Tax Court of Canada Judgments

Date: 20020626

Docket: 1999-4849-IT-I

BETWEEN:

WERNER KELLER,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasonsfor Judgment

Rip, J.

[1]            The facts in this appeal by Mr. Werner Keller from a 1996 income tax assessment are not in issue. At trial Mr. Keller's counsel advised that the only issue to be heard on the morning of trial was whether the provisions of subsection 118(5) of the Income Tax Act ( "Act") infringe rights of the appellant guaranteed by subsection 15(1) of the Canadian Charter of Rights and Freedoms ("Charter"). If I found that the appellant's rights were infringed, it was agreed that I would hear argument at a later date to determine whether such infringements could be justified in a free and democratic society under section 1 of the Charter.

[2]            At all relevant times the appellant and his wife were legally separated. (There is no evidence if and when they divorced.) Mr. and Mrs. Keller entered into a Separation Agreement ( "Agreement"), effective February 1996 by which the spouses agreed to have joint custody of their three children and Mr. Keller was to pay Mrs. Keller support payments of $1,000 per month. By order of the Ontario Court (General Division), dated May 29, 1996 ("Order"), Mr. Keller was to pay to Mrs. Keller, as interim support for their three children the sum of $1,400 per month starting June 1, 1996.

[3]            In filing his income tax return for 1996, the appellant claimed a deduction for alimony and maintenance payments he made to Mrs. Keller for the support of their children in accordance with the Agreement and Order in the amount of $13,800. He also claimed a tax credit with respect to his daughter pursuant to paragraph 118(1)(b) of the Act.

[4]            A final Separation Agreement ("Final Agreement"), dated September 30, 1997 provided for a joint parenting arrangement for the children. Among other things, the Final Agreement stated that the parents would share physical custody and provide parenting to their children equally. Each parent under the Final Agreement "would continue to have a full and active role in providing a sound, moral, social, economic and educational environment for each child and continue that support which each child had received". Each parent delegated the physical care of the children to the other parent. In all other respects, the Order of May 29, 1996 was continued. Mr. Keller's evidence was that in 1996 and later, he and Mrs. Keller shared custody and care of the children equally. The Final Agreement in fact confirmed how the parents had been raising the children since their separation and how they would continue to raise the children in the future. The children, including the daughter with respect to whom the tax credit was claimed, spent as much time in their father's home as in their mother's and each parent equally supported the children in their respective residences.

[5]            I note that in assessing the appellant, according to the Amended Reply to the Notice of Appeal, the Minister of National Revenue ("Minister") assumed, among other things, that:

(k)       in the 1996 taxation year, the Appellant's former spouse had 3 qualified dependants as defined by section 122.2 of the Act;

(l)        at all material times, the Appellant had no qualified dependants as defined in subsection 122.2(2) of the Act;

and concluded, based on their respective incomes, that each of Mr. and Mrs. Keller was entitled to a child tax credit entitlement in the amount of $Nil.[1]

[6]            As far as I can determine, section 122.2 of the Act was repealed by S.C. 1994, c. 7, Sched. VII, subsection 10(2) applicable with effect to the 1993 and subsequent taxation years. I cannot understand why the Minister considered this provision in assessing. The assumptions listed in paragraph 17 of the Amended Reply to the Notice of Appeal, do not refer to subsection 118(5) of the Act, the provision which together with section 15 of the Charter, served as the basis of the parties' submissions. Appellant's counsel did not bring this to my attention. I do note, however, that in section B of the Amended Reply to the Notice of Appeal, entitled "Issue to be Decided", the respondent struck out references to all provisions of the Act set forth in the original reply, except for subsection 118(5) of the Act and section 15 of the Charter. There is no reference to paragraph 118(1)(b) in the Amended Reply to the Notice of Appeal or for that matter in the Notice of Appeal. In the circumstances, most of the assumptions of facts and section C of the Amended Reply to the Notice of Appeal, entitled "Statutory Provisions, Grounds Relied On and Relief Sought", ought to have been struck as well. The appellant's Notice of Appeal is not any more helpful. Most of the alleged facts relate to the exchange of correspondence between the appellant and Revenue Canada and the notice does not refer to any statutory provision in support of the appeal. The appellant does claim he is entitled to the "equivalent to spouse" credit and other credits.[2]

[7]            The relevant portions of paragraph 118(1)(b)[3] and subsection 118(5) of the Act read as follows:

(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 X B

where

A            is the appropriate percentage for the year, and

B             is the total of,

. . .

