Symes v. Canada, [1993] 4 S.C.R. 695

Elizabeth C. Symes Appellant

v.

Her Majesty The Queen Respondent

and

The Attorney General of Quebec,

the Charter Committee on Poverty Issues and

the Canadian Bar Association Interveners

Indexed as: Symes v. Canada

File No.: 22659.

1993: March 2; 1993: December 16.

Present: Lamer C.J. and La Forest, L'Heureux‑Dubé, Sopinka, Gonthier, Cory, McLachlin, Iacobucci and Major JJ.

on appeal from the federal court of appeal

Income tax ‑‑ Deductions ‑‑ Child care expenses ‑‑ Partner in law firm deducting wages paid to nanny in her income tax returns ‑‑ Whether child care expenses deductible as business expenses ‑‑ Income Tax Act, R.S.C. 1952, c. 148, ss. 9(1), 18(1)(a), (h), 63.

Constitutional law ‑‑ Charter of Rights ‑‑ Equality rights ‑‑ Income tax ‑‑ Child care expenses ‑‑ Partner in law firm deducting wages paid to nanny in her income tax returns ‑‑ Whether child care expenses deductible as business expenses ‑‑ If not, whether equality rights violated ‑‑ Canadian Charter of Rights and Freedoms, s. 15(1).

The appellant practised law full‑time as a partner in a law firm during taxation years 1982 through 1985. During that period she employed a nanny to care for her children (she was the mother of one child in 1982, 1983 and 1984, and of two children in 1985). The appellant deducted the wages she paid to the nanny as business expenses in her personal income tax returns for those years. Revenue Canada initially allowed the deductions for 1982 and 1983, but later disallowed the deductions for all four years in notices of reassessment. The appellant objected, but the disallowance was confirmed on the ground that the expenses were not outlays or expenses incurred for the purpose of gaining or producing income from business, as required under s. 18(1)(a) of the Income Tax Act, but were personal or living expenses, deduction of which was prohibited by s. 18(1)(h). In place of the disallowed deductions, Revenue Canada allowed the appellant revised child care deductions of $1,000 for 1982, $2,000 for each of 1983 and 1984, and $4,000 for 1985, pursuant to s. 63 of the Act. The Federal Court, Trial Division, held that the appellant could deduct the payments to the nanny as business expenses. The Federal Court of Appeal reversed the judgment and restored the notices of reassessment.

Held (L'Heureux‑Dubé and McLachlin JJ. dissenting): The appeal should be dismissed. The appellant's child care expenses are not deductible as business expenses.

Per Lamer C.J. and La Forest, Sopinka, Gonthier, Cory, Iacobucci and Major JJ.: The well accepted principles of business practice encompassed by s. 9(1) of the Income Tax Act, under which a taxpayer's income from business is the taxpayer's profit therefrom for the year, would generally operate to prohibit the deduction of expenses which lack an income‑earning purpose, or which are personal expenses, just as much as ss. 18(1)(a) and (h) operate expressly to prohibit such deductions. Traditional tax analysis characterized child care expenses as personal expenses, such that s. 18(1)(h) would now operate to specifically prohibit them. The relationship between child care expenses and business income must be examined more critically, however, to determine whether that relationship can be sufficient to justify the expenses' deductibility. The current wording of s. 18(1)(a) indicates that Parliament amended its predecessor section so as to broaden the scope for business expense deductibility. The language of the section itself provides the most appropriate test: were the expenses incurred for the purpose of gaining or producing income from a business? Courts will look for objective manifestations of purpose, and purpose is ultimately a question of fact to be decided with due regard for all the circumstances. It may be relevant to consider whether a particular deduction is ordinarily allowed as a business expense by accountants, whether the expense is one normally incurred by others involved in the taxpayer's business, and whether it would have been incurred if the taxpayer was not engaged in the pursuit of business income.

In this case arguments can be made for and against the classification of the appellant's child care expenses as business expenses. While it is clear that the appellant would not have incurred child care expenses except for her business, it is equally clear that the need which is met by child care expenses exists regardless of the appellant's business activity. As well, while there is no evidence to suggest that child care expenses are considered business expenses by accountants, many parents, particularly women, confront child care expenses in order to work. Finally, the appellant's decision to have children should not be viewed solely as a consumption, or personal, choice. When one considers deductibility solely with reference to ss. 9, 18(1)(a) and 18(1)(h), child care expenses may remain difficult to classify.

However, ss. 9, 18(1)(a) and 18(1)(h) cannot be interpreted to account for a child care business expense deduction in light of the language used in s. 63. It is clear that the definition of "child care expenses" in s. 63 specifically comprehends the purpose for which the appellant maintains she incurred her nanny expenses. According to part of that definition, a child care expense is one incurred in order to provide child care services "to enable the taxpayer . . . to carry on a business either alone or as a partner". Furthermore, s. 63(1)(e) operates to cap the deduction with reference to "earned income", which is defined to include "incomes from all businesses carried on either alone or as a partner actively engaged in the business". To the extent that s. 63 intends to limit child care expense deductions to lower earning supporters, it would substantially undermine that intent if the appellant were allowed to take a complete deduction of the child care expenses, free from the consideration of whether or not she is the lower earning supporter. Section 4(2), which provides that no deductions permitted by ss. 60 to 63 are applicable to a particular source, may be further evidence that s. 63 is intended to be a complete legislative response to the child care expense issue. The proposals which led directly to the introduction of s. 63 support the view that s. 63 is such a response. Since s. 63 eliminates any question of ambiguity, it also eliminates the need for recourse to the values of the Canadian Charter of Rights and Freedoms as an interpretive aid.

There has been no violation of s. 15(1) of the Charter in this case. Since s. 63 constitutes a complete code with respect to child care expenses, it is the proper focus of the Charter argument. The appellant has not demonstrated a violation of s. 15(1) of the Charter with respect to s. 63 as she has not proved that s. 63 draws a distinction based upon the personal characteristic of sex. While it is clear that women disproportionately bear the burden of child care in society, it has not been shown that women disproportionately incur child care expenses. Although the appellant has overwhelmingly demonstrated how the issue of child care negatively affects women in employment terms, proof that women incur social costs is not sufficient proof that they incur child care expenses.

Per L'Heureux‑Dubé J. (dissenting): The determination of profit under s. 9(1) of the Income Tax Act is dependent upon the question of whether an expenditure is a proper business expense to be included in the calculation of such net gain. In order to arrive at a calculation of net profit, the all‑encompassing question one must ask is whether a deduction is prohibited because it is not incurred for the purpose of earning income as required by s. 18(1)(a), or because the expense is personal pursuant to s. 18(1)(h). There have been dramatic and fundamental changes in both the labour market and the family structure over the past 40 years. A majority of women, even those with very young children, are now in the labour force. The interpretation of a law may change over time in order to coincide with an altered and ever‑changing societal context. Furthermore, the respect of Charter values must be at the forefront of statutory interpretation. Statutes are deemed to be remedial and are thus to be given a fair, large and liberal interpretation. In the past, the scope of deductible business disbursements has been expanded constantly, and has been held to include a wide array of expenditures. Any legitimate expense incurred in relation to a business may be deducted as a business expense. The traditional interpretation of "business expense" was shaped to reflect the experience of businessmen and the ways in which they engaged in business. The present world of business is increasingly populated by both men and women, however, and the meaning of "business expense" must account for the experiences of all participants in the field. Child care is vital to women's ability to earn an income. It made good business sense for the appellant to hire child care. This expense was incurred "for the purpose of gaining or producing income" and is therefore not precluded by the wording of s. 18(1)(a) from deduction under s. 9(1).

Child care expenses should not be disallowed as a business expense under s. 18(1)(h) as being personal in nature. While for most men the responsibility of children does not impact on the number of hours they work or affect their ability to work, a woman's ability even to participate in the work force may be completely contingent on her ability to acquire child care. Many business deductions have been permitted in the past even though these expenditures have a personal element. The real costs incurred by businesswomen with children are no less real, no less worthy of consideration and no less incurred in order to gain or produce income from business. Finally, while there is a personal component to child raising, this "choice" is one from which all of society benefits, even though much of the burden remains on the shoulders of women.

Section 63 of the Act does not preclude the deduction of child care expenses as a business expense. Section 63 provides general relief to parents, but nothing in its wording implies that deductions available under s. 9(1) are abolished or restricted in this respect. In providing that none of the deductions permitted by ss. 60 to 63 are applicable to a particular source of income, s. 4(2) clearly provides for some deductions which may legitimately fall under two sections of the Act. At the very least, s. 63 is ambiguous in its effect on s. 9(1), and under the general rules of statutory interpretation, ambiguities are to be resolved in favour of the taxpayer. In the absence of precise and clear wording in the Act with regard to the effect of s. 63 on s. 9(1), general child care expenses which might be deductible under s. 63 may coexist with child care expenses deductible as a business expense. To conclude that s. 63 intends to limit the opportunity for a businesswoman to deduct child care expenses is antithetical to the whole purpose of the legislation, which was aimed at helping working women and their families bear the high cost of child care. The concern that employed persons and business people will not be treated in the same manner is a fact which stems from the rationale of the Act itself: business deductions generally are restricted to those in business and are not available to an employed person. The fact that the government has provided that a deduction for child care expenses be available to all parents, including employed persons, who ordinarily enjoy very few deductions, indicates governmental recognition that child care is a legitimate expense of working parents, in particular mothers. Further, since the Act either permits the deduction of child care expenses as a business expense or is ambiguous, that ambiguity must be examined through the prism of the values enshrined in the Charter, in particular ss. 15 and 28, which encompass and embrace the importance and significance of equality between the sexes. To disallow child care as a business expense clearly has a differential impact on women. Consideration of the Charter values when interpreting the Act thus strengthens the conclusion that the appellant should be able to deduct her child care expenses as a business expense.

An interpretation which prevents the appellant from deducting her child care expenses as a business expense results in an infringement of her right to equality pursuant to s. 15 of the Charter. The appellant has proved that she incurred an actual and calculable cost for child care and that this cost is disproportionately borne by women.

Per McLachlin J. (dissenting): L'Heureux‑Dubé J.'s interpretation of ss. 9, 18 and 63 of the Income Tax Act and s. 15 of the Charter and her conclusion that the appellant's child care expenses are deductible as business expenses were agreed with.

Cases Cited

By Iacobucci J.

Considered: Olympia Floor & Wall Tile (Quebec) Ltd. v. Minister of National Revenue, [1970] Ex. C.R. 274; referred to: Bowers v. Harding (1891), 3 Tax Cas. 22; Andrews v. Law Society of British Columbia, 1989 2 (SCC), [1989] 1 S.C.R. 143; Slaight Communications Inc. v. Davidson, 1989 92 (SCC), [1989] 1 S.C.R. 1038; Hills v. Canada (Attorney General), 1988 67 (SCC), [1988] 1 S.C.R. 513; Ontario Public Service Employees Union v. National Citizens Coalition Inc. (1987), 1987 4429 (ON SC), 60 O.R. (2d) 26; Royal Trust Co. v. Minister of National Revenue, 1957 302 (CA EXC), 57 D.T.C. 1055; Daley v. Minister of National Revenue, 1950 616 (CA EXC), [1950] Ex. C.R. 516; The Queen v. MerBan Capital Corp., 89 D.T.C. 5404; Neonex International Ltd. v. The Queen, 1978 3937 (FCA), [1978] C.T.C. 485; Associated Investors of Canada Ltd. v. Minister of National Revenue, 1967 1124 (CA EXC), [1967] 2 Ex. C.R. 96; Canadian General Electric Co. v. Minister of National Revenue, 1961 85 (SCC), [1962] S.C.R. 3; R. v. Salituro, 1991 17 (SCC), [1991] 3 S.C.R. 654; Imperial Oil Ltd. v. Minister of National Revenue, 1947 293 (CA EXC), [1947] C.T.C. 353; Minister of National Revenue v. Dominion Natural Gas Co., 1940 60 (SCC), [1941] S.C.R. 19; Kellogg Co. of Canada Ltd. v. Minister of National Revenue, 1942 278 (CA EXC), [1942] C.T.C. 51; Hudson's Bay Co. v. Minister of National Revenue, 1947 597 (CA EXC), [1947] C.T.C. 86; Premium Iron Ores Ltd. v. Minister of National Revenue, 1966 76 (SCC), [1966] S.C.R. 685; Mattabi Mines Ltd. v. Ontario (Minister of Revenue), 1988 58 (SCC), [1988] 2 S.C.R. 175; Brooks v. Canada Safeway Ltd., 1989 96 (SCC), [1989] 1 S.C.R. 1219; Impenco Ltd. v. Minister of National Revenue, 88 D.T.C. 1242; R. v. Big M Drug Mart Ltd., 1985 69 (SCC), [1985] 1 S.C.R. 295; PSAC v. Canada, 1987 89 (SCC), [1987] 1 S.C.R. 424; Tétreault‑Gadoury v. Canada (Employment and Immigration Commission), 1991 12 (SCC), [1991] 2 S.C.R. 22; McKinney v. University of Guelph, 1990 60 (SCC), [1990] 3 S.C.R. 229; Ontario Human Rights Commission v. Simpsons‑Sears Ltd., 1985 18 (SCC), [1985] 2 S.C.R. 536; R. v. Turpin, 1989 98 (SCC), [1989] 1 S.C.R. 1296; R. v. Swain, 1991 104 (SCC), [1991] 1 S.C.R. 933; Janzen v. Platy Enterprises Ltd., 1989 97 (SCC), [1989] 1 S.C.R. 1252; Schachtschneider v. Minister of National Revenue (1993), 1993 2982 (FCA), 154 N.R. 321; R. v. Oakes, 1986 46 (SCC), [1986] 1 S.C.R. 103; Schachter v. Canada, 1992 74 (SCC), [1992] 2 S.C.R. 679.

