Tremblay T.C.J.:
1 This appeal was heard under the informal procedure at Trois-Rivières, Quebec, on April 9, 1997.
1. Point at issue
2 According to the Notice of Appeal and the Reply to the Notice of Appeal, the question is whether two single persons who each have a child (Emmanuel Dionne, 14, and Jean-Félix St-Germain, 8) may share accommodation for economic and social purposes only and at the same time each claim a non-refundable equivalent-to-married tax credit for a wholly dependent person for the 1994 taxation year.
3 The respondent relied on s. 118(4)(b) of the Income Tax Act (“the Act”).
2. Burden of proof
4 2.01 The appellant has the burden of showing that the respondent's assessment is incorrect. This burden of proof results from several judicial decisions, including the judgment of the Supreme Court of Canada in Johnston v. Minister of National Revenue
5 2.02 In that judgment the Supreme Court held that the facts assumed by the respondent in support of the assessment or reassessment are presumed to be true until the contrary is proven. In the instant case the facts assumed by the respondent are set out in subparagraphs (a) to (f) of paragraph 4 of the respondent's Reply to the Notice of Appeal. Paragraph 4 reads as follows:
[TRANSLATION]- 4. In arriving at this reassessment for the 1994 taxation year the Minister took into account inter alia the following facts:
(a) with regard to the 1994 taxation year the appellant stated that she elected domicile at 8 Duvernay, Cap-de-la-Madeleine, in the province of Quebec; [admitted]
(b) with regard to the 1994 taxation year Lise St-Germain stated she also elected domicile at 8 Duvernay, Cap-de-la-Madeleine, in the province of Quebec; [admitted]
(c) a letter to Revenue Canada from Lise St-Germain dated January 22, 1996 stated that it was agreed that Lise St-Germain would claim an equivalent-to-married amount for a wholly dependent person; [Exhibit I-2]
(d) in her tax return for the 1994 taxation year, the appellant claimed a non-refundable equivalent-to-married tax credit for a wholly dependent person of $914.60; [admitted]
(e) in her tax return for the 1994 taxation year Lise St-Germain claimed a non-refundable equivalent-to-married tax credit for a wholly dependent person of $914.60; [admitted]
(f) based on the foregoing the Minister disallowed pursuant to s. 118(4) of the Income Tax Act (hereinafter “the Act”) the non-refundable tax credit claimed by the appellant for a wholly dependent person for the 1994 taxation year. [admitted as to disallowance, denied as to law]
3. Facts in evidence
6 3.01 During the 1994 taxation year the appellant Lisette Dionne, mother of Emmanuel Dionne, 14, lived at 8 Duvernay, Cap-de-la-Madeleine, Quebec.
7 3.02 During the same 1994 fiscal year Lise St-Germain, mother of Jean-Félix St-Germain, 8, also lived at 8 Duvernay, Cap-de-la-Madeleine, Quebec.
8 3.03 These two individuals were both community workers who knew each other only by sight until the day Ms. Dionne informed her friends that she was looking for a place to rent. She was told that Ms. St-Germain was looking for someone to share her accommodation. Ms. St-Germain had recently purchased a house with her mother's help and was looking for someone with whom she could get along to share the house. This would help her financially. The St-Germain house had four bedrooms, a kitchen, a basement and so on and also an attic.
9 They agreed on a rental of $380 a month plus telephone and electricity expenses.
10 3.04 In due course, they filed their 1994 tax returns, each claiming with respect to her child a non-refundable equivalent-to-married credit of $914.60 ($5,380 × 17%) for a wholly dependent person.
11 3.05 At the end of November 1995 Lise St-Germain received the following letter from Revenue Canada (Exhibit I-1):
[TRANSLATION]Dear Madam:
Re: Your tax returns for 1992 and 1993
We regularly conduct reviews which play an important part in the self-assessment tax system. This letter is to inform you that we have reviewed your returns and intend to reassess you as follows.
According to our information, someone else with the same address as your own has also claimed the equivalent-to-married amount. As only one equivalent-to-married amount can be claimed per household, you must decide who will make the application for 1993 and 1994.
The person withdrawing the claim for the equivalent-to-married amount must do so in writing within 30 days. If you cannot reach agreement as to which of you will claim the equivalent-to-married amount, we will disallow both of your claims.