(b) in the case of an individual who does not claim a deduction for the year because of paragraph (a) and who, at any time in the year,

(i) is an unmarried person or a married person who neither supported nor lived with the married person's spouse and is not supported by the spouse, and

(ii) whether alone or jointly with one or more other persons, maintains a self-contained domestic establishment (in which the individual lives) and actually supports in that establishment a person who, at that time, is

(A) except in the case of a child of the individual, resident in Canada,

(B) wholly dependent for support on the individual, or the individual and the other person or persons, as the case may be,

(C) related to the individual, and

. . .

              (5) No amount may be deducted under subsection (1) in computing an individual's tax payable under this Part for a taxation year in respect of a person where the individual is required to pay a support amount (as defined in subsection 56.1(4)) to the individual's spouse or former spouse in respect of the person and the individual

(a) lives separate and apart from the spouse or former spouse throughout the year because of the breakdown of their marriage; or

(b) claims a deduction for the year because of section 60 in respect of a support amount paid to the spouse or former spouse.

[8]            Paragraph 118(1)(b) is often referred to as an "equivalent to spouse" or "equivalent to married" credit.

[9]            Subsection 15(1) of the Charter states that:

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.

[10]          The appellant claims that subsection 118(5) of the Act violates his equality rights guaranteed by subsection 15(1) of the Charter since subsection 118(5) denies or disallows a deduction with respect to his daughter only on the basis that he is entitled to deduct child support payments under paragraph 60(b) of the Act. He argues that the denial of the equivalent to married credit for any person who happens to pay child support, most payers being men, without regard to any other consideration, is discriminatory. The appellant further states that the comparator[4] group on the facts of his appeal is his wife, who was not denied the paragraph 118(1)(b) credit.

[11]          Before continuing with these reasons I wish to refer the appellant to the reminder by Lebel J. (dissenting in part) in Blencoe v. British Columbia (Human Rights Commission)[5] to ". . . litigants that not every case can be reduced to a Charter case". There have been several appeals in this Court and the Federal Court of Appeal where, on facts similar to those at bar, the taxpayers have been unsuccessful in arguing that subsection 118(5) of the Act violates subsection 15(1) of the Charter.

[12]          In Werring v. Canada,[6] my late colleague Sobier J., held that section 118 of the Act does not discriminate against a disadvantaged group. As in the appeal at bar, the appellant, Mr. Werring, claimed an equivalent to married deduction for one of his sons. His claim was disallowed, as was Mr. Keller's, because he was entitled to deduct child support paid to his wife: subsection 118(5). Sobier J. held that Mr. Werring and his wife received benefits that were equal to those received by other couples under section 118. Subsection 118(5) merely prevented them from receiving greater benefits than those other couples. Custodial parents who paid maintenance were not a distinct group and they were not disadvantaged. No equality rights were violated.

[13]          In Nelson v. The Queen,[7] the appellant and his former spouse shared joint custody of their two children. By virtue of their separation agreement, the appellant paid child support for the two children to his spouse. The appellant deducted the support payments under paragraph 60(b) of the Act. The appellant also claimed the equivalent to married tax credit under subsection 118(1) of the Act. The Minister disallowed the equivalent to married credit pursuant to subsection 118(5). The appellant appealed to the Tax Court, arguing that subsections 118(1) and (5) discriminated against him and therefore violated subsection 15(1) of the Charter. Brulé J. determined that subsections 118(1) and (5) did not discriminate against the appellant.

[14]          The Federal Court of Appeal affirmed Brul é J.'s decision in Nelson. Sharlow J.A. stated:

[para. 11] . . . I would identify the relevant comparator group in Mr. Nelson's case as a single parent who lives with and supports a child in a shared custody arrangement with the child's other parent but who has no legal obligation to pay child support to the other parent.

[para. 12]              In my view, the differential treatment created by subsection 118(5) of the Income Tax Act is not based on one of the grounds enumerated in subsection 15(1) of the Charter or an analogous ground. Subsection 118(5) does not draw a distinction between Mr. Nelson and the comparator group based on personal characteristics, or the stereotypical application of presumed group or personal characteristics, and does not bring into play the purpose of subsection 15(1) of the Charter in remedying such ills as prejudice, stereotyping, and historical disadvantage. Nor does the operation of subsection 118(5) of the Income Tax Act offend Mr. Nelson's dignity, intrinsic worthiness or self-respect. Therefore, the differential treatment resulting from subsection 118(5) is not discriminatory in the Charter sense.

[para. 13]               The premise underlying Mr. Nelson's argument is that Parliament should provide equal tax relief to all single parents who support their children in a shared custody arrangement. While that may be a laudable public policy objective, it is not one that can be advanced through a claim under subsection 15(1) of the Charter. Mr. Nelson's remedy lies with Parliament alone.