By L'Heureux‑Dubé J. (dissenting)

Andrews v. Law Society of British Columbia, 1989 2 (SCC), [1989] 1 S.C.R. 143; PSAC v. Canada, 1987 89 (SCC), [1987] 1 S.C.R. 424; Daley v. Minister of National Revenue, 1950 616 (CA EXC), [1950] Ex. C.R. 516; Mattabi Mines Ltd. v. Ontario (Minister of Revenue), 1988 58 (SCC), [1988] 2 S.C.R. 175; Premium Iron Ores Ltd. v. Minister of National Revenue, 1966 76 (SCC), [1966] S.C.R. 685; Edmonton Journal v. Alberta (Attorney General), 1989 20 (SCC), [1989] 2 S.C.R. 1326; Murdoch v. Murdoch, 1973 193 (SCC), [1975] 1 S.C.R. 423; Rathwell v. Rathwell, 1978 3 (SCC), [1978] 2 S.C.R. 436; Canada (Attorney General) v. Mossop, 1993 164 (SCC), [1993] 1 S.C.R. 554; Hills v. Canada (Attorney General), 1988 67 (SCC), [1988] 1 S.C.R. 513; Slaight Communications Inc. v. Davidson, 1989 92 (SCC), [1989] 1 S.C.R. 1038; Canadian National Railway Co. v. Canada (Canadian Human Rights Commission), 1987 109 (SCC), [1987] 1 S.C.R. 1114; Olympia Floor & Wall Tile (Quebec) Ltd. v. Minister of National Revenue, [1970] Ex. C.R. 274; Impenco Ltd. v. Minister of National Revenue, 88 D.T.C. 1242; Kellogg Co. of Canada Ltd. v. Minister of National Revenue, 1942 278 (CA EXC), [1942] C.T.C. 51; Royal Trust Co. v. Minister of National Revenue, 1957 302 (CA EXC), 57 D.T.C. 1055; Friedland v. The Queen, 89 D.T.C. 5341; Brooks v. Canada Safeway Ltd., 1989 96 (SCC), [1989] 1 S.C.R. 1219; Stubart Investments Ltd. v. The Queen, 1984 20 (SCC), [1984] 1 S.C.R. 536; Johns‑Manville Canada Inc. v. The Queen, 1985 43 (SCC), [1985] 2 S.C.R. 46; Ontario Public Service Employees Union v. National Citizens' Coalition Inc. (1987), 1987 4429 (ON SC), 60 O.R. (2d) 26 (H.C.), aff'd (1990), 1990 6959 (ON CA), 74 O.R. (2d) 260 (C.A.); R. v. Turpin, 1989 98 (SCC), [1989] 1 S.C.R. 1296; R. v. Seaboyer, 1991 76 (SCC), [1991] 2 S.C.R. 577.

Statutes and Regulations Cited

Canadian Charter of Rights and Freedoms, ss. 1, 15, 28, 32.

Constitution Act, 1982, s. 52(1).

Criminal Code, R.S.C., 1985, c. C‑46, s. 215.

Income Tax Act, R.S.C. 1952, c. 148 [am. 1970‑71‑72, c. 63], ss. 2(1), (2), 3, 4, 8(1)(f), (h), (2), (9), 9(1), 14, 18(1)(a), (h), (12), 20(1)(b), 60 to 62, 63, 67, 67.1, 118.1.

Income Tax Act, S.C. 1948, c. 52, s. 12(1)(a).

Income Tax Act (U.K.), 16 & 17 Vict., c. 34, s. 51.

Income Tax Regulations, C.R.C. 1978, c. 945, Schedule II, Class 8(i).

Income War Tax Act, R.S.C. 1927, c. 97, ss. 3, 6(a).

Authors Cited

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Arnold, Brian J. "The Deduction for Child Care Expenses in the United States and Canada: A Comparative Analysis" (1973), 12 West. Ont. L. Rev. 1.

Arnold, Brian J., and Timothy W. Edgar, eds. Materials on Canadian Income Tax, 9th ed. Don Mills, Ont.: Richard De Boo, 1990.

Belcourt, Monica, Ronald J. Burke and Hélène Lee‑Gosselin. The Glass Box: Women Business Owners in Canada. Ottawa: Canadian Advisory Council on the Status of Women, 1991.

Benson, E. J., Minister of Finance. Proposals for Tax Reform. Ottawa: Queen's Printer, 1969.

Blumberg, Grace. "Sexism in the Code: A Comparative Study of Income Taxation of Working Wives and Mothers" (1971‑1972), 21 Buff. L. Rev. 49.

Brockman, Joan. "Social Authority, Legal Discourse, and Women's Voices" (1992), 21 Man. L.J. 213.

Brooks, Neil. "The Principles Underlying the Deduction of Business Expenses". In Brian G. Hansen, Vern Krishna and James A. Rendall, eds., Essays on Canadian Taxation. Toronto: Richard De Boo, 1978, 249.

Canada. House of Commons. Standing Committee on Finance, Trade and Economic Affairs. Minutes of Proceedings and Evidence, Issue No. 70, June 23, 1970, p. 70:145.

Canada. Royal Commission on Taxation. Report of the Royal Commission on Taxation, vols. 2 and 3. Ottawa: Queen's Printer, 1966.

Canada. Statistics Canada. "Who's Looking After the Kids? Child Care Arrangements of Working Mothers", by Susan Crompton. In Perspectives on Labour and Income, vol. 3, No. 2. Ottawa, Summer 1991, 68.

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Canadian Bar Association. Task Force on Gender Equality in the Legal Profession. Touchstones for Change: Equality, Diversity and Accountability. Ottawa: Canadian Bar Association, 1993.

Côté, Pierre‑André. The Interpretation of Legislation in Canada, 2nd ed. Cowansville: Yvon Blais, 1991.

Driedger, Elmer A. Construction of Statutes, 2nd ed. Toronto: Butterworths, 1983.

Eichler, Margrit. Nonsexist Research Methods: A Practical Guide. Boston: Allen & Unwin, 1988.

Goodison, Don. "Nanny Means Business", CGA Magazine, September 1989, p. 15.

Grant, Isabel, and Lynn Smith. "Gender Representation in the Canadian Judiciary". In Appointing Judges: Philosophy, Politics and Practice. Toronto: Ontario Law Reform Commission, 1991, 57.

Gunderson, Morley, Leon Muszynski and Jennifer Keck. Women and Labour Market Poverty. Ottawa: Canadian Advisory Council on the Status of Women, 1990.

Harris, Edwin C. Canadian Income Taxation, 4th ed. Toronto: Butterworths, 1986.

Hershfield, J. E. "Recent Trends in the Deduction of Expenses in Computing Income". In Report of Proceedings of the Forty-First Tax Conference Convened by the Canadian Tax Foundation. Toronto: Canadian Tax Foundation, 1990.

Holmes, Oliver Wendell. The Common Law. Boston: Little, Brown, 1881.

Ish, Daniel, James A. Rendall and Catherine A. Brown. "Deductions". In B. J. Arnold and T. W. Edgar, eds., Materials on Canadian Income Tax, 9th ed. Don Mills, Ont.: Richard De Boo, 1990, 385.

Krasa, Eva M. "The Deductibility of Fines, Penalties, Damages, and Contract Termination Payments" (1990), 38 Can. Tax J. 1399.

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APPEAL from a judgment of the Federal Court of Appeal, 1991 13553 (FCA), [1991] 3 F.C. 507, [1991] 2 C.T.C. 1, 91 D.T.C. 5397, 7 C.R.R. (2d) 333, 127 N.R. 348, reversing a decision of the Federal Court, Trial Division, 1989 9511 (FC), [1989] 3 F.C. 59, [1989] 1 C.T.C. 476, 89 D.T.C. 5243, 40 C.R.R. 278, 25 F.T.R. 306, holding that the appellant could deduct child care expenses as business expenses. Appeal dismissed, L'Heureux‑Dubé and McLachlin JJ. dissenting.

Mary Eberts and Wendy M. Matheson, for the appellant.

John R. Power, Q.C., and Sandra E. Phillips, for the respondent.

Monique Rousseau, for the intervener the Attorney General of Quebec.

Raj Anand, for the intervener the Charter Committee on Poverty Issues.

J. J. Camp, Q.C., and Melina Buckley, for the intervener the Canadian Bar Association.

The judgment of Lamer C.J. and La Forest, Sopinka, Gonthier, Cory, Iacobucci and Major JJ. was delivered by

Iacobucci J. -- The basic issue in this appeal is whether child care expenses, on the facts of this case, are deductible as business expenses in the determination of profit under the Income Tax Act, R.S.C. 1952, c. 148, as amended (the "Act").

I.Facts

The appellant taxpayer, Elizabeth Symes, is a lawyer and a mother. During the relevant period, she practised law full‑time as a partner in a Toronto law firm. During that same period, she was initially the mother of one child (in taxation years 1982, 1983 and 1984), and was later the mother of two children (in taxation year 1985). The appellant is married.

The appellant employed a nanny, Mrs. Simpson (Simpson), during these taxation years. Simpson's only employment function was to care for the appellant's children in the appellant's home. During 1982, 1983 and 1984 respectively, the appellant paid Simpson $10,075, $11,200 and $13,173 to care for her one child. During 1985, the appellant paid Simpson $13,359 to care for her two children. The appellant deducted from Simpson's wages ‑‑ and remitted to Revenue Canada ‑‑ income tax payments, Canada Pension Plan contributions, and Unemployment Insurance premiums as required. The appellant also remitted the pension and unemployment insurance contributions required of employers. Simpson received a T‑4 slip from the appellant with respect to each of the taxation years.

In her personal income tax returns for 1982 to 1985, the appellant deducted the wages paid to Simpson as business expenses. In Notices of Assessment received by the appellant in 1983 and 1984, Revenue Canada allowed the deductions. However, in Notices of Reassessment dated December 9, 1985 and November 7, 1986, Revenue Canada disallowed the deductions for all four years. The appellant objected, but the disallowance was confirmed for the stated reason that the expenses were not outlays or expenses incurred for the purpose of gaining or producing income from business. The expenses were characterized as personal or living expenses. In place of the disallowed deductions, Revenue Canada allowed the appellant revised child care deductions of $1,000 for 1982, $2,000 for each of 1983 and 1984, and $4,000 for 1985, pursuant to s. 63 of the Act.

After the appellant's objection to, and Revenue Canada's confirmation of, the Notices of Reassessment, the appellant successfully challenged these notices in the Federal Court, Trial Division. The Trial Division held that the appellant could deduct the payments to Simpson as business expenses: 1989 9511 (FC), [1989] 3 F.C. 59, [1989] 1 C.T.C. 476, 89 D.T.C. 5243, 40 C.R.R. 278, 25 F.T.R. 306. The Minister of National Revenue appealed and, in allowing the appeal, the Federal Court of Appeal restored the Notices of Reassessment: 1991 13553 (FCA), [1991] 3 F.C. 507, [1991] 2 C.T.C. 1, 91 D.T.C. 5397, 7 C.R.R. (2d) 333, 127 N.R. 348. This Court granted leave to appeal: [1992] 1 S.C.R. xi.

