provide child care to their children, are a minority.

(e) That it costs money to raise infant children.

(f) That the appellant paid more income tax in 1989 as a result of the denial of the deduction than if it had been allowed.

Analysis

Section 63 allows a deduction for child care expenses in certain circumstances. The appellant is not entitled to the deduction for two reasons, namely payments to a parent are excluded by subparagraph 63(3)(a)(ii) and the deduction can only be claimed by the spouse with the lower income. This was common ground between the appellant and the respondent.

The appellant’s argument rests on discrimination as prohibited by subsection 15(1) of the Charter in that amounts paid for child care do not qualify for deductions if the care is provided by certain persons related to the child. This allegedly constitutes discrimination on the basis of family status. This subsection reads:

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.

(2) Subsection (1) does not preclude any law, program or activity that has as its object the amelioration of conditions of disadvantaged individuals or groups including those that are disadvantaged because of race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.

In determining whether a provision violates subsection 15(1) of the Charter, the Supreme Court of Canada established a test in Andrews v. Law Society of British Columbia, [1989] 1 S.C.R. 143, 56 D.L.R. (4th) 1. A similar approach was also described by Lamer, C.J.C., in R, v. Swain, [1991] 1 S.C.R. 933, 63 C.C.C. (3d) 481. The test is a two stage test.

Firstly, I must determine whether the claimant has shown that one of the four basic equality rights has been denied (i.e., equality before the law, equality under the law, equal protection of the law and equal benefit of the law). Mahoney, J.A. in Schachtscnneider v. Canada, [1993] 2 C.T.C. 178, 93 D.T.C. 5298 (F.C.A.), noted that a tax credit is a benefit under the law. Therefore by analogy, a tax deduction is a benefit under the law. Conversely, the denial of such a benefit amounts to a denial of equal benefit of the law.

Secondly, I must determine whether the denial of equal treatment results in "discrimination". In so doing, I must identify the group that is claiming to be discriminated against and the ground of discrimination. This also entails a two prong enquiry. One must first ascertain whether the differential treatment has the effect of imposing a burden, obligation or disadvantage not imposed upon others or withholding or limiting access to opportunities, benefits and advantages available to others. Section 63 denies a tax deduction for child care costs where one of the spouses is the care giver to the child. Thus, parents who hire a third party to look after their children and parents who decide to personally assume responsibility for their children's care are treated differently.

In determining whether the claimant's rights have been infringed, I must consider the personal characteristics of the group or person affected. The evidence has established that stay-at-home spouses constitute a minority in Canada. Andrews directs that I must determine whether this minority can be said to constitute a "discrete and insular minority". Wilson, J. in Andrews found that non-citizens constituted such a group, she underlined the lack of political power of non-citizens and their vulnerability to having their interests overlooked and their rights to equal concern and respect violated.

It is essential to consider the position of the group not only in the context of the law but also in the context of the place of the group in the entire social, political and legal fabric of society.

I am of the opinion that it cannot be said that stay-at-home spouses constitute a vulnerable group in today's society nor can it be said that such group has been subject historically to discrimination.

Also I must answer the question of whether the "discrete and insular minority" is distinguished by a characteristic analogous to those grounds enumerated in section 15 of the Charter.

The Federal Court of Appeal in Schachtschneider dealt with Elaine Schacht- schneider's claim to entitlement to freedom from discrimination as per subsection 15(1) of the Charter on the analogous ground of "marital status". Under attack was subsection 118(1) of the Act.

The Court in Schachtschneider was dealing with a group composed of married persons with a child of the marriage, living together and not supporting each other. Mahoney, J.A. with W. Gibson Gray, D.J. agreeing, said at pages 185 (D.T.C. 5303-04):

There may be others differently treated by subsection 118(1) on the basis of personal characteristics, but the group now in issue is composed of married persons with a child of the marriage, living together and not supporting each other. In my opinion, that is not a group that can be described as being disadvantaged in the context of its place in the entire social, political and legal fabric of our society. It follows that it is not a distinct and insular minority within the contemplation of section 15. The distinction made by subsection 118(1) of the Income Tax Act between married and unmarried persons in those like circumstances is not discriminatory.

I see no difference between the group in which Elaine Schachtschneider belonged and the group that Jim Boland claims to represent. It is my opinion that the Federal Court of Appeal has determined in Schachtschneider that a group based on marital status does not form a "distinct and insular minority" within the contemplation of section 15 of the Charter even though the group may be in a minority.

Christie, A.C.J.T.C. in Ross v. Canada, [1993] 2 C.T.C. 2197, 93 D.T.C. 1560 (T.C.C.) dealt with the same issue as herein. The appellant paid his spouse $8,000 in 1990 to provide child care for their two children and claimed a deduction for that amount. Associate Chief Judge Christie dismissed the appeal, finding that section 63 does not infringe section 15 of the Charter.

Although the Ross appeal was heard pursuant to the informal procedure as prescribed in section 18 of the Tax Court of Canada Act and even though by section 18.28, a decision under the informal procedure has no precedential value, I can see no reason not to follow Ross, supra, particularly in light of the Schachtschneider decision.

In making the above comment concerning precedential value as set out in section 18.28, I am mindful of the words of Bowman, J.T.C.C. in the unreported decision of Mourtzis v. Canada, delivered from the bench on April 8, 1993, wherein he said:

I regard that section (18.28) as being of very limited application. I am prepared to accept it insofar as it means nothing more than this: If I do not choose to follow the decision of one of my brethren in an informal procedure, I am not bound by the strict rules of stare decisis. If that section is interpreted to mean that counsel is not entitled to refer to informal procedure cases or that I am not permitted to cite them or follow them if I choose to do so, then I regard that as a most unreasonable interpretation of the Act and, indeed, I would regard it as an unwarranted attempt by Parliament to interfere with my judicial independence and with the independence of the bar in this country to refer to such authorities if they see fit to refer to them. After all, the decisions of the House of Lords are not binding on me. Does that mean they should not be referred to? The decisions of the Supreme Court of the United States are not binding upon me. Does that mean that if counsel find a good decision by Mr. Justice Oliver Wendell Holmes or Judge Benjamin Cardozo or Judge Learned Hand, they should not refer to them? I find that interpretation patently unacceptable and, as I understand the rule, if a statute can bear one of two interpretations, one of which leads to an absurdity and one which does not, one should adopt the interpretation which leads to a reasonable result rather than an absurd result. And if one wants authority for that, it is found in the decision of the House of Lords in Victoria v. The Bishop of Vancouver, [1921] 2 Appeal Cases, page 384.

Having found no infringement of section 15, it is not necessary to consider the application of section 1 of the Charter.

The history of section 63 was traced in detail by Décary, J.A. of the Federal Court of Appeal in Symes v. Canada, [1991] 2 C.T.C. 1, 91 D.T.C. 5397 on pages 4-5 (D.T.C. 5400-01) under the headings of “Fiscal history of child care expenses"; "Government policies on child care expenses" and "Reports and Royal Commissions" eliminating the need to repeat it herein.

A reading of this history shows that the child care expense deduction was enacted to help working parents to adequately care for their children by enabling them to deduct part of the cost of hiring a third party to look after the children. The purpose of the deduction is to supplement the cost of child care where both parents or a single parent are working. It is not to subsidize in general the cost of raising children.

For these reasons, the appeal is dismissed.

Appeal dismissed.