[15]          In the case Nixon v. Canada[8] Bell J. of this Court, relied on the Tax Court decision in Nelson and determined that subsections 118(1) and (5) of the Act did not discriminate against the appellant. Specifically, divorced male taxpayers who share joint custody of their children with their former spouses are not an enumerated or analogous group within subsection 15(1) of the Charter.

[16]          The appellant presented aggressive submissions that the earlier decisions of this Court and the Federal Court of Appeal, in particular the decision in Nelson, are no longer good law by virtue of the decision of the Supreme Court of Canada in Law v. Canada (Minister of Employment and Immigration).[9] In Law, the Supreme Court declared the following inquiries should be made where a court is called upon to determine a discrimination claim under subsection 15(1) of the Charter:

(i)          Does the impugned law (a) draw a formal distinction between the claimant and others on the basis of one or more personal characteristics, or (b) fail to take into account the claimant's already disadvantaged position within Canadian society resulting in substantively differential treatment between the claimant and others on the basis of one or more personal characteristics?

(ii)        Is the claimant subject to differential treatment based on one or more enumerated and analogous grounds?

and

(iii)       Does the differential treatment discriminate, by imposing a burden upon or withholding a benefit from the claimant in a manner which reflects the stereotypical application of presumed group or personal characteristics, or which otherwise has the effect of perpetuating or promoting the view that the individual is less capable or worthy of recognition or value as a human being or as a member of Canadian society, equally deserving of concern, respect, and consideration?[10]

[17]          In his factum, the appellant states that the "primary innovation of the Law ruling lies in its reformulation of the evaluative framework to assist courts in assessing the merits of section 15 claims". The appellant explained that "its basic elements, underscoring a heightened focus on human dignity, may be summarized as follows:

·         The purpose of section 15 is to prevent the violation of human dignity and freedom by the imposition of disadvantage, stereotyping or prejudice, and to promote equal recognition at law of all persons as equally deserving;

·    Because equality is a comparative concept, relevant "comparators" must be established; within the scope of the ground(s) of alleged discrimination claimed, a court may refine a claimant's comparison, should it be insufficient or inaccurate;

·    Contextual factors that determine whether the law demeans a claimant's dignity are to be evaluated, first and foremost from the perspective of the claimant an, to ensure that her or his assertion is supported objectively, from the perspective of a reasonable person in circumstances similar to the claimant's, who takes into account those contextual factors;

·    The list of contextual factors raised by a section 15 claimant to show that a law is demeaning to dignity is not closed;

·    Noteworthy contextual considerations influencing whether section 15 has been infringed include:

          (a) the effect of the challenged law always of central significance; and (b) the extent of the link, if any, between the ground(s) raised and the claimant's actual circumstances. Discrimination being more difficult to establish to the degree the law takes those circumstances into account in a way that values the claimant;

·    The claimant's burden of establishing section 15 infringement does not oblige her or him to adduce evidence of violation of human dignity or freedom; the fact that a distinction in treatment is based on one or more section 15 grounds will often be sufficient to establish such an infringement in that it will be apparent, through judicial notice and logic, that the distinction is discriminatory."

[18] I do not agree with the appellant that in deciding Law the Supreme Court altered its view on what constitutes discrimination under section 15 of the Charter. The Supreme Court set down guidelines based on its previous rulings, if not to simplify, then to explain and make clear how to determine claims under section 15 of the Charter. Law does not add anything to assist the appellant.

[19]          The appellant argues that the analogous ground he falls within and which subsections 118(1) and (5) discriminate against is "family or parental status". The appellant further submits that the relevant comparator group is his separated or divorced wife.

[20]          In Law Iacobucci J. stated that:

The equality guarantee is a comparative concept, which ultimately requires a court to establish one or more relevant comparators. The claimant generally chooses the person, group, or groups with whom he or she wishes to be compared for the purpose of the discrimination inquiry. However, where the claimant's characterization of the comparison is insufficient, a court may, within the scope of the ground or grounds pleaded, refine the comparison presented by the claimant where warranted. Locating the relevant comparison group requires an examination of the subject-matter of the legislation and its effects, as well as a full appreciation of context.[11]

[21]          The comparator group proposed by the appellant is insufficient. The denial of the equivalent to married credit is not based on a taxpayer's sex or parental status, but rather on the fact that the taxpayer paid child support and was allowed a consequential deduction with regard to the amount paid. The relevant comparator group is the same as that identified by Sharlow J.A., in Nelson, namely, a single parent who lives with and supports a child in a shared custody arrangement with the child's other parent but who has no legal obligation to pay child support to the other parent.

[22]          It has been recognized that subsections 118(1) and (5) of the Act impose differential treatment between taxpayers. In Nelson, the Federal Court of Appeal acknowledged that subsection 118(5) imposed differential treatment between the appellant and the identified comparator group.