II.Relevant Constitutional and Statutory Provisions

A.Constitutional Provisions

1.Canadian Charter of Rights and Freedoms, ss. 1, 15 and 32

1. The Canadian Charter of Rights and Freedoms guarantees the rights and freedoms set out in it subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society.

2. (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.

(2) Subsection (1) does not preclude any law, program or activity that has as its object the amelioration of conditions of disadvantaged individuals or groups including those that are disadvantaged because of race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.

32. (1) This Charter applies

(a) to the Parliament and government of Canada in respect of all matters within the authority of Parliament including all matters relating to the Yukon Territory and Northwest Territories; and

(b) to the legislature and government of each province in respect of all matters within the authority of the legislature of each province.

(2) Notwithstanding subsection (1), section 15 shall not have effect until three years after this section comes into force.

2.Constitution Act, 1982, s. 52(1)

52. (1) The Constitution of Canada is the supreme law of Canada, and any law that is inconsistent with the provisions of the Constitution is, to the extent of the inconsistency, of no force or effect.

B.Statutory Provisions

Income Tax Act, R.S.C. 1952, c. 148, as amended and applicable in taxation years 1983 to 1985. ss. 4, 9(1), 18(1), 63 and 67

4. (1) For the purposes of this Act,

(a) a taxpayer's income ... for a taxation year from an office, employment, business, property or other source ... is the taxpayer's income ... computed in accordance with this Act on the assumption that he had during the taxation year no income ... except from that source ... and was allowed no deductions in computing his income for the taxation year except such deductions as may reasonably be regarded as wholly applicable to that source ... and except such part of any other deductions as may reasonably be regarded as applicable thereto ...

(2) Subject to subsection (3), in applying subsection (1) for the purposes of this Part, no deductions permitted by sections 60 to 63 are applicable either wholly or in part to a particular source ...

(4) Unless a contrary intention is evident, no provision of this Part shall be read or construed to require the inclusion or to permit the deduction, in computing the income of the taxpayer for a taxation year or his income or loss for a taxation year from a particular source or from sources in a particular place, of any amount to the extent that that amount has been included or deducted, as the case may be, in computing such income or loss under, in accordance with or by virtue of any other provision of this Part.

9. (1) Subject to this Part, a taxpayer's income for a taxation year from a business or property is his profit therefrom for the year.

10. (1) In computing the income of a taxpayer from a business or property no deduction shall be made in respect of

(a) an outlay or expense except to the extent that it was made or incurred by the taxpayer for the purpose of gaining or producing income from the business or property;

(h) personal or living expenses of the taxpayer except travelling expenses (including the entire amount expended for meals and lodging) incurred by the taxpayer while away from home in the course of carrying on his business;

63. (1) Subject to subsection (2), in computing the income of a taxpayer for a taxation year the aggregate of all amounts each of which is an amount paid in the year as or on account of child care expenses in respect of an eligible child of the taxpayer for the year may be deducted

(b) by the taxpayer or a supporting person of the child for the year ...

to the extent that

(c) the amount is not included in computing the amount deductible under this subsection by an individual (other than the taxpayer), and

(d) the amount is not an amount (other than an amount that is included in computing a taxpayer's income and that is not deductible in computing his taxable income) in respect of which any taxpayer is or was entitled to a reimbursement or any other form of assistance,

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; but not exceeding the amount, if any, by which

(e) the least of

(i) $8,000,

(ii) the product obtained when $2,000 is multiplied by the number of eligible children of the taxpayer for the year in respect of whom the child care expenses were incurred, and

(iii) 2/3 of the taxpayer's earned income for the year

exceeds

(f) the aggregate of all amounts each of which is an amount deducted, in respect of the eligible children of the taxpayer that are referred to in subparagraph (e)(ii), under this subsection for the year by an individual (other than the taxpayer) to whom subsection (2) is applicable for the year.

(3) In this section,

(a) "child care expense" means an expense incurred for the purpose of providing in Canada, for any eligible child of a taxpayer, child care services including baby sitting services, day nursery services or lodging at a boarding school or camp if the services were provided

(i) to enable the taxpayer, or the supporting person of the child for the year, who resided with the child at the time the expense was incurred,

(A) to perform the duties of an office or employment,

(B) to carry on a business either alone or as a partner actively engaged in the business,

(b) "earned income" of a taxpayer means the aggregate of

(i) all salaries, wages and other remuneration, including gratuities, received by him in respect of, in the course of, or by virtue of offices and employments, and all amounts included in computing his income by virtue of sections 6 and 7,

(ii) amounts included in computing his income by virtue of paragraph 56(1)(m), (n) or (o), and

(iii) his incomes from all businesses carried on either alone or as a partner actively engaged in the business.

(c) "eligible child" of a taxpayer for a taxation year means

(i) a child of the taxpayer or of his spouse, or

(ii) a child in respect of whom the taxpayer deducted an amount under section 109 for the year,

if, at any time during the year, the child was under 14 years of age or was over 13 years of age and dependent on the taxpayer by reason of mental or physical infirmity; and

(d) "supporting person" of an eligible child of a taxpayer for a taxation year means

(i) a parent of the child,

(ii) the taxpayer's spouse, or

(iii) an individual who deducted an amount under section 109 for the year in respect of the child,

if the parent, spouse or individual, as the case may be, resided with the taxpayer at any time during the year and at any time within 60 days after the end of the year.

67. In computing income, no deduction shall be made in respect of an outlay or expense in respect of which any amount is otherwise deductible under this Act, except to the extent that the outlay or expense was reasonable in the circumstances.

III.Judgments Below

A.Federal Court, Trial Division, 1989 9511 (FC), [1989] 3 F.C. 59 (Cullen J.)

1.Child Care as a Business Expense

Dealing first with issues of statutory interpretation, Cullen J. noted that "[t]he determination of profit and the question of whether an expenditure is a proper business expense to be included in the calculation of profit are questions of law" (p. 66). Based upon his review of case law, he then held that, in determining what constitutes a legitimate business expense, the proper approach is to "ascertain whether the expense or disbursement was consistent with ordinary principles of commercial trading or well accepted principles of business practice" (pp. 66-67). For Cullen J. (at p. 67), a "business test" was to be applied in order to determine the legal meaning of "profit".

In addition to satisfying a business test, Cullen J. noted that a business expense must be made or incurred for the purpose of gaining or producing income from the business in order to satisfy s. 18(1)(a) of the Act. He reviewed several cases which have interpreted this requirement, before suggesting (at p. 71) that courts have given a "progressive interpretation" to s. 18(1)(a). For Cullen J., the concept of a business expense has been "adapted to reflect the changing ways of doing business" (p. 71).

In a similar vein, Cullen J. discussed an argument of the respondent founded upon the concept of a business or revenue-producing "circle". According to this concept, only expenses incurred within a revenue-producing circle are deductible; expenses incurred in order to approach a revenue-producing circle are not. The respondent characterized the payments to Simpson "as an expense which enabled the plaintiff to go out and practise her profession but was not incurred in the practice of her profession" (p. 70, emphasis in original). Cullen J. rejected this argument and the concept itself, since the concept "would seem to suggest that the business or revenue‑producing circle has a fixed content" (p. 70).

Cullen J. proceeded to examine the child care expenses in light of his analysis of the profit concept. He noted that several cases had been cited by the respondent in which child care expenses were held to be personal in nature. Cullen J. dismissed the relevance of these, however, stating that they were all ultimately founded upon Bowers v. Harding (1891), 3 Tax Cas. 22 (Q.B.), a case which "came from another age, from another system dealing with a tax question that related to employment rather than profits from a business" (p. 72). He also considered the expert evidence of Dr. Patricia Armstrong (Armstrong), which described an influx of women of child‑bearing age into business and the workplace during the late 1970s and into the 1980s.

In the result, Cullen J. was satisfied that the taxpayer had used good business and commercial judgment in dedicating part of her resources from the practice of law to the provision of child care. He stated (at p. 73):

This decision was acceptable according to business principles which include the development of intellectual capital, the improvement of productivity, the provision of services to clients and making available the resource which she sells, namely her time.

Further, Armstrong's evidence supports the notion that the availability of child care increases productivity by enhancing the peace of mind of employees. Enhancing productivity is something that is totally in keeping with well established business practices. Moreover, Armstrong's evidence indicates that the absence of child care is a barrier to women's participation in the economy, in terms of paid work and income‑generating work and therefore lowering the barrier by arriving at a satisfactory means of dealing with the costs of child care, would make good business sense.

Having thus found that the nanny expenses satisfied ss. 9 and 18(1)(a), Cullen J. examined whether s. 18(1)(h) prohibited their deduction as personal or living expenses. On this question, he stated that, on the facts of the case, "a distinction has been made between child care which allows one to participate in the economy and generate income and child care which allows one to go out on social occasions" (p. 74). According to Cullen J., only the latter are discretionary personal living expenses. Cullen J. distinguished the appellant's child care expenses from other expenses which might be characterized as personal or living expenses, principally because of the appellant's legal obligation to care for her children.

For these reasons, as a matter of statutory interpretation, and based upon the facts of the case, Cullen J. concluded that the nanny expenses qualified as business expenses deductible in the computation of a taxpayer's profit. It is noteworthy that in so doing, Cullen J. stated the following (at p. 75): "With respect to section 63 of the Act, I would like to note at this point in my reasons that the defendant has admitted that if the nanny expense is a proper business expense pursuant to sections 3, 9 and 18 of the Act, then section 63 cannot prevent it from being allowed as such". Finally, Cullen J. quickly indicated that there was no question as to the reasonableness of the sums expended within the meaning of s. 67 of the Act.

2.Section 15(1) of the Charter

Despite his conclusions on the interpretive issue, Cullen J. considered the taxpayer's Charter argument in the alternative. He recognized that, since s. 15(1) did not come into effect until April 17, 1985, and since that section does not operate retrospectively, the taxpayer could not make a Charter claim respecting child care expenses incurred prior to the section's coming into force.

Cullen J. quoted extensively from the decision of this Court in Andrews v. Law Society of British Columbia, 1989 2 (SCC), [1989] 1 S.C.R. 143, and relied heavily upon principles stated therein, in discussing s. 15. First, he noted that since he was considering an Act of Parliament, s. 15 was applicable. Second, he looked for unequal treatment and discrimination. Although his analysis is undoubtedly intended to consider these latter two concepts with respect to the Act itself, I note that Cullen J. focused upon Revenue Canada's treatment of the taxpayer.

On the question of unequal treatment, Cullen J. first looked for and found a distinction (at p. 80): "by refusing the plaintiff her deduction, the MNR is treating her differently from other taxpayers with expenses that are considered necessary to generate business income". On the question of discrimination, Cullen J. characterized the Act as facially neutral, but held that there was an adverse impact upon the taxpayer, in so far as she was compelled to pay more taxes and take on extra paper work by virtue of the unequal treatment. Viewed another way, he held that the taxpayer was "denied the benefit of a tax deduction" (p. 82). Cullen J. tied the discrimination to the "personal characteristics of sex and family or parental status" (p. 84).

In this fashion, Cullen J. found that to deny the deduction of child care expenses as part of the profit determination would be to violate s. 15(1) of the Charter. Turning to s. 1, he found that no pressing and substantial objective for non‑deductibility had been offered. Accordingly, he did not deal with a proportionality test per se.

Since Cullen J. found that there was no evidence indicating that Parliament had made a legislative choice against full deductibility of child care expenses, he indicated (at p. 87) that courts are left to determine, in accordance with the Charter, "whether the concepts of profit and business expenses" permit deductibility. Upon this basis, he concluded that ss. 9 and 18(1)(a) permit the deduction of child care expenses as business expenses. This conclusion was an interpretive one said to be "consistent with the requirements of the Charter", and which involved no questions of "deleting', amending' or `reading in'" (p. 87).

In the result, Cullen J. held that the taxpayer was allowed to deduct the payments made to Simpson as a business expense for taxation years 1982, 1983, 1984, and 1985. This conclusion rested solely upon his approach to statutory interpretation. With respect to his alternative conclusion involving Charter analysis, Cullen J. held that these payments were deductible for 1985 and subsequent taxation years.

B.Federal Court of Appeal, 1991 13553 (FCA), [1991] 3 F.C. 507 (Décary J.A., Pratte and MacGuigan JJ.A. concurring)

After reviewing the facts of the case, Décary J.A. established a context for the decision of the Federal Court of Appeal. He discussed the fiscal history of child care expenses, and particularly s. 63 of the Act, citing a royal commission report and a government white paper. With reference to Hansard, he sought to describe government policy on child care expenses. Finally, he noted various reports and background papers dealing with child care responses which had been cited to the court.