If you have any questions about this letter, you can contact me at (418) 699-0231. Collect calls will be accepted.Yours truly,
(s) Richard Duhaime
RICHARD DUHAIME
REFUND REVIEW
12 3.06 In view of the content of paragraph 3 of Exhibit I-1, Ms. Dionne and Ms. St-Germain decided between themselves that the latter would claim the tax credit provided for in the Act. On January 22, 1996 Ms. St-Germain wrote Revenue Canada the following letter (Exhibit I-2):
[TRANSLATION]Cap-de-la-Madeleine
January 22, 1996
Attention: Richard Duhaime
Re: Tax return for 93-94
Dear Sir:
Further to a letter from Revenue Canada dated November 25, 1995 regarding my taxes for 93-94, the following decisions have been made in this matter.
It has been agreed that Lise St-Germain will make the claim for an equivalent-to-married amount for 93-94.
However, I should point out that Ms. Dionne and I did not live together for all of 1993. We began sharing accommodation in June 1993.
That fiscal year should consequently not be taken into account in considering our cases.
I enclose a copy of the contract for the purchase of the house. The owner is Louise Fortin St-Germain, who is my mother.
Ms. Dionne paid me rental as it is I who was responsible for paying the mortgage. This can be verified with the Caisse populaire de St-Odilon: the signatures on the deposits are all by Lise St-Germain. Ms. Dionne and I have a verbal agreement regarding the sharing of accommodation.
Do not hesitate to contact me if you need further information.Yours truly,
(s) Lise St-Germain
Lise St-Germain
13 3.07 The evidence was clear that there was no love relationship between the two individuals. Their only concern was the economic and social benefits for themselves and their children.
14 3.08 The 1994 tax return of the appellant, Lisette Dionne, shows employment income of $13,950.
15 3.09 Following the respondent's assessment which disallowed the equivalent-to-married credit for a dependent person claimed with regard to her son, Ms. Dionne filed a notice of objection and, when the assessment was upheld, she filed a Notice of Appeal with this Court.
4. Act - case law and commentary - analysis
4.01 Act
16 The main statutory provisions relied on in the instant case are subsections 118(1) and (4) and 248(1) of the Income Tax Act. Those subsections read as follows:
118: Personal credits.
(1) For the purpose of computing the tax payable under this Part by an individual for a taxation year, there may be deducted an amount determined by the formula
A × B
whereA is the appropriate percentage for the year, and B is the total of,- (a) Married status- in the case of an individual who at any time in the year is a married person who supports the individual's spouse, an amount equal to the total of
(i) $6,000, and
- (ii) an amount determined by the formula
$5,000 - (C - $500)
C is the greater of $500 and the income of the individual's spouse for the year or, where the individual and the individual's spouse are living separate and apart at the end of the year by reason of a breakdown of their marriage, the spouse's income for the year while married and not so separated,
- (b) Wholly dependent person—in the case of an individualnot entitled toa deduction by reason of paragraph (a)who, at any time in the year,
118(4) Limitations re s. (1).
For the purposes of subsection (1), the following rules apply:(a) no amount may be deducted under subsection (1) by reason of paragraphs (1)(a) and (b) by an individual in a taxation year for more than one other person;
(b) not more than one individual is entitled to a deduction under subsection (1) by reason of paragraph (1)(b) for a taxation year in respect of the same person orthe same domestic establishmentand where two or more individuals otherwise entitled to such a deduction fail to agree as to the individual by whom the deduction may be made, no such deduction for the year shall be allowed to either or any of them;
(c) where an individual is entitled to a deduction under subsection (1) by reason of paragraph (1)(b) for any person described therein, the person shall be deemed not to be a dependant for the year for the purposes of paragraph (1)(d); and
(d) [Repealed by S.C. 1994, c. 7, Sched. VII, s. 8(2).]
(e) where more than one individual is, in respect of a taxation year, entitled to deduct an amount under subsection (1) by reason of paragraph (1)(d) for the same dependant, the total of all amounts so deductible for the year shall not exceed the maximum amount that would be deductible by reason of that paragraph for the year by any one of those individuals for that dependant if that individual were the only individual entitled to deduct an amount for the year by reason of that paragraph for that dependant and, where the individuals cannot agree as to what portion of the amount each can so deduct, the Minister may fix the portions.
248(1)...
“self-contained domestic establishment” — “self-contained domestic establishment” means a dwelling-house, apartment or other similar place of residence in which place a person as a general rules sleeps and eats...
