Albert Schindeler v. Her Majesty the Queen (Informal Procedure), [1994] 1 CTC 2379, 95 DTC 300

McArthur, J.T.C.C.:—This is an informal procedure appeal for the appellant's 1991 taxation year. The respondent disallowed the appellant from claiming child care expenses of $1,858 pursuant to section 63 of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act") because his income exceeded that of his wife and his wife was not in full time attendance at a designated educational institution as defined in subsection 118.6(1) of the Act.

The facts were not in dispute and no evidence was called. The appellant who was not in Court, was represented by an accountant (agent) who commenced immediately with argument.

Facts

Briefly the accepted facts include the following:

The net income in 1991 of the appellant was $32,182 and that of his wife Tracy was $3,265.

The appellant concedes that he is not entitled to a deduction for child care expenses pursuant to section 63 of the Act because his income exceeds that of his spouse and that the exceptions that allow an individual with higher net income to claim child care expenses pursuant to subsection 63(2) of the Act do not apply.

In 1991 Tracy Schindeler took a post-secondary course in hairdressing at Camrose Composite High School ("C.C.H.S.") in Camrose, Alberta. C.C.H.S. is not a "designated educational institution" as defined. Had the C.C.H.S. been a "designated institution” the appellant would have been permitted a child care expense deduction of $1,858 because the Minister would have been permitted to apply subparagraph 63(2)(b)(iii) that allows an individual with higher net income to claim child care expenses.

The appellant was aware that this Court does not have the jurisdiction to make the required designation and, in fact, the efforts to do so by the appellant were frustrated.

The Appellant's position

The appellant's agent argued that the appellant was subjected to cruel and unusual punishment contrary to section 12 of the Charter of Rights and Freedoms not being allowed a child care expense because C.C.H.S. was not a "designated educational institution".

The respondent submitted that in assessing the tax liability of the appellant in respect to the 1991 taxation year, the Minister of National Revenue did not discriminate against him in any way and relied on section 63 and subsection 118.6(1) of the Act.

Analysis

The relevant sections read in part:

63 (2) Where the income for a taxation year of a taxpayer who has an eligible child for the year exceeds the income for that year of a supporting person of that child (on the assumption that both incomes are computed without reference to this section and paragraph 60(w), the amount that may be deducted by the taxpayer under subsection (1) for the year as or on account of child care expenses shall not exceed the lesser of

(a) the amount that would, but for this subsection, be deductible by him for the year under subsection (1); and

(b) the product obtained when the aggregate of

is multiplied by the number of weeks in the year during which the child care expenses were incurred and throughout which the supporting person was

(iii) a person in full-time attendance at a designated educational institution (within the meaning assigned by subsection 118.6(1)).

Section 118.6 reads in part:

For the purposes of this section,

"designated educational institution” means

(a) an educational institution in Canada that is

(i) a university, college or other educational institution designated by the Lieutenant Governor in Council of a province as a specified educational institution under the Canada Student Loans Act or recognized by the Minister of Education of the Province of Quebec for the purposes of the Student Loans and Scholarships Act of the Province of Quebec,

Section 12 of the Charter of Rights and Freedoms reads as follow:

Everyone has the right not to be subjected to any cruel and unusual treatment or punishment.

Subsection 63(2) and definition paragraph 118.6 create an exception to allow a child care expense.

The appellant would have been permitted to deduct child care expense if the school his wife was attending had been one designated as defined in section 118.6. It was not so designated and he feels that it should have been so designated. It is for this reason that the appellant submits he is subjected to “cruel and unusual” punishment.

The respondent referred the Court to Charron v. The Queen, [1984] C.T.C. 237, 84 D.T.C. 6241 (F.C.T.D.). This case stands for the position that it is not cruel or unusual to apply provisions of the Act in an attempt to collect taxes that are due.

Walsh, J. stated in part at page 240 (D.T.C. 6244):

With respect to article 12 there is certainly no question of any unusual treatment or punishment. What has been done is a very common procedure and although petitioner alleges that as a result of the seizure he is now deprived of any source of income and that he suffers a grave prejudice this is no more than the prejudice suffered by any debtor whose assets are seized by a creditor, nor is there anything cruel or unusual in applying the provisions of the Income Tax Act in an attempt to collect taxes believed to be due. As already stated the petitioner has every right to oppose the seizure before it is made definitive, and also to contest his liability for taxes which led to the seizure.

As painful as it might be to pay income tax or to be denied an income tax deduction, it is not cruel and unusual punishment as envisaged in section 12 of the Charter.

While the appellant did not specifically raise the issue, I have considered whether the appellant's rights under section 15(1) of the Charter were contravened because the appellant spoke of "unfair treatment". The section 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.

In Hover v. M.N.R., [1993] 1 C.T.C. 2585, 93 D.T.C. 98 (T.C.C.), at pages 2587-88 (D.T.C. 99), Bowman, J.T.C.C. stated:

In a broad sense it might be said that any fiscal law that dictates different treatment for different classes of persons discriminates among those classes. Yet the Act abounds in such distinctions. Farmers are treated differently from those engaged in manufacturing who in turn receive a different treatment from those engaged in the resource industry. Employees are treated differently from persons in business. Married persons are accorded treatment that differs from that accorded to single persons.

it must be recognized that taxing statutes have economic and social objectives that far transcend the mere raising of money and it is difficult to conceive of any way in which a modern industrialized state such as Canada could avoid making such distinctions in its fiscal legislation. Such distinctions may appear superficially to be arbitrary and possibly unfair and the appellant has raised squarely whether the category to which the Minister's assessment under section 31 relegates him in the fiscal scheme of things infringes upon his right of equality under the Charter.

In order to succeed under section 15 one of the following four basic rights must have been denied:

1. the right to equality before the law;

2. the right to equality under the law;

3. the right to protection under the law; and

4. the right to equal benefit under the law.

In Schachtschneider v. Canada, [1993] 2 C.T.C. 178, 93 D.T.C. 5298 (F.C.A.), the Court held that the appellant's right to equal benefit of the law under subsection 15(1) of the Charter was found not to have been infringed by subsection 118(1) of the Act.

I conclude that the appellant has not been subject to cruel and unusual punishment contrary to section 12 and his rights of equality under section 15 have not been infringed by the denial by the Minister to the appellant of a child care expense in the amount of $1,858.

For these reasons the appellant’s appeal is dismissed.

Appeal dismissed.