1.Child Care as a Business Expense

As a first point of analysis, Décary J.A. discussed s. 18(1)(a) of the Act. With respect to the argument that the taxpayer's child care expenses were made in the ordinary course of business or as part of the income earning process, he characterized her legal obligation to care for her children as an obligation independent of her business. For him, the child care obligation is imposed upon both parents, and is, in any event, a "natural obligation" (p. 522).

It is not obvious whether Décary J.A. accepted or rejected the taxpayer's arguments with respect to the proper tests to be applied under ss. 9(1) and 18(1)(a) of the Act. It is clear, however, that he professed to agree with the taxpayer and the trial judge to the effect that judicial interpretation "must be sufficiently flexible and sensitive to adapt to changing circumstances" (p. 523). Equally, he stated that "concepts should be extended by the courts in order to take into account the presence of women in the business world" (p. 523). But then he summarized his overall disagreement with the taxpayer and the court below with respect to the proper interpretation of the Act. He stated (at p. 523) that:

... the concept of a business expense has been developed exclusively in relation to the commercial needs of the business, without any regard to the particular needs of those in charge of the business, and I have difficulty in seeing how a change in the particular needs of these persons could justify modifying an interpretation which has nothing to do with these needs. Having said that, I consider that the case at bar does not require a conclusion on this point for the simple reason that Parliament has itself already amended the Income Tax Act to provide for the specific situation relied on by the respondent.

In support of this conclusion, Décary J.A. examined the language of s. 63. His examination caused him to conclude that s. 63 was clearly intended by Parliament to apply to "a parent carrying on a business and income earned by the parent from the operation of a business" (p. 525). For this reason, he located child care expenses solely with s. 63 of the Act, excluding such expenses from the concept of "business expenses" implicit within s. 18(1)(a). He did not otherwise examine the meaning of "profit" in s. 9 of the Act.

2. Section 15 (1) of the Charter

Décary J.A. began his Charter analysis by summarizing the taxpayer's basic Charter argument. He noted that a s. 15(1) violation was alleged, not with respect to the actual language of the Act, but with respect to any interpretation of the Act's language which could prevent child care expenses from being deducted as business expenses. He then suggested that the taxpayer supported her argument by reference to the decisions of this Court in Slaight Communications Inc. v. Davidson, 1989 92 (SCC), [1989] 1 S.C.R. 1038, and Hills v. Canada (Attorney General), 1988 67 (SCC), [1988] 1 S.C.R. 513. Since Décary J.A. quoted from these decisions in a manner which suggests that he was considering the extent to which Charter values should infuse ordinary statutory interpretation, it is somewhat unclear to me whether some of his subsequent comments are intended to relate to this kind of statutory interpretation, or to Charter analysis per se.

In either event, Décary J.A. went on to make general statements with respect to the propriety of challenging what can be loosely called "socioeconomic legislation" with the Charter. After quoting from several decisions, he cited Ontario Public Service Employees Union v. National Citizens Coalition Inc. (1987), 1987 4429 (ON SC), 60 O.R. (2d) 26 (H.C.), and in apparent reliance upon language used in that case, stated that "[a]t bottom, the approach put forward by the respondent risks trivializing the Charter" (p. 528). To accept the taxpayer's arguments would, according to him, "be to fall into the trap of overshooting against which the Supreme Court of Canada has constantly warned the courts" (p. 529). Décary J.A. recoiled from the idea that the taxpayer could use s. 15 of the Charter to obtain a positive guarantee of equality, one which would compel "legislatures to adopt measures enabling... her to work" (p. 530).

Departing from this foundation, Décary J.A. characterized s. 63 as a statutory benefit adopted by Parliament "in the enlightened exercise of its discretion" (p. 530). He then came to the following conclusion, which is clearly a conclusion relating to Charter analysis per se, rather than to the use of Charter values as an aid to statutory interpretation (at pp. 531‑32):

By adopting section 63 and deciding to create a new type of personal deduction for parents applying to child care expenses, Parliament made a political, social and economic choice. On the evidence presented, that choice favours women more than men, and the respondent has no complaint about this. I do not see how a provision which favours all women could directly or indirectly infringe the right of women to equality, and I am not prepared to concede that professional women make up a disadvantaged group against whom a form of discrimination recognized by section 15 has been perpetrated by the adopting of section 63, or would be perpetrated by this Court's refusal to interpret paragraph 18(1)(a) so as to give a self‑employed mother an additional deduction for a business expense; and even if there were discrimination within the meaning of section 15, I consider in light of the ample evidence of justification submitted to the Court that it is not the function of this Court to substitute its choice for the one made by Parliament, with full knowledge of the options proposed and in keeping with an overall policy of assisting the family.

The court allowed the appeal, restored the Notices of Assessment, and ordered the appellant to pay the respondent's costs at trial and on appeal.

IV.Issues

On July 14, 1992, the Chief Justice stated the following constitutional questions:

1. If ss. 9, 18 and 63 of the Income Tax Act are not open to an interpretation other than that full child care expenses of the appellant are not deductible as business expenses, does any part, or do any or all of these sections, infringe or deny rights guaranteed by s. 15 of the Canadian Charter of Rights and Freedoms?

2. To the extent that the above sections of the Income Tax Act infringe or deny the rights and freedoms guaranteed by s. 15 of the Canadian Charter of Rights and Freedoms, are these sections justified by s. 1 of the Canadian Charter of Rights and Freedoms and therefore not inconsistent with the Constitution Act, 1982?

In responding to these constitutional questions, I will structure my discussion with reference to the following principal issues:

1. Are child care expenses deductible as part of the determination of profit under s. 9(1) of the Act?

2. If child care expenses are not deductible as part of the determination of profit under s. 9(1) of the Act, has there been a violation of s. 15(1) of the Charter?

3. If there has been a violation of s. 15(1) of the Charter, is it justified under s. 1?

V.Analysis

1.Are child care expenses deductible as part of the determination of profit under s. 9(1) of the Act?

There are two aspects to this question: (a) Are child care expenses deductible under principles of income tax law applicable to business deductions? (b) If child care expenses are not otherwise deductible using such principles, are they deductible employing the values of the Charter as an interpretive aid? For the following reasons, I am of the opinion that both of these questions must be answered in the negative.

(a)Are child care expenses deductible under principles of income tax law applicable to business deductions?

My analysis of income tax law principles applicable to business deductions will proceed in the following way. Immediately below, I will describe the statutory framework which supports business expense deductibility. Then, I will examine deductibility issues per se under four headings. Under the first, I will discuss the interrelationship of ss. 9(1), 18(1)(a) and 18(1)(h) of the Act, in order to clarify the proper analytical approach in this case. Under the second, I will comment upon the historical classification of child care expenses as personal expenses, in order to define the relevance of s. 18(1)(h) of the Act. Under the third, I will examine s. 18(1)(a) of the Act in a search for indicia of business expenses which can be compared to the facts of this case. Finally, under the fourth, I will consider the relevance of the child care expense deduction in s. 63 of the Act.

At the outset, however, it is helpful to describe briefly the statutory framework in which the subsequent analysis will take place. Canadian residents pay tax pursuant to the basic charging provision, s. 2(1) of the Act. Therein, the taxability of residents is established and made referable to the concept of "taxable income". As set out in s. 2(2), calculation of a taxpayer's "taxable income" first involves determining the taxpayer's "income for the year". That concept, in turn, requires recourse to s. 3 of the Act, where, in part, it is established that to determine a taxpayer's income for a taxation year requires first that one compute the taxpayer's income from each of several sources. As set out in s. 3(a), one such source is "income ... from ... business".

As a self‑employed lawyer, it is the business income source of taxation which concerns the appellant. In essence, she argues that the Act is capable of comprehending a business expense deduction for child care as part of its ordinary determination of business income. This argument, therefore, mandates a discussion of how the Income Tax Act ordinarily determines what constitutes business income.

(i)Business Income: The Interrelationship of ss. 9(1), 18(1)(a) and 18(1)(h)

Leaving aside for the moment the potential impact of s. 63, three provisions of the Act which deal with business income determination are relevant in this case, and the language of each is worthy of note. First, by virtue of s. 9(1), a taxpayer's income from business is stated to be the taxpayer's "profit therefrom for the year", "profit" being nowhere defined in the Act. Second, s. 18(1)(a) provides that in computing business income, no deduction shall be made for an expense "except to the extent that it was made or incurred by the taxpayer for the purpose of gaining or producing income". Finally, in s. 18(1)(h), a prohibition against deducting "personal or living expenses" is established. The proper approach to these three provisions is the initial point to be examined.

At one time, it was not clearly understood whether the authority for deducting business expenses was located within what is now s. 9(1) or within what is now s. 18(1)(a). In a series of decisions culminating in Royal Trust Co. v. Minister of National Revenue, 1957 302 (CA EXC), 57 D.T.C. 1055 (Ex. Ct.), however, Thorson P. recognized that the deduction of business expenses is a necessary part of the s. 9(1) "profit" calculation. In Daley v. Minister of National Revenue, 1950 616 (CA EXC), [1950] Ex. C.R. 516, Thorson P. commented upon s. 3 (the forerunner to s. 9) and s. 6(a) (the forerunner to s. 18(1)(a)) of the Income War Tax Act, R.S.C. 1927, c. 97, in the following terms (at p. 521):

The correct view, in my opinion, is that the deductibility of the disbursements and expenses that may properly be deducted "in computing the amount of the profits or gains to be assessed" is inherent in the concept of "annual net profit or gain" in the definition of taxable income contained in section 3. The deductibility from the receipts of a taxation year of the appropriate disbursements or expenses stems, therefore, from section 3 of the Act, if it stems from any section, and not at all, even inferentially, from paragraph (a) of section 6.

In other words, the "profit" concept in s. 9(1) is inherently a net concept which presupposes business expense deductions. It is now generally accepted that it is s. 9(1) which authorizes the deduction of business expenses; the provisions of s. 18(1) are limiting provisions only. See The Queen v. MerBan Capital Corp., 89 D.T.C. 5404 (F.C.A.).

To so describe ss. 9(1) and 18(1)(a) does not, however, clarify the proper approach in this case. While ss. 18(1)(a) and (h) may first appear logically to limit ‑‑ within the structure of the Act ‑‑ deductions which have already satisfied s. 9(1), this structure can make less logical sense than one might suppose. This is because it is generally not clear what kinds of expenses would be deductible under s. 9(1), yet prohibited by ss. 18(1)(a) or (h).

Under s. 9(1), deductibility is ordinarily considered as it was by Thorson P. in Royal Trust, supra (at p. 1059):

... the first approach to the question whether a particular disbursement or expense was deductible for income tax purpose was to ascertain whether its deduction was consistent with ordinary principles of commercial trading or well accepted principles of business ... practice ... [Emphasis added.]

Thus, in a deductibility analysis, one's first recourse is to s. 9(1), a section which embodies, as the trial judge suggested, a form of "business test" for taxable profit.

This is a test which has been variously phrased. As the trial judge rightly noted, the determination of profit under s. 9(1) is a question of law: Neonex International Ltd. v. The Queen, 1978 3937 (FCA), [1978] C.T.C. 485 (F.C.A.). Perhaps for this reason, and as Neonex itself impliedly suggests, courts have been reluctant to posit a s. 9(1) test based upon "generally accepted accounting principles" (G.A.A.P.): see also "Business Income and Taxable Income" (1953 Conference Report: Canadian Tax Foundation) cited in B. J. Arnold and T. W. Edgar, eds., Materials on Canadian Income Tax (9th ed. 1990), at p. 336. Any reference to G.A.A.P. connotes a degree of control by professional accountants which is inconsistent with a legal test for "profit" under s. 9(1). Further, whereas an accountant questioning the propriety of a deduction may be motivated by a desire to present an appropriately conservative picture of current profitability, the Act is motivated by a different purpose: the raising of public revenues. For these reasons, it is more appropriate in considering the s. 9(1) business test to speak of "well accepted principles of business (or accounting) practice" or "well accepted principles of commercial trading".

Adopting this approach to deductibility, it becomes immediately apparent that the well accepted principles of business practice encompassed by s. 9(1) would generally operate to prohibit the deduction of expenses which lack an income earning purpose, or which are personal expenses, just as much as ss. 18(1)(a) and (h) operate expressly to prohibit such deductions. For this reason, there is an artificiality apparent in the suggestion that one can first examine s. 9(1) in order to determine whether a deduction is authorized, and can then turn to s. 18(1) where another analysis can be undertaken: N. Brooks, "The Principles Underlying the Deduction of Business Expenses" in B. G. Hansen, V. Krishna and J. A. Rendall, eds., Essays on Canadian Taxation (1978), 249, at pp. 253‑54; V. Krishna, The Fundamentals of Canadian Income Tax (4th ed. 1992), at p. 365, footnote 44, and at p. 367.