4.02 Case law and commentary
17 The case law and commentary cited by the parties were the following:
1. Lang v. Canada (Employment & Immigration Commission), [1991] 3 F.C. 65 (Fed. C.A.)
2. Schaap v. Canada (Canadian Armed Forces), [1989] 3 F.C. 172 (Fed. C.A.)
3. Christoffersen v. Minister of National Revenue (1993), 93 D.T.C. 727(T.C.C.: 89-2762(IT))
4. Kuchirka v. R. (1991), 91 D.T.C. 5156 (Fed. T.D.)
5. Lodge v. Canada (Minister of Employment & Immigration, [1979] 1 F.C. 775 (Fed. C.A.)
6. Canadian Imperial Bank of Commerce and Joëlle Marghem, decision (on preliminary objection), Umpire: Jacques Sylvestre, 17/2/92
7. Brossard (Ville) c. Québec (Commission des droits de la personne), [1988] 2 S.C.R. 279 (S.C.C.)
8. MacNeill v. Canada (Attorney General), [1993] 3 F.C. 575 (Fed. T.D.);[1994] 3 F.C. 261 (F.ed C.A.)
9. Canada (Canadian Human Rights Commission) v. Canadian Liberty Net, [1992] 3 F.C.155 (Fed. T.D.)
10. Québec (Communauté urbaine) c. Notre-Dame de Bonsecours (Corp.), [1994] 3 S.C.R. 3 (S.C.C.)
11. ALTER EGO Collection, «Chartes des droits de la personne, Législation, jurisprudence et doctrine», Henri Brun and Pierre Brun, 1996, 9th ed., Wilson & Lafleur Ltée
12. Craton v. Winnipeg School Division No. 1, [1985] 2 S.C.R. 150 (S.C.C.)
4.03 Analysis
18 4.03.1 In her Notice of Appeal the appellant made the following argument, through her counsel:
[TRANSLATION]
My client is entitled to the deduction claimed under s. 118. Parliament's intention is clear: it wanted to prevent a couple claiming the deduction for dependent children from a prior union such that there would be two deductions for the same couple.
In the instant case the appellant and her “co-tenant” did not form a couple, no family unit existed in their case, and their situation cannot be interpreted as meaning that they formed a self-contained domestic establishment together. Accordingly, the appellant should be entitled to the deduction.
19 4.03.2 The second argument made by counsel for the appellant at the hearing was that there had been discrimination within the meaning of ss. 2 and 3 of the Canadian Human Rights Act. Those sections read as follows:
2. [Purpose] The purpose of this Act is to extend the laws in Canada to give effect, within the purview of matters coming within the legislative authority of Parliament, to the principle that all individuals should have an equal opportunity to make for themselves the lives that they are able and wish to have, consistent with their duties and obligations as members of society, without being hindered in or prevented from doing so by discriminatory practices based on race, national or ethnic origin, colour, religion, age, sex, sexual orientation,marital status, family status, disability or conviction for an offence for which a pardon has been granted.
3. (1) [Proscribed grounds of discrimination] For all purposes of this Act, the prohibited grounds of discrimination are race, national or ethnic origin, colour, religion, age, sex, sexual orientation,marital status, family status, disability and conviction for which a pardon has been granted.
(2) Where the ground of discrimination is pregnancy or child-birth, the discrimination shall be deemed to be on the ground of sex.
20 Counsel for the respondent replied that this Court does not have jurisdiction to rule on the application of the Canadian Human Rights Act. He cited s. 40 of that statute, authorizing the Canadian Human Rights Commission to hear a complaint by an individual or group of individuals:
40. (1) Subject to subsections (5) and (7), any individual or group of individuals having reasonable grounds for believing that a person is engaging or has engaged in a discriminatory practice may file with the Commission a complaint in a form acceptable to the Commission.
(2) If a complaint is made by someone other than the individual who is alleged to be the victim of the discriminatory practice to which the complaint relates, the Commission may refuse to deal with the complaint unless the alleged victim consents thereto.
21 Counsel for the appellant thereupon referred to s. 41(b) of the same statute:
41. Subject to section 40, the Commission shall deal with any complaint filed with it unless in respect of that complaint it appears to the Commission that
22 Section 13 of the Tax Court of Canada Act clearly indicates that this Court has the same powers, rights and privileges as any superior court of record:
13. The Court has, with respect to the attendance, swearing and examination of witnesses, the production and inspection of documents and other matters necessary or proper for the due exercise of its jurisdiction, all such powers, rights and privileges as are vested in a superior court of record.
