http://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/127533/index.do
Grenon v. Canada (January 11, 2016 – 2016 FCA 4, Gauthier, Boivin, Rennie (author) JJ.A.).
Précis: Mr. Grenon sought to deduct legal fees in connection with determining his child support obligations to his ex-wife. The Tax Court dismissed his appeal. The Federal Court of Appeal similarly rejected his appeal holding that an earlier decision of the Court, Nadeau v. M.N.R., 2003 FCA 400, was dispositive of the issue. In addition the Court rejected Mr. Grenon’s arguments based on section 15 of the Charter.
As a result the appeal was dismissed with costs.
Decision: The Court declined to re-examine it’s decision in Nadeau:
[28] As the judge noted in his reasons, various judges of the Tax Court of Canada have expressed concern about the underlying tax policy with respect to child support payments. In his reasons, the judge set forth various scenarios which illustrated the absence of a logical basis for the current regime. Under the current law, even a payor who is successful in fending off unreasonable demands in a child support dispute cannot deduct any legal expenses that are not recovered through cost awards. The implication is that through the taxation system, Parliament penalizes payors who seek vindication of their legal rights, and offers a public subsidy to one side of a private dispute. Further, the notion that the child support payment is “property” in the hands of the recipient is arguably an artifice. It is the child that has the right to be supported. The child support is money paid to the parent for the benefit of the child. These concerns are policy matters for Parliament, and do not bear on the legal question of what is “property” and whether child support is a “right of any kind” under the ITA.
[29] The appellant urges that Nadeau be reconsidered. In support the appellant referred us to decisions which expressed concern regarding the deductibility of legal expenses to only one side: see Loewig v. Canada, 2006 TCC 476; Rabb v. Canada, 2006 TCC 140; McLaren v. Canada, 2009 TCC 514; Trignani v. Canada, 2010 TCC 209.
[30] This Court will only depart from a previous decision where it is manifestly incorrect or where subsequent decisions require that it be reconsidered; Miller v. Canada (Attorney General), 2002 FCA 370. Neither of these criteria apply to the interpretation accorded paragraph 18(1)(a) by this Court in Nadeau and, accordingly, this ground of appeal fails.
The Court then turned to Mr. Grenon’s Charter challenge in light of the Tax Court finding that the vast majority of taxpayer’s paying child support were men:
[16] Given the likelihood of an appeal, the judge reviewed the evidence of two expert witnesses called on behalf of the appellant. While he discounted much of the expert evidence on the basis of relevance and admissibility, he did accept evidence establishing that 92.8% of all payors were men. He concluded that substantially all payors of child support are men.
The Court held that there was no direct discrimination against men paying child support:
[32] The examination of whether a law violates subsection 15(1) proceeds in two steps. At the first step, the claimant must demonstrate that the law grants an unequal benefit or imposes an unequal burden on the basis of a ground that is either enumerated in the text of subsection 15(1) or analogous thereto. At the second step, the claimant must demonstrate that the unequal treatment amounts to discrimination. This step inquires into whether the unequal treatment perpetuates stereotypes and prejudices, or whether it suggests that certain members of society are less worthy of consideration. If these steps are satisfied a breach of subsection 15(1) results, and the burden shifts to the Crown to justify the breach under either subsection 15(2) (the affirmative action provision) or section 1.
[33] The ITA provisions in question are, on their face, neutral and make no distinction based on an enumerated or analogous ground in section 248. Parliament defined property to include a right of any kind, and paragraph 18(1)(a) allowed deductions of expenses incurred for the purposes of gaining or producing income. Paragraph 18(1)(a) makes a distinction only insofar as it bars deductions unless the expense was incurred “for the purpose of producing or gaining income from property.” Parliament left the precise contours of that definition for the judiciary to determine.
[34] In the result, the ITA discriminates between those who have income from property and those who do not. The ITA is replete with such distinctions – between capital and income, loss and profit. The foundations of these distinctions are not the gender of the taxpayer, but the nature and source of income and the means of which it is produced. The fact that deductions may be available to limited segments of Canadian society, which may, in fact, be largely men, or largely women, does not constitute either an enumerated or analogous ground. In sum, having income from property is not an inherent or personal characteristic and to characterize this as a Charter violation conflates unfairness about income distribution with Charter rights.
[35] There is, therefore, no direct distinction based on an enumerated or analogous ground.
Similarly the Court rejected Mr. Grenon’s adverse effect discrimination argument:
[43] The Charter argument fails because it confounds the underlying social circumstances with the consequences of the law. Assume, for example, a special tax on the highest earning 1% of income earners in Canadian society. Such a tax may fall disproportionately on men, but that does not mean that men are subject to differential treatment within the meaning of section 15. Similarly, the fact that more women may receive the Guaranteed Income Supplement because of age and income levels than men does not mean that women are given a benefit that men are not. Special taxes and withholding provisions in respect of foreign nationals may affect people of one ethnicity or country of origin than another.
[44] In each case, it must be established that the tax measure affects them because of or by reason of, a prohibited ground, their gender, age or ethnicity, and not as a consequential effect.
[45] Put otherwise, the section 15 analysis requires that there be a qualitative nexus between the law and the group. As noted by Iacobucci in Symes v. Canada, [1993] 4 SCR 695, at p. 764 “If the adverse effects analysis is to be coherent, it must not assume that a statutory provision has an effect which is not proved.” The fact that men are denied the deduction is a consequence of custody determinations made by agreement or by provincial courts, and, in the case of joint custody, income levels of the respective parents. The Charter analysis thus fails at the first stage.
As a result the appeal was dismissed with costs.