Although ss. 18(1)(a) and (h) may, therefore, simply be analytically repetitive or confirmatory of prohibitions already embodied in s. 9(1), they may serve to reinforce the point already made, namely, that the s. 9(1) test is a legal test rather than an accountancy test. At the same time, they conveniently summarize what might otherwise be abstract principles of commercial practice. As noted by D. Ish, J. A. Rendall and C. A. Brown ("Deductions" in Materials on Canadian Income Tax, supra, at pp. 387-88):

... the frequency with which paragraph 18(1)(a) appears in the cases confirms that it is useful, if not necessary, for the Minister to have specific statements which can be relied upon.... Arguably, paragraph 18(1)(h) is just a refinement of paragraph 18(1)(a); indeed, one might suppose that the taxpayer's personal or living expenses would not be deducted according to standard practices of accounting for business profits, the test erected by subsection 9(1). The process we are describing is one in which the focus is progressively narrowed. Although a personal or living expense prohibited by paragraph 18(1)(h) arguably would also be prohibited by paragraph 18(1)(a) ... the Minister may nevertheless find it very useful to concentrate attention on the specific characterization of a disputed expense as being of a personal consumption nature.

There is no doubt that, in some cases, s. 9(1) will operate in isolation to scrutinize deductions according to well accepted principles of business practice. In this respect, I refer to cases, also noted by the trial judge, in which the real issue was whether a particular method of accounting could be used to escape tax liability: e.g. Associated Investors of Canada Ltd. v. Minister of National Revenue, 1967 1124 (CA EXC), [1967] 2 Ex. C.R. 96; Canadian General Electric Co. v. Minister of National Revenue, 1961 85 (SCC), [1962] S.C.R. 3. In other cases, including the present case, however, the real issue may be whether a deduction is prohibited by well accepted principles of business practice for the reason that it is not incurred for the purpose of earning income, or for the reason that it is a personal or living expense. In such cases, any treatment of the issue will necessarily blur s. 9(1) with ss. 18(1)(a) and (h).

I proceed, therefore, to deal with closely related arguments respecting the specific language of ss. 18(1)(a) and 18(1)(h). In so doing, I mean to cast no doubt upon the proposition that s. 9(1) contains the authority for deduction, nor do I wish to suggest that s. 9(1) is not the first section against which a deduction is to be measured. Instead, I simply wish to acknowledge that, on the facts of this case, I cannot respond to the arguments of the parties without necessarily addressing the general language of s. 9(1), and the specific language of ss. 18(1)(a) and 18(1)(h), at the same time.

(ii)Personal Expenses and s. 18(1)(h)

I begin with s. 18(1)(h), since traditional tax analysis characterized child care expenses as personal expenses, such that in modern terms, s. 18(1)(h) would operate to specifically prohibit them. I do not propose to review the numerous cases which might be cited to demonstrate this point: see B. J. Arnold, "The Deduction for Child Care Expenses in the United States and Canada: A Comparative Analysis" (1973), 12 West. Ont. L. Rev. 1, at p. 27, footnote 141; J. E. Hershfield, "Recent Trends in the Deduction of Expenses in Computing Income", in 1989 Conference Report (Canadian Tax Foundation), at p. 44:2, footnote 3. It is sufficient to note, as did the trial judge below, that the line of reasoning supporting such a characterization is ultimately founded upon the English decision of Bowers v. Harding, supra, and brief examination of that case can help to explain the historical classification of child care expenses as personal expenses.

In Bowers v. Harding, the Hardings (a married couple) were employed in the operation of a school, and they received a joint salary for this employment. Mr. Harding engaged a household servant, according to the admitted facts of the case, in order "to enable his wife to have time to perform her duties as schoolmistress" (p. 23). Since the relevant tax legislation treated the couple's joint salary as Mr. Harding's alone, he sought to deduct the expense of the housekeeper upon the basis that it was incurred "wholly, exclusively, and necessarily in the performance of the duties of his ... employment": Income Tax Act (U.K.), 16 & 17 Vict., c. 34, s. 51.

The attempted deduction was disallowed. In the eyes of the court, the Hardings were proposing a "but for" test for deductibility. In other words, they were arguing that "but for the housekeeper", the income could not have been earned. Baron Pollock rejected this test in the following terms (at p. 26):

When a man and his wife accept an office there are certain detriments as well as profits, but is in no sense an expenditure which enables them to earn the income in the sense of its being money expended upon goods, or in the payment of clerks, whereby a tradesman or a merchant is enabled to earn an income.... If we were to go into these questions with great nicety we must consider the district in which the person lives, the altitude at which he lives, the price of meat, and the character of the clothing that he would require, in many places indeed the character of the services and the wages paid to particular servants, and the style in which each person lives, before we could come to any conclusion.

I am aware that many people might question the applicability of the language and circumstances of Bowers v. Harding, supra. Indeed, there are many ways that it might be distinguished. First, it deals with income from employment, rather than with income from business. Second, the expense in question related to "housekeeping", rather than to child care (or, at least, if child care was involved, the case report fails to disclose so). Third, the expense was compared against the very strict requirement that it be made "wholly, exclusively and necessarily" for the purpose of earning the income, and no identical requirement arises on the facts of this case. Finally, perhaps, like the trial judge below, one could merely focus upon the fact that the case came from "another age" and from "another system" (p. 72).

Even without distinguishing Bowers v. Harding in this fashion, however, I believe that I should move beyond s. 18(1)(h) of the Act and the traditional classification of child care in the analysis of whether child care expenses are truly personal in nature. The relationship between expenses and income in Bowers v. Harding was subsumed in that case, as it was in cases to follow, within an apparent dichotomy. As stated by Professor Arnold, in "The Deduction for Child Care Expenses", supra, at p. 27:

The test established by the case for distinguishing between personal and living expenses involved a determination of the origin of the expenses. If the expenses arose out of personal circumstances rather than business circumstances the expense was a non‑deductible personal expense.

There are obvious tautologies within this approach. "Personal expenses" are said to arise from "personal circumstances", and "business expenses" are said to arise from "business circumstances". But, how is one to locate a particular expense within the business/personal dichotomy?

This appeal presents a particular expense which has been traditionally characterized as personal in nature. If, in coming to a decision, this Court stated that since such expenses have always been personal, they must now be personal, the conclusion could be easily and deservedly attacked. For this reason, proper analysis of this question demands that the relationship between child care expenses and business income be examined more critically, in order to determine whether that relationship can be sufficient to justify the former's deductibility. This proposition, in my opinion, leads naturally to s. 18(1)(a), which sets out the relationship required by the Act.

In turning to s. 18(1)(a), however, I must take pains not to eviscerate needlessly s. 18(1)(h) and its related jurisprudence. When faced with a particular expense, it may be both proper and expedient to refer to past decisions which have characterized the expense as "personal" within 18(1)(h), such that an extensive analytical approach involving the words of s. 18(1)(a) may not be required. On the facts of this case, s. 18(1)(a) may be of greater assistance than the simple prohibition against deducting "personal expenses" in s. 18(1)(h), as I re‑examine whether child care expenses truly constitute personal expenses. However, not every expense which has been traditionally characterized as a personal expense will deserve a similar re‑examination.

Why, in this case, is it appropriate to re‑examine extensively whether child care expenses are appropriately characterized as personal expenses? Relying upon the evidence of the expert witness, Armstrong, the trial judge had this to say (at p. 72):

... there has been a significant social change in the late 1970's and into the 1980's, in terms of the influx of women of child‑bearing age into business and into the workplace. This change post‑dates the earlier cases dismissing nanny expenses as a legitimate business deduction and therefore it does not necessarily follow that the conditions which prevailed in society at the time of those earlier decisions will prevail now.

I consider the existence of the trend discussed in this paragraph to be relatively non‑controversial, such that the point could have been accepted even without the assistance of an expert.

The decision to characterize child care expenses as personal expenses was made by judges. As part of our case law, it is susceptible to re‑examination in an appropriate case. In R. v. Salituro, 1991 17 (SCC), [1991] 3 S.C.R. 654, this Court had occasion to state the following (at p. 670):

Judges can and should adapt the common law to reflect the changing social, moral and economic fabric of the country. Judges should not be quick to perpetuate rules whose social foundation has long since disappeared. Nonetheless, there are significant constraints on the power of the judiciary to change the law.... The judiciary should confine itself to those incremental changes which are necessary to keep the common law in step with the dynamic and evolving fabric of our society.

The increased participation of women in the Canadian workforce is undoubtedly a change in the "social foundation" within the meaning of Salituro. Accordingly, I do not feel that I must slavishly follow those cases which have characterized child care expenses as personal in nature. It now falls to be considered whether the alternative is appropriate. In other words, are child care expenses not prohibited by s. 18(1)(a) of the Act?

(iii)Business Expenses and s. 18(1)(a)

In order to be deductible as business expenses, the appellant's child care expenses must have been incurred "for the purpose of gaining or producing income from the business" within the meaning of s. 18(1)(a) of the Act. This is not to say that the expenses must directly lead to the production of income. Even with respect to the more restrictively worded ancestor of s. 18(1)(a), it was recognized in Imperial Oil Ltd. v. Minister of National Revenue, 1947 293 (CA EXC), [1947] C.T.C. 353 (Ex. Ct.), at p. 371, that it is not necessary to prove a causative relationship between a particular expense and a particular receipt. Indeed, provided that an expense otherwise satisfies s. 18(1)(a), an expense may be deductible even if it results in a loss.

There is some difficulty associated with determining how an expense can otherwise satisfy s. 18(1)(a), however. Several cases which gave important consideration to the question did so with respect to the more restrictive language of the Income War Tax Act, s. 6(a). That section prohibited the deduction of expenses to the extent that they were not "wholly, exclusively and necessarily laid out or expended for the purpose of earning the income" (emphasis added).

The leading case which considered s. 6(a) of the Income War Tax Act was Minister of National Revenue v. Dominion Natural Gas Co., 1940 60 (SCC), [1941] S.C.R. 19. That case involved a taxpayer who incurred substantial legal expenses in defending a natural gas franchise. This Court characterized the expenses as non‑deductible capital expenditures, and suggested that the expenses did not satisfy s. 6(a). In the words of Duff C.J., s. 6(a) referred to "working expenses; that is to say, expenses incurred in the process of earning `the income'" (p. 22, emphasis added).

Dominion Natural Gas thus established a test for business expenses frequently referred to as the "income earning process" test. In subsequent cases, this test was applied by courts, but not always in a manner which suggests that the application was straightforward. In Kellogg Co. of Canada Ltd. v. Minister of National Revenue, 1942 278 (CA EXC), [1942] C.T.C. 51 (Ex. Ct.), for example, Kellogg incurred substantial legal expenses in the defence of an action alleging a trademark infringement. Notwithstanding Dominion, Maclean J. in Kellogg held that such expenses were currently deductible as business expenses. Maclean J. focused upon the fact that Kellogg's legal expenses were involuntary, the action not having been commenced by the taxpayer, and seemed to disregard the fact that the same was true of the legal expenses in Dominion. A similar discomfort can be discerned within Imperial Oil, supra, and Hudson's Bay Co. v. Minister of National Revenue, 1947 597 (CA EXC), [1947] C.T.C. 86 (Ex. Ct.): see Brooks, supra, at p. 255.

In 1948, the statutory language which governed in the above cases was replaced by the immediate forerunner of s. 18(1)(a): The Income Tax Act, S.C. 1948, c. 52, s. 12(1)(a). It is important to highlight the changes which were thus introduced. First, whereas the old provision required that an expense be incurred "wholly, exclusively and necessarily" for the stated purpose, the current provision does not relate the purpose requirement to any modifier. Second, whereas the old provision stated that a business expense was an expense incurred for the "purpose of earning the income", the current provision speaks of "gaining or producing" the income.

On more than one occasion since the amendment, it has been recognized that the current language of the Act suggests a broader rationale for deductibility than did the former. In Premium Iron Ores Ltd. v. Minister of National Revenue, 1966 76 (SCC), [1966] S.C.R. 685, a taxpayer incurred substantial legal expenses in resisting the tax claim of a foreign jurisdiction. In discussing the deductibility of such expenses, Martland J. suggested that "[i]t seems clear that the present wording of [s. 18(1)(a)] ... was intended to broaden the definition of deductible expenses" (p. 702). See also Hall J. at p. 711; Royal Trust, supra, at p. 1059. The Court in Premium found such expenses to be currently deductible, and rejected that operations should be "segregated into revenue producing as distinct from revenue retaining functions" (p. 711, per Hall J.).

