Date: 19991214
Docket: 98-2605-IT-I
BETWEEN:
CHARLES DAVID NIXON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Bell, J.T.C.C.
ISSUES:
[1] The issues are:
1. Whether the Appellant is entitled, for his 1995, 1996 and 1997 taxation years to a deduction from tax payable of the sum of $5,380 for each of those years pursuant to the provisions of subsection 118(1) of the Income Tax Act ("Act")[1]; and
2. Whether the reassessments infringe upon any right of the Appellant guaranteed by subsection 15(1) of the Canada Charter of Rights and Freedoms ("Charter").
[2] As the Minister of National Revenue ("Minister") had not yet issued a decision[2] for the 1997 taxation year and because the Appellant had filed a Notice of Appeal before the elapse of 90 days after service of the Notice of Objection,[3] such Notice of Appeal is invalid. However, Revenue Canada wrote a letter to the Appellant dated November 9, 1998 saying in part:
However, as the facts and issues are identical for all the years, subsection 225.1(5) of the Act allows us to hold the 1997 objection to await the judgment of the Court on the 1995 and 1996 years. Whatever court decision is rendered on the 1995 and 1996 years will be applied to (sic) 1997 year.
FACTS:
[3] The Appellant was married on May 19, 1979. Two children were born of this union, one on October 13, 1980 and one on April 29, 1984. The Appellant and his wife were separated on February 28, 1993 and divorced on May 12, 1994.
[4] Since the separation the Appellant shared custody of his two children with his wife, this arrangement continuing after the divorce. By virtue of a separation agreement the Appellant was obliged to and did pay $500 per month per child to his ex-wife. He said that this figure was selected so that his income and his ex-wife's income would be equalized. A mediation lawyer who apparently represented both of them advised the Appellant, according to his evidence, that in arriving at those calculations, income tax factors were taken into account.
[5] The Appellant claimed alimony deductions of $12,000 under section 60 of the Act for each of the taxation years in question. The Appellant was also obliged to made payments to his ex-wife for her support.
[6] The Appellant's ex-wife reported the aforesaid sum of $12,000 as alimony income in each of the taxation years and also claimed the "equivalent to married" tax credit under subsection 118(1) for those years. The Appellant sought a similar deduction in the amount of $5,380 from tax payable for each of 1995, 1996 and 1997.
[7] The Minister reassessed the Appellant disallowing the claim for each of those years.
ANALYSIS AND CONCLUSION:
[8] Subsection 118(5) of the Act provided for the 1995 and 1996 taxation years that:
Where an individual in computing the individual's income for a taxation year is entitled to a deduction under paragraph 60(b), (c) or (c.1) in respect of a payment for the maintenance of a spouse or child, the spouse or child shall, for the purposes of this section ... be deemed not to be the spouse or child of the individual.
[9] Not only are the provisions of that subsection clear but inPeeck v. R., 98 DTC 3426 Judge Lamarre-Proulx of this Court, coming to the same conclusion in a similar factual case said:
To conclude, the evidence was clear that there were alimony payments made to the Appellant's former wife for the maintenance of the Appellant's children and therefore the Appellant was entitled to a deduction pursuant to paragraph 60(b) of the Act. Consequently, pursuant to subsection 118(5) of the Act, the Appellant's children are deemed not to be his children for the purpose of section 118 of the Act. Therefore, the Appellant is not entitled to the tax credit provided for in paragraph 118(1)(b) of the Act.
[10] An amendment to subsection 118(5) applicable to the 1997 and subsequent taxation years does not change the tax treatment provided for the earlier years.
[11] With respect to the Appellant's submission that he was being discriminated against under subsection 15(1) of the Charter, that precise matter was dealt with by this Court in Nelson v. R. 99 DTC 3513 That subsection reads:
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.
[12] In the Andrews v. The Law Society of British Columbia, [1989] 1 S.C.R. 143 the Court at 174 said:
I would say then that discrimination may be described as a distinction, whether intentional or not, but based on grounds relating to personal characteristics of the individual or group, which has the effect of imposing burdens, obligations or disadvantages on such individual or group not imposed upon others or which withholds or limits access to opportunities, benefits or advantages available to other members of society.
Later the Court said at 194:
I am convinced that it was never intended in enacting s. 15 that it become a tool for the wholesale subjection to judicial scrutiny of variegated legislative choices in no way infringing on values fundamental to a free and democratic society. Like my colleague, I am not prepared to accept that all legislative classifications must be rationally supportable before the courts. Much economic and social policy-making is simply beyond the institutional competence of the courts. Their role is to protect against incursions on fundamental values, not to second guess policy decisions.
[13] In Schachteschneider v. Her Majesty the Queen, 93 DTC 5298, the Federal Court of Appeal, with respect to paragraph 118(1)(b) said:
On balance, therefore, viewing the section in its entirety, I cannot say that its effects are discriminatory against married people. These distinctions are merely distinctions that Parliament is allowed to draw in order to operate an efficient, self-reporting tax system, not requiring undue intrusion on people's private lives. Sometimes a particular group may get a small advantage; at other times, it may suffer a minor disadvantage. That is the way the tax system works. It cannot be expected to be perfect. Unless there is clear evidence that a provision discriminates against an advantaged group on section 15 grounds, it is something that negatively affected Canadians must tolerate until Parliament sees fit to remedy it.
[14] In R. v. Swain, [1991] 1 S.C.R. 933 (S.C.C.) Chief Justice Lamer at page 992 said:
The Court must first determine whether the claimant has shown that one of the four basis equality rights has been denied (i.e. the equality under the law, equal protection of the law and equal benefit of the law). This inquiry will focus largely on whether the law has drawn a distinction (intentionally or otherwise) between the claimant and others, based on personal characteristics. Next, the Court must determine whether the denial can be said to result in "discrimination". This second inquiry will focus largely on whether the differential treatment has the effect of imposing a burden, obligation or disadvantage not imposed upon others or of withholding or limiting access to opportunities, benefits and advantages to others. Furthermore, in determining whether the claimant's s. 15(1) rights are being infringed, the Court must consider whether the personal characteristic in question falls within the grounds enumerated in the section or within an analogous ground, so as to ensure that the claim fits within the overall purpose of s. 15 - namely, to remedy or prevent discrimination against groups subject to stereotyping, historical disadvantage and political and social prejudice in Canadian society.
[15] Judge Brulé of this Court had regard to the foregoing in concluding in the Nelson (supra) case , whose facts were similar to those in the present case, that there was no discrimination. The Appellant does not fall within the grounds enumerated in section 15(1) and cannot succeed in this appeal.
[16] Accordingly, the appeals for the 1995 and 1996 taxation years are dismissed. The purported appeal for the 1997 taxation year is quashed.
Signed at Ottawa, Canada this 14th day of December, 1999.
"R.D. Bell"
J.T.C.C.