[23]          In Schachtschneider v. The Queen,[12] the Federal Court of Appeal also determined that the equivalent to married credit resulted in differential treatment: "No doubt a tax credit is a benefit under the law and no doubt subsection 118(1) provides a greater benefit to a taxpaying couple with a child cohabiting common law than to a married couple in like circumstances . . .".[13]

[24]          Therefore, the appellant's argument has passed the first part of the section 15 analysis as set out in Law. Subsections 118(1) and (5) of the Act impose differential treatment between taxpayers. What remains to be determined is whether the appellant is a member of a group, which has characteristics enumerated or analogous to those listed in subsection 15(1) of the Charter.

[25]          The decision as to what constitutes an analogous ground is to be made in light of the purpose of section 15 and is based on whether the proposed ground is analogous to the listed ones. The factors taken into consideration when determining if a ground is analogous include whether the personal characteristic is one that cannot be changed without high personal cost and whether there is a history of discrimination or animosity against persons with that characteristic. In Corbiere v. Canada,[14] McLachlin and Bastarache JJ. for the majority stated that:

What then are the criteria by which we identify a ground of distinction as analogous? The obvious answer is that we look for grounds of distinction that are analogous or like the grounds enumerated in s. 15 - race, national or ethnic origin, colour, religion, sex, age, or mental or physical disability. It seems to us that what these grounds have in common is the fact that they often serve as the basis for stereotypical decisions made not on the basis of merit but on the basis of a personal characteristic that is immutable or changeable only at unacceptable cost to personal identity. This suggests that the thrust of identification of analogous grounds at the second stage of the Law analysis is to reveal grounds based on characteristics that we cannot change or that the government has no legitimate interest in expecting us to change to receive equal treatment under the law. To put it another way, s. 15 targets the denial of equal treatment on grounds that are actually immutable, like race, or constructively immutable, like religion. Other factors identified in the cases as associated with the enumerated and analogous grounds, like the fact that the decision adversely impacts on a discrete and insular minority or a group that has been historically discriminated against, may be seen to flow from the central concept of immutable or constructively immutable personal characteristics, which too often have served as illegitimate and demeaning proxies for merit-based decision making.[15]

[26]          An obligation to pay child support is not an immutable or constructively immutable characteristic similar to race or religion. Further, joint custodial parents required to pay child support do not constitute a group that is a discrete and insular minority nor are these parents a group that has been historically discriminated against in society. Subsections 118(1) and (5) of the Act do not draw a distinction between the appellant and the comparator group based on personal characteristics, or the stereotypical application of a presumed group or personal characteristics, and does not bring into play the purpose of section 15 of the Charter in remedying such ills as prejudice, stereotyping and historical disadvantage. Nor does subsection 118(5) offend the appellant's dignity, intrinsic worthiness or self-respect. The appellant is not subject to differential treatment based on one or more enumerated and analogous grounds. Accordingly, subsection 118(5) of the Act does not infringe section 15 of the Charter.

[27]          The appeal is dismissed.

Signed at Ottawa, Canada, this 26th day of June, 2002.

"Gerald J. Rip"

J.T.C.C.

COURT FILE NO.:                                                 1999-4849(IT)I

STYLE OF CAUSE:                                               Werner H. Keller and

                                                                                                Her Majesty The Queen

PLACE OF HEARING:                                         Windsor, Ontario

DATE OF HEARING:                                           May 28, 2002

REASONS FOR JUDGMENT BY:      The Hon. Judge Gerald J. Rip

DATE OF JUDGMENT:                                       June 26, 2002

APPEARANCES:

Counsel for the Appellant: Craig J. Allen

Counsel for the Respondent:              Justine Malone

COUNSEL OF RECORD:

For the Appellant:                                                 SUTTS, STROSBERG LLP

                                                                                Barristers & Solicitors

Address:                          600 Westcourt Place

                                          251 Goyeau Street

                                          Windsor, Ontario N9A 6V4

For the Respondent:                             Morris Rosenberg

                                                                                Deputy Attorney General of Canada

                                                                                                Ottawa, Canada

1999-4849(IT)I

BETWEEN:

WERNER KELLER,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Appeal heard on May 28, 2002, at Windsor, Ontario, by

the Honourable Judge Gerald J. Rip

Appearances

Counsel for the Appellant:                    Craig J. Allen

Counsel for the Respondent:                Justine Malone

JUDGMENT

          The appeal from the assessment made under the Income Tax Act for the 1996 taxation years is dismissed.

Signed at Ottawa, Canada, this 26th day of June 2002.

"Gerald J. Rip"

J.T.C.C.