In considering the extent to which these cases, and others cited by the trial judge, demonstrate a liberalization of principles of deduction with respect to s. 18(1)(a) of the Act, it is relevant to acknowledge their historical context. In particular, I note that since the cases discussed above were decided prior to 1972, they arose in the context of a taxation system which did not allow deductions in respect of intangible capital expenditures. For this reason, when confronted with an expenditure for intangibles, courts had two choices. First, the expenditure could be characterized as being on account of capital, in which case it could not be deducted at all since capital expenditures could only be deducted within the capital cost allowance system, a system which provides only for the depreciation of tangible property: see Income Tax Regulations, C.R.C. 1978, c. 945, Schedule II, Class 8(i). Second, an intangible expenditure could be characterized as a current expenditure, in which case it would be totally deductible as such.

In dealing with intangibles such as substantial legal expenses, therefore, pre‑1972 courts may have been influenced by more than simply a liberalized formulation of the s. 18(1)(a) test. In discussing the treatment of intangible capital expenditures prior to 1972, Professor Woodman has stated ("A Child Care Expenses Deduction, Tax Reform and the Charter: Some Modest Proposals" (1990), 8 Can. J. Fam. L. 371, at p. 377):

Courts, recognizing the adverse effect of such a characterization, attempted to circumvent the paragraph 18(1)(b) prohibition by stretching the definition of a current deductible business expense. In other words, it is true that the courts have expanded the ambit of deductibility, but it does not necessarily follow that the next step is to make child care expenses deductible.

Today, the treatment of business deductions occurs in a statutory environment which provides for capital intangibles through the concept of eligible capital expenditures: see ss. 14 and 20(1)(b) of the Act.

Without dismissing the importance of the observation just described, it is nonetheless true that the current wording of s. 18(1)(a) is sufficient justification for the view that Parliament acted to amend its predecessor section in such a way as to broaden the scope for business expense deductibility. Professor Brooks adopts this view, and suggests that the only true question under s. 18(1)(a) is: "was the expense incurred for a personal or business purpose?" (supra, at p. 253). Other commentators propose other tests which vary in the extent to which they borrow directly from the language of s. 18(1)(a). Examples include a "predominant purpose" test (C. F. L. Young, "Case Comment on Symes v. The Queen", [1991] Brit. Tax Rev. 105, at p. 105), or, more basically, a test which requires simply an income earning purpose: Krishna, The Fundamentals of Canadian Income Tax, supra, at pp. 365‑66; E. C. Harris, Canadian Income Taxation (4th ed. 1986), at pp. 191‑92.

All of these tests include some reference to the purpose of an expense. In considering the extent to which a purpose test is appropriate, I wish to make note of the decision of Wilson J. in Mattabi Mines Ltd. v. Ontario (Minister of Revenue), 1988 58 (SCC), [1988] 2 S.C.R. 175. Therein, Wilson J. considered a taxation provision substantially similar to s. 18(1)(a), she examined jurisprudence on s. 18(1)(a), and she came to the following conclusion (at p. 189):

The only thing that matters is that the expenditures were a legitimate expense made in the ordinary course of business with the intention that the company could generate a taxable income some time in the future.

In making this statement, and in proceeding to discuss an interpretation bulletin reference to the "income‑earning process" (at pp. 189‑90), Wilson J. was not considering the personal versus business expense dichotomy. Instead, she was rejecting both the need for a causal connection between a particular expenditure and a particular receipt, and the suggestion that a receipt must arise in the same year as an expenditure is incurred. Her reference to the "ordinary course of business" is merely a reflection of these other conclusions. It is not a rejection of the idea that s. 18(1)(a) focuses upon purpose, nor does it signal her acceptance of an "income-earning process" test intended to distinguish analytically between personal and business expenses. Indeed, in this regard, it is instructive to note Wilson J.'s reference to the "intention" of the taxpayer.

The appropriateness of a purpose test must also be measured against other tests which have been proposed in this case. The respondent in this Court, as in the courts below, argued in favour of what can be called an "income-producing circle" test. According to such a test, a distinction should be made between expenses incurred in order to approach the income-producing circle (such as clothing and commuting expenses, for example), and those which are incurred within the circle itself. Of course, the test would presuppose that only the latter would be deductible as business expenses.

I consider this circle test of limited help as an analytic tool in a case such as the one at hand though it may be of assistance in understanding generally accepted business expenses. By suggesting that there is a line dividing business expenses per se and those expenses incurred in order to approach the realm of business, this so‑called test does nothing more than restate the business/personal dichotomy already being examined. What is worse, by disguising this restatement as a test, the circle concept can have pernicious effects. The trial judge recognized one of these, namely, that the circle concept seems to suggest that the content of the income-producing circle has been fixed in time. To the extent that the content of the circle has been informed by gendered and irrelevant considerations, the circle concept may be unwilling to respond.

In my view, the test has a second problem: it conjures up an image of an income-producing circle which is entirely separate and apart from a domestic circle. Taking commuting expenses as an example, one tends to imagine a taxpayer leaving the "home circle" and incurring expenses in order to approach the "income-producing circle". This is a simplistic vision of the modern business world. One need only consider the deduction available for the home office (s. 18(12) of the Act) to realize that a taxpayer's personal and business activities may be closely related within the taxpayer's home itself. Further, to the extent that this Court is now asked to consider whether the needs of women have been disregarded in the definition of "business expenses", it is misleading to presuppose that activities occurring within the domestic environment are, for that reason alone, more likely to be excluded from the income-producing circle, since the concerns of women have been confined to the domestic environment as an historical matter.

A test not unrelated to this circle test is that which asks whether an expense is an expense "of the trader" or "of the trade". J. E. Hershfield, supra, describes how this language entered Canadian law by way of quotation in Dominion Natural Gas, supra, at p. 28 (per Crocket J.). Hershfield goes on to argue that part of the deductibility test must be "whether the expense was an incident of the trade ‑‑ part of the business operation itself. That the `trader' incurred the expense to earn income from the business is not enough" (p. 44:9). Viewed one way, this might be seen as little more than a restatement of the circle argument, since it might be difficult to distinguish between an "income-producing circle" and "the business operation itself". Viewed more charitably, however, to ask whether an expense is of the trader or of the trade may be simply to realize that the deductibility of an expense is "not to be determined by isolating it" (Hershfield, supra, at p. 44:8). To the extent that this test simply requires child care expenses to be viewed in the context of the appellant's business as a lawyer, I agree with it.

Concepts such as the "income-producing circle" or the "trade/trader" distinction suggest that the classification of an expense involves a straightforward question. For example, these concepts ask: Does the expense satisfy a need of the business or a need of the taxpayer? Without meaning to retract the critique of these concepts just offered, I frankly acknowledge that such a question is often sufficient when one classifies expenses. However, I do not regard this question as necessarily sufficient in cases, such as the present case, which involve the allegation that an expense is a "personal expense". In other words, there are a great many expenses which are never alleged to be "personal expenses" at all. With respect to these, the approach is ordinarily much more objective, and the analysis is generally confined to s. 9 of the Act. It is only when an expense is alleged to be a "personal expense" that one must go further and ask what is meant by the concept of "business need".

Upon reflection, therefore, no test has been proposed which improves upon or which substantially modifies a test derived directly from the language of s. 18(1)(a). The analytical trail leads back to its source, and I simply ask the following: did the appellant incur child care expenses for the purpose of gaining or producing income from a business?

As in other areas of law where purpose or intention behind actions is to be ascertained, it must not be supposed that in responding to this question, courts will be guided only by a taxpayer's statements, ex post facto or otherwise, as to the subjective purpose of a particular expenditure. Courts will, instead, look for objective manifestations of purpose, and purpose is ultimately a question of fact to be decided with due regard for all of the circumstances. For these reasons, it is not possible to set forth a fixed list of circumstances which will tend to prove objectively an income gaining or producing purpose. Professor Brooks has, however, in summarizing some re‑occurring factual patterns, elucidated factors to be considered, and I find his discussion generally helpful: supra, at pp. 256‑59. In the following paragraphs, I will make reference to some of these factors.

It may be relevant in a particular case to consider whether a deduction is ordinarily allowed as a business expense by accountants. This is not to revert to the notion that accountancy will govern under s. 9(1) of the Act, since accountants "have no special expertise in making" the business versus personal expense judgment (Brooks, supra, at p. 256). Instead, such evidence may simply indicate that a particular kind of expenditure is widely accepted as a business expense. Similarly, it may be relevant to consider whether the expense is one normally incurred by others involved in the taxpayer's business. If it is, there may be an increased likelihood that the expense is a business expense.

It may also be relevant to consider whether a particular expense would have been incurred if the taxpayer was not engaged in the pursuit of business income. Professor Brooks comments upon this consideration in the following terms (at p. 258):

If a person would have incurred a particular expense even if he or she had not been working, there is a strong inference that the expense has a personal purpose. For example, it is necessary in order to earn income from a business that a business person be fed, clothed and sheltered. However, since these are expenses that a person would incur even if not working, it can be assumed they are incurred for a personal purpose ‑‑ to stay alive, covered, and out of the rain. These expenses do not increase significantly when one undertakes to earn income.

I recognize that in discussing food, clothing and shelter, I am adverting to a "but for" test opposite to the one discussed earlier. Here, the test suggests that "but for the gaining or producing of income, these expenses would still need to be incurred". I must acknowledge that because it is a "but for" test, it can be manipulated. One can argue, for example, that "but for work, the taxpayer would not still require expensive dress clothes". However, in most cases, the manipulation can be easily rejected. Continuing with the same example, one can conclude that the expense of clothing does "not increase significantly" (Brooks, supra, at p. 258) in tax terms when one upgrades a wardrobe. Alternatively, one can focus upon the change in clothing as a personal choice. Or, finally, considering that all psychic satisfactions represent a form of consumption within the ideal of a comprehensive tax base, one can focus upon the increased personal satisfaction associated with possessing a fine wardrobe.

Taking up this last point, I note that in a tax system which is at least partly geared toward the preservation of vertical and horizontal equities ("[h]orizontal equity merely requires that equals' be treated equally, with the term equals' referring to equality of ability to pay" and "vertical equity merely requires that the incidence of the tax burden should be more heavily borne by the rich than the poor": V. Krishna, "Perspectives on Tax Policy" in Essays on Canadian Taxation, supra, at pp. 5 and 6-7), one seeks to prevent deductions which represent personal consumption. To the extent that a taxpayer can make a lifestyle choice while maintaining the same capacity to gain or produce income, such choices tend to be seen as personal consumption decisions, and the resultant expenses as personal expenses. Professor Brooks gives the example of commuting expenses, which necessarily vary according to where one chooses to live (assuming, of course, that the taxpayer has some choice in this regard). In some cases, it may be helpful to analyze expenses in these terms.

Since I have commented upon the underlying concept of the "business need" above, it may also be helpful to discuss the factors relevant to expense classification in need-based terms. In particular, it may be helpful to resort to a "but for" test applied not to the expense but to the need which the expense meets. Would the need exist apart from the business? If a need exists even in the absence of business activity, and irrespective of whether the need was or might have been satisfied by an expenditure to a third party or by the opportunity cost of personal labour, then an expense to meet the need would traditionally be viewed as a personal expense. Expenses which can be identified in this way are expenses which are incurred by a taxpayer in order to relieve the taxpayer from personal duties and to make the taxpayer available to the business. Traditionally, expenses that simply make the taxpayer available to the business are not considered business expenses since the taxpayer is expected to be available to the business as a quid pro quo for business income received. This translates into the fundamental distinction often drawn between the earning or source of income on the one hand, and the receipt or use of income on the other hand.

It remains to consider the appellant's child care expenses in light of this discussion. First, it is clear on the facts that the appellant would not have incurred child care expenses except for her business. It is relevant to note in this regard that her choice of child care was tailored to her business needs. As a lawyer, she could not personally care for her children during the day since to do so would interfere with client meetings and court appearances, nor could she make use of institutionalized daycare, in light of her working hours. These are points which were recognized by the trial judge.

Second, however, it is equally clear that the need which is met by child care expenses on the facts of this case, namely, the care of the appellant's children, exists regardless of the appellant's business activity. The expenses were incurred to make her available to practise her profession rather than for any other purpose associated with the business itself.