23 Further, in Craton v. Winnipeg School Division No. 1 (4.02 (12)) at page 156, McIntyre J. of the Supreme Court of Canada said the following:
In any event, I am in agreement with Monnin C.J.M. where he said:
Human rights legislation is public and fundamental law of general application. If there is a conflict between this fundamental law and other specific legislation, unless an exception is created, the human rights legislation must govern.
This is in accordance with the views expressed by Lamer J. in Insurance Corporation of British Columbia v. Heerspink, [1982] 2 S.C.R. 145. Human rights legislation is of a special nature and declares public policy regarding matters of general concern.
24 Accordingly, a superior court of record has the right, in the exercise of its jurisdiction, to rule on the application of human rights legislation.
25 However, before deciding whether there has been discrimination the Court must consider the pros and cons of the appellant's first argument.
26 4.04 Section 118(4) of the Act lays down rules regarding the deductions provided for in s. 118(1).
27 The purpose of s. 118(1) is moreover to govern the calculation of personal tax credits:
28 The instant case concerns an unmarried person who is living with other persons in a self-contained domestic establishment and who supports a person who is her child.
29 On reading clauses (B), (C) and (D) of s. 118(1)(b), we see that s. 118(1) as a whole appears to apply to the members of one family or at least to related persons.
30 This was pointed out by counsel for the appellant:
[TRANSLATION]
Parliament ... wanted to prevent a couple claiming the deduction for dependent children from a prior union such that there would be two deductions for the same couple.
In the instant case the appellant and her co-tenant did not form a couple, no family unit existed in their case, and their situation cannot be interpreted as meaning that they formed a self-contained domestic establishment together. Accordingly, the appellant should be entitled to the deduction.
31 4.05 The appellant's argument is the first that comes to mind in considering the contents of s. 118(1) as a whole.
32 However, one cannot ignore the fact that s. 118(1)(b)(ii) is at the heart of the dispute. It provides that an individual (here the appellant) may with other persons maintain a self-contained domestic establishment and actually support a person:
ii) whetheraloneor jointly with one or more other persons,maintainsa self-contained domestic establishment (in which the individual lives) and actually supports in that establishment a person who, at that time, is...
33 In s. 118(4)(b), Parliament seems at first sight to have limited the scope of s. 118(b)(ii):
(b) not more than one individual is entitled to a deduction under subsection (1) by reason of paragraph (1)(b) for a taxation year in respect of the same person orthe same domestic establishmentand where two or more individuals otherwise entitled to such a deduction fail to agree as to the individual by whom the deduction may be made, no such deduction for the year shall be allowed to either or any of them....
34 However, on closer examination this provision also refers to the self-contained domestic establishment requirement. In addition, the second part of the provision — “where two or more individuals otherwise entitled to such a deduction fail to agree as to the individual by whom the deduction may be made, no such deduction for the year shall be allowed to either or any of them”— seems at first sight to confirm that the persons concerned must indeed all be relatives or at least related persons. However, in s. 118(1)(b)(ii), it is not expressly stated that all persons concerned must be related to each other.
35 Moreover, Parliament, by including earlier on the words “in respect of the same person or the same ... establishment”, has in my view precluded the argument that only relatives or related persons are referred to.
36 4.06 Did Parliament by so enacting in s. 118(4)(b) create discrimination and so infringe the Canadian Human Rights Act provisions regarding marital status and family status?
37 There cannot be said to be discrimination since Parliament has placed taxpayers on the same footing: individuals who are relatives and those who are not.
38 4.07 However, the question the Court asks is why individuals, whether they are relatives or not, are subject to this “same domestic establishment” condition.
39 Did Parliament fear that a very large number of taxpayers each with dependants would decide to live together in a self-contained domestic establishment and that the respondent would thus be obliged to grant more tax credits?
40 It is rather exceptional for unrelated individuals to agree to live together in this fashion while having with them persons they are supporting. Even between related individuals, this would be the exception. Why then should these individuals be deprived of economic and social benefits for themselves and their children?
41 In short, for Parliament it is simply a matter of dollars and cents, but the savings to be had are very modest indeed.
42 In my view, the provision in question should be repealed both for related and for unrelated individuals.
43 4.08 Unfortunately for the appellant, in view of the legislation as it now stands, I am unable to conclude that the Act does not apply in her case.
5. Conclusion
44 For the foregoing reasons, the appeal is dismissed.
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