Rip T.C.J.:
1 Edward Wells has appealed his income tax assessment for the 1994 taxation year in which the Minister of National Revenue (the “Minister”), disallowed his claim for child care expenses in accordance with subsection 63(1) of the Income Tax Act (the “Act”). It appears that the Minister disallowed the claim since Mr. Wells could not file with the Minister receipts issued by the person who rendered child care services to him[FN1: <p>The appellant filed receipts paid to the Brantford YM-YWCA for day camp for his children. Revenue Canada does not contest validity of these receipts and counsel for the Minister concedes that the appellant is entitled to deduct the amounts reflected by these receipts, which totalled $272.</p>] .
2 During 1994 Mr. and Mrs. Wells lived in Brantford, Ontario, near Hamilton. Mr. Wells worked for the Department of Employment and Immigration as an investigator in its Hamilton office. He worked a five day week. He could work as long as 12 to 13 hours a day but his regular work day was 71/2hours. Mr. Wells would leave for work as early as 4 o'clock in the morning and as late as 8:00 a.m.; he would return home as early as 5:45 p.m. in the evening and as late as 9:30 p.m. During 1994 Mr. Wells travelled approximately two to three months.
3 Mrs. Wells was employed by the Toronto Dominion Bank and worked at its head office in downtown Toronto. Her work hours were from 8 a.m. to 5 p.m. She would leave usually home at 6 a.m. and return at approximately 6:45 to 7 p.m. each evening.
4 The Wells had two children, a daughter, age 9 and a son, age 13, in 1994. Ms. Carol Baker was engaged by the Wells as a baby-sitter for their children. Ms. Baker would arrive at their home between 6:30 and 7 a.m. in the morning, and leave at 9 a.m., once the children left for school. She would return again at noon to serve the children lunch and leave at 1 p.m. She again returned to the Wells residence at 3:30 p.m. until she was relieved by Mr. or Mrs. Wells. Ms. Baker lived about a 10 minutes drive from the Wells residence. Mr. Wells paid Ms. Baker $100 a week in cash. Mr. Wells testified that he had purchased a receipt book at Grand and Toy and had Ms. Baker sign a receipt each time he paid her. Mr. Wells testified that Ms. Baker gave Mrs. Wells her social security number, which Mr. Wells believed was the social insurance number of Ms. Baker.
5 On November 14, 1994, Mr. Wells' briefcase was stolen. The theft was reported to the Brantford police and a police report was filed in court. According to the police report the briefcase contained fraud documents owned by the Department of Employment and Immigration, a camera and flares. Mr. Wells stated that his receipt book was also in the briefcase. He stated — and I believe him — that he did not mention the receipt book to the police because his main concern at the time was the loss of the government documents. The receipts were “not on [his] mind” at the time he reported the theft to the police.
6 Ms. Baker continued to work for the Wells after the theft and receipts initialled by her for December 9 and 16, 1994 were produced at trial.
7 In cross-examination, Mr. Wells was asked why he did not ask Ms. Baker to sign duplicate receipts for all of 1994 after the theft. Mr. Wells stated that it “never entered his mind” because of his concern with the other documents. He said he did not even think about the receipts until 1995 when Revenue Canada requested them. He said he attempted to telephone Ms. Baker but there was no longer any service at the number. He also visited the apartment building in which Ms. Baker had lived but could not find her name on the apartment's directory of occupants.
8 Revenue Canada advised Mr. Wells the social insurance number Ms. Baker gave to Mrs. Wells was not Ms. Baker.
9 I accept Mr. Wells' testimony. I am confident that he engaged the services of Ms. Baker to care for his children, that he paid her $100 a week, that Ms. Baker acknowledged receipt of the monies paid to her on a weekly basis, that Mrs. Wells had taken Ms. Baker's social insurance number from documentation Ms. Baker gave to her and that the receipts were stolen. Had the theft not taken place Mr. Wells would have been able to file the receipts with Revenue Canada. There is nothing in the evidence before me to suggest Mrs. Wells did not do what a reasonable person in similar circumstances would have done when she obtained the social insurance number. If the social insurance number that was given to Mrs. Wells was not correct, and as Mrs. Wells used her best efforts to obtain the number, Mr. Wells should not be prejudiced.
10 Subsection 63(1) provides that a taxpayer shall be entitled to child care expenses under certain circumstances:
and the payment of which is proven by filing with the Minister one or more receipts each of which was issued by the payee and contains, where the payee is an individual, that individual's Social Insurance Number...
11 At the commencement of argument by counsel for the respondent, I referred to the reasons for judgment of Bowman T.C.C.J. in Senger-Hammond v. R. (IT)I (T.C.C.). In that appeal Judge Bowman found that the words in subsection 63(1) requiring the filing of receipts with the payee's social insurance numbers, to which I referred, are directory rather than imperative; they are merely an administrative direction. The failure to file receipts is not fatal to deductibility when the taxpayer is able to establish that the payments have been made. Judge Bowman, at paragraphs 10 to 27, referred to the decisions of Hamlyn T.C.C.J. in Barclay v. R. (IT)I (T.C.C.) [Now reported(1994), [1995] 1 C.T.C. 2345 (T.C.C.)] and of the Tax Review Board in Grodski v. Minister of National Revenue (1978), 78 D.T.C. 1273 (T.R.B.). Hamlyn T.C.C.J. dismissed the appeal where the taxpayer did not have a receipt whereas the Tax Review Board had previously allowed such an appeal. Bowman T.C.C.J. analyzed case law and doctrine and concluded that his finding was consistent with the wording of the Act and its object.
12 Counsel for the crown naturally took the position that Judge Bowman erred. Counsel referred me to the Federal Court of Appeal decision in Ginsberg v. R. (1996), 96 D.T.C. 6372 (Fed. C.A.)and the decision of the Privy Council in Wang v. Commissioner of Inland Revenue, [1995] 1 All E.R. 367 (England P.C.), at 377. In both these cases the courts considered, amongst other things, whether certain meanings of words were mandatory or directory. The Federal Court of Appeal, citing Wang, at p. 6377, agreed that the importance of the distinction between a directory and a mandatory provision has been diminished over the years. It is difficult to be able to draw a distinction between what is directory and what is imperative: British Columbia (Attorney General) v. Canada (Attorney General), [1994] 2 S.C.R. 41 (S.C.C.)122-24.
13 What concerns me in the appeal at bar is that if Mr. Wells' briefcase had not been stolen, he would have been able to provide Revenue Canada with the receipts and he would be entitled to a deduction pursuant to subsection 63(1) of the Act. He did not cause the theft. I cannot imagine that Parliament wished to deny a deduction to a taxpayer when that taxpayer did all that was required by him to do but, due to an event not of his making and beyond his control, he is unable to fulfil an administrative disposition of the Act. In such a situation, for the Act to make sense, the relevant words of subsection 63(1) must be directory. Therefore, I shall allow the appeal.
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