Third, I note that there is no evidence to suggest that child care expenses are considered business expenses by accountants. There is, however, considerable reason to believe that many parents, and particularly many women, confront child care expenses in order to work. There is, first of all, the evidence of the expert witness, already discussed above. In addition, the record before this Court includes a report by Status of Women Canada, entitled the Report of the Task Force on Child Care (1986), which demonstrates that a very large number of working parents require non‑parental care for their children (see, e.g., Table 4.2). As well, the intervener the Canadian Bar Association presented this Court with survey information which specifically addresses the experience of lawyers in Ontario. That information suggests that for lawyers with children, a significant proportion of child care responsibility is borne by paid child care workers, and the mean proportion is over 250 percent greater for women (25.56 hours per week) than for men (9.53 hours per week): Law Society of Upper Canada, Transitions in the Ontario Legal Profession (1991). This demographic picture may increase the likelihood that child care expenses are a form of business expense.

Finally, as a fourth point of analysis, I am uncomfortable with the suggestion that the appellant's decision to have children should be viewed solely as a consumption choice. I frankly admit that there is an element of public policy which feeds my discomfort. In Brooks v. Canada Safeway Ltd., 1989 96 (SCC), [1989] 1 S.C.R. 1219, Dickson C.J. stated (at p. 1243):

That those who bear children and benefit society as a whole thereby should not be economically or socially disadvantaged seems to bespeak the obvious. It is only women who bear children; no man can become pregnant ... it is unfair to impose all of the costs of pregnancy upon one half of the population.

The appellant and her husband freely chose to have children, and they further determined that the costs of child care would be paid by the appellant. However, it would be wrong to be misled by this factual pattern. Pregnancy and childbirth decisions are associated with a host of competing ethical, legal, religious, and socioeconomic influences, and to conclude that the decision to have children should ‑‑ in tax terms ‑‑ be characterized as an entirely personal choice, is to ignore these influences altogether. While it might be factually correct to regard this particular appellant's decision to have children as a personal choice, I suggest it is more appropriate to disregard any element of personal consumption which might be associated with it.

What is more, I note that it is not a necessary part of this conclusion that the appellant bears a legal obligation to care for her children, as might be suggested by the following oft‑quoted analogy originating from the United States (M. J. McIntyre, "Evaluating the New Tax Credit for Child Care and Maid Service" (1977), 5 Tax Notes 7, at p. 8):

The child care deduction was somewhat different because of the legal obligation to care for children. No one would suggest that the costs of caring for a pet elephant are deductible, simply because it is impossible to go to work and leave the elephant alone. What made child care different was that a parent, after making the quintessential personal choice to have a child, could not undo that decision by giving the child to the local zoo. This difference, however, is not sufficient to convert child care into a business expense....

The appellant's legal obligation to care for her children is a relevant consideration in this case: see, e.g., Criminal Code, R.S.C., 1985, c. C‑46, s. 215. However, it is fallacious to suppose that one's decision to have a pet and one's decision to have a child can be distinguished solely on this basis. As indicated immediately above, these decisions can also be distinguished if one chooses to ignore any element of personal consumption associated with having children, or to borrow a phrase, if one rejects that a child is always "the quintessential personal choice" of the parent.

The factors so far analyzed suggest that, considering only ss. 9, 18(1)(a) and 18(1)(h), arguments can be made for and against the classification of the appellant's child care expenses as business expenses. In another case, the arguments might be differently balanced, since the existence of a business purpose within the meaning of s. 18(1)(a) is a question of fact, and that the relative weight to be given to the factors analyzed will vary from case to case. However, in general terms, I am of the view that child care expenses are unique: expenditures for child care can represent a significant percentage of taxpayer income, such expenditures are generally linked to the taxpayer's ability to gain or produce income, yet such expenditures are also made in order to make a taxpayer available to the business, and the expenditures are incurred as part of the development of another human life. It can be difficult to weigh the personal and business elements at play.

In this respect, Professor Arnold analyzed the nature of child care expenses soon after s. 63 was introduced into the Act. After addressing the extent to which Canadian courts have rationalized the personal versus business expense distinction generally, he makes the following statement (supra, at p. 39):

This analysis leads one to the conclusion that the distinction between personal and business expenses does not provide a satisfactory rationale for the treatment of child care expenses. Child care expenses are characterized by personal elements but they also have significant business elements which distinguish them from the "purely" personal expenses.

I agree with this statement, in so far as it recognizes that when one considers deductibility solely with reference to ss. 9, 18(1)(a) and 18(1)(h), child care expenses may remain difficult to classify.

I am aware that if I were compelled to reach a conclusion with respect to the proper classification of child care expenses with reference to only ss. 9, 18(1)(a) and 18(1)(h) of the Act, such a conclusion would involve competing policy considerations. On the one hand, there is value in the traditional tax law test which seeks to identify those expenses which simply make a taxpayer available to the business, and which proceeds to classify such expenses as "personal" for the reason that a "personal need" is being fulfilled. On the other hand, however, it is inappropriate to disregard lightly the policy considerations which suggest that choice and consumption have no role to play in the classification of child care expenses.

In the Federal Court of Appeal, a needs-based analysis carried the day. The court concluded that "the concept of a business expense has been developed exclusively in relation to the commercial needs of the business, without any regard to the particular needs of those in charge" (p. 523). If other policy considerations are disregarded, an availability analysis virtually compels this conclusion. In this regard, however, I find interesting the comments of Professor Macklin which relate to the conclusion of the Federal Court of Appeal just quoted (A. Macklin, "Symes v. M.N.R.: Where Sex Meets Class" (1992), 5 C.J.W.L. 498, at pp. 507-8):

This assertion failed to acknowledge that as long as business has been the exclusive domain of men, the commercial needs of business have been dictated by what men (think they) need to expend in order to produce income. The fact that these expenditures also have a "personal" element was never treated as a complete bar.... It seems closer to the truth to suggest that these practices inhere in the way men, or some men, engage in business. Of course, since men have (until very recently) been the only people engaging in business, it is easy enough to conflate the needs of businessmen with the needs of business. Women's needs in doing business will necessarily be different, and one might reasonably demand a reconceptualization of "business expenses" that reflects the changing composition of the business class.

Although I wish to make no comment about expenses which have a "personal" element but which are nonetheless currently treated as business expenses, and although Professor Macklin fails to note the role of taxpayer availability in her discussion of "needs", it is difficult to argue that history has not conflated the "needs of businessmen with the needs of business" as Professor Macklin suggests. Therefore, to the extent that traditional income tax law would classify child care expenses as "personal" simply because such expenses are incurred in order to make the taxpayer "available" to the business -- and in the absence of s. 63 -- it might be correct to assert that the changing composition of the business class and changing social structure demand a reconceptualization.

However, I find it unnecessary to determine whether reconceptualization is appropriate having regard to the presence of s. 63 in the Act. Section 63 cannot be lightly disregarded (E. A. Driedger, Construction of Statutes (2nd ed. 1983), at p. 87):

... the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.

In fact, as I will now attempt to demonstrate, I do not believe that ss. 9, 18(1)(a) and 18(1)(h) can be interpreted to account for a child care business expense deduction, in light of the language used in s. 63.

(iv)The Effect of s. 63

The appellant argues that the presence of s. 63 in the Act should not affect the deductibility of child care costs as business expenses. She suggests that the language of that provision does not operate to confine taxpayers in making deductions for child care expenses. Additionally, she relies upon the decision in Olympia Floor & Wall Tile (Quebec) Ltd. v. Minister of National Revenue, [1970] Ex. C.R. 274, to suggest that when a taxpayer has expenses which exceed an amount made deductible by a specific provision of the Act, the taxpayer can have recourse to a more general provision in order to deduct the full amount. In my opinion, her arguments must fail.

Considering first the language of s. 63, it is readily apparent that the Act's definition of "child care expenses" specifically comprehends the purpose for which the appellant incurred her nanny expenses. According to part of that definition, a child care expense is one incurred in order to provide child care services "to enable the taxpayer ... to carry on a business either alone or as a partner": s. 63(3)(a)(i)(B). Furthermore, s. 63(1)(e) operates to cap the deduction with reference to "earned income", which is defined in s. 63(3)(b)(iii) to include "incomes from all businesses carried on either alone or as a partner actively engaged in the business".

The fact that this language accurately describes the situation at hand ‑‑ i.e., a law partner paying child care in order to work ‑‑ is itself persuasive reason to suppose that ss. 9, 18(1)(a) and 18(1)(h) cannot be interpreted to permit a child care business expense deduction. Décary J.A., in the Federal Court of Appeal below, considered this language to be "clear and not open to question", and suggested that s. 63 is "really a code in itself, complete and independent" (p. 525). In addition to the plain language of the quoted provisions, however, there are other reasons to believe that this is the correct interpretation.

One such reason is the structure of s. 63 itself. Section 63 places a number of limitations upon the child care deduction. It varies the deduction according to the taxpayer's earned income, or according to the product obtained when a fixed sum is multiplied by the number of children requiring care, subject to an annual ceiling. In addition, when two or more taxpayers have contributed during a year to the support of a child, the scheme established by s. 63 ordinarily limits the deduction in a further way: it makes the deduction available only to the lower earning supporter ‑‑ see s. 63(2).

To the extent that s. 63 intends to limit child care expense deductions to lower earning supporters, the appellant's position could substantially undermine that intent. In this case, the appellant and her husband admittedly made a "family decision" to the effect that the appellant alone bears the financial burden of child care: see Federal Court of Appeal judgment, at p. 513. By proffering evidence on this point, the appellant would seek to avoid the definition of "supporting person" in s. 63(3)(d) of the Act, which would statutorily define her husband as such a person, notwithstanding the "family decision". In the result, she would take a complete deduction of the child care expenses, free from the consideration of whether or not she is the lower earning supporter.

The appellant's approach is unworkable. For example, consider the case of two spouses living with an eligible child, one of whom is an employee earning a low income, and the other of whom is a businessperson earning a higher income. The approach of the appellant clearly invites this couple to make a "family decision" in order to establish that the cost of child care is the sole responsibility of the taxpayer with business income. Without casting aspersions upon the appellant, I fear that in many cases there would be more bookkeeping than reality about such a decision. The courts being poorly suited to assess the validity of "family decisions" of this sort, I am inclined to believe that the intent of s. 63 is to prevent the need for such assessments. Further, by statutorily defining both parents to be responsible for child care expenses for tax purposes, s. 63(3)(d) is entirely congruent with a contemporary understanding of parental obligations in that regard.

Additionally, it is important to acknowledge the context of s. 63 within the Act as a whole. Section 63 exists within Division B, subdivision e of the Act. As set out in s. 3(c), the deductions permitted by this subdivision are made only after income from each of the various sources has been calculated. In this regard, it is relevant to consider s. 4. Section 4(1)(a) of the Act provides that each source of income is initially considered in isolation as one determines the taxpayer's overall income for the year. Then, s. 4(2) provides that in applying s. 4(1), "no deductions permitted by sections 60 to 63 are applicable either wholly or in part to a particular source".

Brief reference to s. 4(2) is made in the respondent's factum. Aside from this reference, the section was not otherwise discussed by the parties in this case, and it has not been the subject of any significant commentary of which I have been made aware. For this reason, I do not wish to overstate the importance of s. 4(2) to my analysis. Section 4(2) obviously means that the child care expense deduction in s. 63 is not referable to a particular source of income. In other words, the s. 63 calculation is not relevant to the computation of business income. Less obviously, however, it may also mean that the type of deduction provided for in s. 63 (i.e., any deduction in respect of child care expenses) cannot occur within the source calculations. In other words, s. 4(2) may be further evidence that s. 63 is intended to be a complete legislative response to the child care expense issue.

At this point, it is appropriate to discuss Olympia Floor & Tile, supra, upon which the appellant relied in order to deny that the specific deduction allowed by s. 63 must override the potential for a more general deduction elsewhere in the Act. In that case, unchallenged evidence was led to establish that between 25 and 30 percent of a taxpayer's sales in each of two taxation years went toward charitable gifts. The taxpayer sought to deduct the full amount of such gifts, arguing that the sums were expended in order to increase future sales, and that for this reason, they constituted business expenses. The Minister took the position, however, that the deductibility of the gifts was governed by s. 27(1)(a) of the Act (now see s. 118.1) which established that a taxpayer could deduct charitable "gifts" not exceeding 10 percent of the taxpayer's taxable income for the year.

