Renata Grodski v. Minister of National Revenue, [1978] CTC 2340, 78 DTC 1273

A W Prociuk (orally: February 7, 1978):—The appellant, Mrs Renata Grodski, of the City of Toronto, Ontario, appeals from the reassessment of her income by the respondent for the taxation year 1975, wherein the respondent disallowed the claim for child care expenses in the sum of $500 in respect of her child born on December 4, 1973.

The disallowance was originally based on the premise that the payments made by the appellant were made to persons not resident in Canada; and also it is now the position of the respondent, although this was not pleaded in the reply to the notice of appeal, that there were no Social Insurance Numbers supplied by the appellant in respect of the two ladies who babysat for her during the taxation year 1975.

Mr Julius Grodski, husband of the appellant, appeared on her behalf and gave evidence. He testified that both he and his wife were employed in the taxation year 1975, and they required someone to look after their infant son who was then just a little over a year old. A certain lady by the name of Mrs Izewska, who had arrived in Canada from Poland, offered her services to Mrs Grodski, the appellant herein. Upon finding her satisfactory, Mrs Grodski, on April 29, 1975, wrote to Canada Manpower Centre by letter, a copy of which was filed as Exhibit R-1, requesting that Mrs Izewska be issued a work permit so that the appellant could engage her for her services in that capacity. Apparently, a work permit was granted and renewed some time in August of that year. In filing her return for the year, Mrs Grodski stated that she paid Mrs Izewska the sum of $658.

The form, Schedule 5, stipulates that it is not necessary to file receipts with the return, but that they should be kept for examination on request. Mr Grodski appearing for his wife, stated in evidence, that at no time were the receipts asked for by Revenue Canada. At the hearing, however, he filed as Exhibit A-2, six cancelled cheques paid to a Mrs Izewska, totalling $550 and two cheques totalling $116 paid to a medical insurance company under the name of Hospital Medical Care. Mr Grodski stated that this was paid to this firm at Mrs Izewska’s request so that she would have some form of health insurance protection. The total here is $666 which is $8 dollars more than claimed in the return. It has been held time and again by this Board and by different courts that a cancelled cheque representing payment for a service and endorsed by the person to whom payment was made, is acceptable in lieu of a receipt. Similarly, having heard the evidence herein, I accept these cancelled cheques as receipts representing payments to Mrs B Izewska in the total sum of $666.

Mrs Izewska worked until some time late in August of 1975 for the appellant at which time the appellant and her husband took their holidays and went to their cottage and did not require her services any longer. So she was released.

The next babysitter was Mrs E Sawicka who also came to Canada from Poland and offered her services to the appellant. By letter dated October 27, 1975, written by the appellant to Canada Manpower in Toronto, the appellant requested permission to hire Mrs Sawicka as her baby-sitter, and requested that a work permit be issued. The permit was issued.

On February 6, 1976, when Mrs Sawicka terminated her employment with the appellant, she signed a letter, which I accept as a receipt, and which reads as follows:

This is to certify that I, Elzbieta Sawicka, have have been working as a babysitter for Mrs Renata Grodski starting from November 17, 1975 and in this capacity I have earned $330.00 during 1975.

This amount was also claimed by Mrs Grodski in her return for a total of $988, which actually should be $996 if my arithmetic is correct, but she only claims the sum of $500 which is the maximum that she could claim for child care expenses.

There was a rather long argument with regard to the Social Insurance Numbers which Mrs Grodski ought to have obtained from the two baby-sitters. The Board was informed by Mr Grodski that at least Mrs Izewska had, according to his information, obtained a Social Insurance Number from Canada Manpower, but that he could not get that number because he was told by an official of that office that that number is not available to anybody except to people for official purposes. I then instructed the Registrar of the Board to telephone the Central Index Office to obtain that number. After some delay, the Registrar returned and advised that he had received a telephone call from that office stating that there was no number for the lady in respect of whom he made the inquiry.

Today, counsel for the respondent offered further information and Stated that the respondent is now withdrawing his plea in respect of residency of the two ladies in Canada, as originally pleaded in paragraph 4(a) of the reply to the notice of appeal which states that:

. . . the respondent found or assumed, inter alia:

(a) the individuals to whom payments were made for child care services were not residents of Canada during the 1975 taxation year.

Mr Hermosa asked that that portion of the reply be deleted as the respondent admitted that the two ladies in question had been resident in Canada. So the residency part has been established. The respondent further agreed that they did obtain work permits to enable them to obtain employment as babysitters.

What remains now under the Act, is the question of the Social Insurance Number, and I quote from section 63 of the Income Tax Act under the heading of “Child care expenses”:

63. (1) There, may be deducted in computing the income for a taxation year of a taxpayer who Is

(a) a woman, or

amounts paid by the taxpayer in the year as or on account of child care expenses in respect of the taxpayer’s children, to the extent that

(c) payment of the amounts is proven by filing with the Minister receipts each of which contains the Social Insurance Number of any individual payee who issued the receipt, and

There remains the question of the Social Insurance Number. In my humble opinion the purpose of this Social Insurance Number is simply to properly identify the payee so that in the évent that there is a check, or that there was to be a check made on whether or not the taxpayer truly and really paid the amounts in question which she purported to deduct, a further check could be made to ascertain whether in fact these amounts were paid, and, if so, whether or not the payees of those amounts ought not to pay tax thereon if they have taxable income.

I think that I would be unduly harsh if I treated this matter as an insurmountable obstacle to allowing the taxpayer the deduction for child care expenses to which she is properly entitled.

I am not prepared to do that. As I said before, I hold that the necessity of the Social Insurance Number is only for identification purposes. And it is nothing more than that.

There is, in my opinion, more than sufficient evidence to show that the appellant did in fact pay the sum of $996 for babysitting. She is claiming,$500 which of course is the maximum that she can claim.

In the special circumstances of this case, in view of the fact that the said babysitters have returned to their native land and there isn't any hope of obtaining their Social Insurance Numbers now, ff, in fact, they had any, I do not think that it would be a just and proper interpretation of the Act to disallow the deduction on this narrow ground, which ordinarily would be properly allowable.

Accordingly, the appeal is allowed.

Appeal allowed.