Jackett P. accepted the taxpayer's position. He was convinced that the taxpayer made the contributions largely, if not entirely, "for the purpose of increasing its sales and only subsidiarily, if at all, for charitable or benevolent reasons" (p. 276). For this reason, he was satisfied that the expenses could constitute business expenses, and the important question became the effect of s. 27(1)(a). Jackett P. recognized that s. 27(1)(a) calculated the allowable charitable deduction with reference to the taxpayer's income, and stated (at p. 282):

... it follows that what is being permitted by that provision is a deduction of an amount that has been given out of the corporation's income after it has been earned and not a deduction of an amount that has been laid out as part of the income earning process....

From this position, it was then a simple matter for Jackett P. to conclude that the taxpayer's expense was not the sort of expense contemplated by the language of s. 27(1)(a). He did so in the following terms (at p. 284):

In my view, when a taxpayer makes an outlay for the purpose of producing income‑‑i.e. as part of his profit making process‑‑even though that outlay takes the form of a "gift" to a charitable organization, it is not a "gift" within the meaning of that word in section 27(1)(a) which, by reason of the place it holds in the process of computing taxable income, was obviously intended to confer a benefit on persons who made contributions out of income and was not intended to provide deductions for outlays made in the course of the income earning process. [Emphasis in original.]

In the result, therefore, the taxpayer could deduct the charitable donations as part of its business profit calculation, notwithstanding the specific provision relating to the deduction of charitable gifts.

The decision of Jackett P. in Olympia Floor & Tile, supra, has recently been followed in Impenco Ltd. v. Minister of National Revenue, 88 D.T.C. 1242 (T.C.C.). I wish to express neither approval nor disapproval of the approach taken in either case with respect to the charitable donation issue per se. Instead, it is sufficient to highlight the real basis for the decision in Olympia Floor & Tile. In my view, what that case says is that a particular expenditure, such as a charitable donation, may be made for more than one purpose. In such a case, it will be relevant to consider whether the actual purpose of the expenditure is addressed in the Act. If a specific provision exists which limits deductibility in respect of that purpose, then that should be the end of the matter. If, however, the purpose is not addressed in a specific provision, recourse may be had to more general rules governing deductibility.

In this case, the appellant willingly admits ‑‑ indeed, she argues ‑‑ that she has incurred child care expenses in order to gain or produce income. Only one purpose for the expenses has been advanced. On the facts of Olympia Floor & Tile, supra, a donation made with a truly charitable intent (out of a taxpayer's previously calculated "income") would undoubtedly have been limited by the specific language of s. 27(1)(a). Likewise, on the facts of this case, the purpose for which the appellant maintains she has incurred her child care expenses falls squarely within the language of s. 63; they were, she argues, incurred in order to "enable" her to "carry on a business ... as a partner" within the meaning of s. 63(3)(a)(i)(B), and they were incurred for that reason alone. Since that purpose is specifically addressed in s. 63 of the Act, she cannot claim a deduction employing that same purpose under s. 9. Thus, I do not find persuasive support for the appellant's position from Olympia Floor & Tile, supra.

Although it is unnecessary to my conclusion, I wish to note, finally, that evidence of Parliamentary intent appears to support my view. At the outset of his reasons, Décary J.A. in the Federal Court of Appeal reviewed the fiscal history of child care expenses, as well as government policies on such expenses, and I consider his discussion helpful. I wish, however, to make particular note of the proposals which directly led to the 1972 introduction of s. 63. In Proposals for Tax Reform (1969) (E. J. Benson, Minister of Finance), the following approach to child care expenses is advocated (at p. 15):

2.7 We propose to permit deduction of the child care expenses that face many working parents today. The problem of adequately caring for children when both parents are working, or when there is only one parent in the family and she or he is working, is both a personal and a social one. We consider it desirable on social as well as economic grounds to permit a tax deduction for child care expenses, under carefully controlled terms, in addition to the general deduction for children.

2.9 This new deduction for child care costs would be a major reform. While it is not possible to make an accurate forecast of the number who would benefit from this new deduction, it seems likely to be several hundred thousand families. It would assist many mothers who work or want to work to provide or supplement the family income, but are discouraged by the cost of having their children cared for. [Emphasis added.]

These proposals suggest to me that s. 63 was intended by Parliament to address comprehensively child care expenses. I cannot imagine that a system which allowed some parents to deduct expenses under general provisions respecting business income, but which confined others to a s. 63 regime, would permit deductibility "under carefully controlled terms" within the meaning of the above quotation. Further, I am not impressed by the suggestion that Parliament intended s. 63 to limit deductibility only for employees. The proposals do not specify the kind of "work" which is to be encouraged, and the language of s. 63 clearly addresses income from business.

For these reasons, a straightforward approach to statutory interpretation has led me to conclude that the Act intends to address child care expenses, and does so in fact, entirely within s. 63. It is not necessary for me to decide whether, in the absence of s. 63, ss. 9, 18(1)(a) and 18(1)(h) are capable of comprehending a business expense deduction for child care. Given s. 63, however, it is clear that child care cannot be considered deductible under principles of income tax law applicable to business deductions.

(b)If child care expenses are not otherwise deductible under principles of income tax law applicable to business deductions, are they deductible as such using the values of the Charter as an interpretive aid?

The appellant argued that the values of the Charter can be used in this case as an interpretive aid. In particular, reliance is placed upon the decisions of this Court in Hills v. Canada (Attorney General), supra, and Slaight Communications Inc. v. Davidson, supra.

In Hills, supra, this Court was asked to interpret the meaning of the word "financing" in unemployment insurance legislation. In reaching a decision, this Court referred, inter alia, to the purpose of the provision containing the word, to the purpose of the statute as a whole, and to the proposition that doubt should be resolved in favour of the claimant. Finally, my colleague L'Heureux‑Dubé J. had occasion to state the following (at p. 558):

Appellant, while not relying on any specific provision of the Charter, nevertheless urged that preference be given to Charter values in the interpretation of a statute, namely freedom of association. I agree that the values embodied in the Charter must be given preference over an interpretation which would run contrary to them....

In a similar fashion, in Slaight Communications, supra, this Court was asked to determine whether the language of certain labour legislation conferred upon an adjudicator the power to make a particular kind of order. In responding, Lamer J. (as he then was) stated the following (at p. 1078):

Although this Court must not add anything to legislation or delete anything from it in order to make it consistent with the Charter, there is no doubt in my mind that it should also not interpret legislation that is open to more than one interpretation so as to make it inconsistent with the Charter and hence of no force or effect. Legislation conferring an imprecise discretion must therefore be interpreted as not allowing the Charter rights to be infringed.

I agree with the sentiment reflected in both of these quotations, but I fail to see their relevance in this case. In both Hills and Slaight Communications, this Court was confronted with statutory language which was ambiguous. In each case, the values of the Charter were consulted to resolve the ambiguity. However, each case recognizes that to consult the Charter in the absence of such ambiguity is to deprive the Charter of a more powerful purpose, namely, the determination of a statute's constitutional validity. If statutory meanings must be made congruent with the Charter even in the absence of ambiguity, then it would never be possible to apply, rather than simply consult, the values of the Charter. Furthermore, it would never be possible for the government to justify infringements as reasonable limits under s. 1 of the Charter, since the interpretive process would preclude one from finding infringements in the first place.

Had s. 63 not been present, it might be arguable that the equality values in the Charter could have informed the interpretation of ss. 9, 18(1)(a) and 18(1)(h) of the Act. However, as already discussed, s. 63 eliminates any question of ambiguity, and by so doing, also eliminates the need for recourse to Charter values in this case. My analysis of the Income Tax Act has ineluctably led me to conclude that the Act does not permit a business expense deduction in respect of child care as part of its s. 9 profit calculation, but instead limits the child care deduction in accordance with s. 63.

Accordingly, with respect to those taxation years not directly reviewable in constitutional terms by s. 15(1) of the Charter, I would affirm the reassessments by Revenue Canada which disallowed the deductions claimed by the appellant.

2.If child care expenses are not deductible as part of the determination of profit under s. 9(1) of the Act, has there been a violation of s. 15(1) of the Charter?

(a)Can s. 15(1) of the Charter be Applied to the Income Tax Act?

A preliminary "debate" took place before this Court which questioned the propriety of using the Charter to challenge the scheme of deductibility created by the Act. With respect to this debate, I have two brief comments.

First, it has been suggested that to subject the Act to the Charter would risk "overshooting" the purposes of the Charter. However, the danger of "overshooting" relates not to the kinds of legislation which are subject to the Charter, but to the proper interpretive approach which courts should adopt as they imbue Charter rights and freedoms with meaning: see R. v. Big M Drug Mart Ltd., 1985 69 (SCC), [1985] 1 S.C.R. 295, at p. 344. Second, it has been said that courts should defer to legislatures with respect to difficult economic questions. However, support for this proposition is said to come from cases in which a degree of deference has been exhibited as part of a s. 1 Charter analysis: see, e.g., PSAC v. Canada, 1987 89 (SCC), [1987] 1 S.C.R. 424, at p. 442. Such cases do not advocate a deferential approach at any earlier stage of Charter analysis.

Since neither of the two propositions upon which this preliminary "debate" was founded can withstand even brief critical analysis, I consider it unnecessary to comment further in this regard. The Act is certainly not insulated against all forms of Charter review.

(b)Section 15(1) of the Charter: A Method of Analysis

Before turning to the specifics of the s. 15(1) infringement alleged by the appellant, it is convenient to set forth some of the basic principles of Charter equality analysis which will structure my approach. Many of these principles are derived directly from Andrews v. Law Society of British Columbia, supra, wherein this Court began the important process of giving shape to s. 15(1) of the Charter. As I restate these principles, however, I must be mindful of the fact that equality "is an elusive concept and, more than any of the other rights and freedoms guaranteed in the Charter, it lacks precise definition": Andrews, at p. 164.

At the outset, it is important to realize that, in order to determine whether particular facts demonstrate equality or inequality, one must necessarily undertake a form of comparative analysis. For the purposes of s. 15(1), Andrews has rejected that the analysis should be governed by the comparison of similarly situated persons. Section 15(1) guarantees more than formal equality; it guarantees that equality will be mainly concerned with "the impact of the law on the individual or the group concerned": Andrews, at p. 165. McIntyre J. stated (at p. 164) that equality

is a comparative concept, the condition of which may only be attained or discerned by comparison with the condition of others in the social and political setting in which the question arises. It must be recognized at once, however, that every difference in treatment between individuals under the law will not necessarily result in inequality and, as well, that identical treatment may frequently produce serious inequality. [Emphasis added.]

The s. 15(1) challenge, of course, is to determine whether a "difference in treatment" between individuals, or an "identical treatment" of individuals, engages the Charter. Stated another way, the goal is to ensure that "a law expressed to bind all should not because of irrelevant personal differences have a more burdensome or less beneficial impact on one than another": Andrews, at p. 165. In pursuit of this goal, McIntyre J. in Andrews took the comparative analysis a step further and suggested that the Charter was not intended to eliminate all distinctions, but, in keeping with the language and purpose of s. 15, only those distinctions which are "discriminatory".

Fortunately, in both Andrews and the present case, this Court has been able to access a rich jurisprudence associated with human rights legislation. The concept of "discrimination" within s. 15(1) of the Charter has been informed by this jurisprudence, and McIntyre J.'s definition of the term in Andrews is proof of its utility. McIntyre J. stated (at p. 174):

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, and advantages available to other members of society.

McIntyre J. went on to conclude that an approach to s. 15(1) which comprehends both enumerated and analogous grounds of discrimination most closely accords with this definition. One reason for his conclusion is that such an approach has the advantage of leaving questions of justification to s. 1 of the Charter.

It may be helpful at this stage to underscore two aspects of the discrimination concept which emanated from Andrews. First, it is clear that a law may be discriminatory even if it is not directly or expressly discriminatory. In other words, adverse effects discrimination is comprehended by s. 15(1): see also Tétreault‑Gadoury v. Canada (Employment and Immigration Commission), 1991 12 (SCC), [1991] 2 S.C.R. 22, at p. 41; McKinney v. University of Guelph, 1990 60 (SCC), [1990] 3 S.C.R. 229, at p. 279. In Ontario Human Rights Commission v. Simpsons‑Sears Ltd., 1985 18 (SCC), [1985] 2 S.C.R. 536, McIntyre J. contrasted direct discrimination to adverse effects discrimination in the employment context (at p. 551):

A distinction must be made between what I would describe as direct discrimination and the concept already referred to as adverse effect discrimination in connection with employment. Direct discrimination occurs in this connection where an employer adopts a practice or rule which on its face discriminates on a prohibited ground. For example, "No Catholics or no women or no blacks employed here."... On the other hand, there is the concept of adverse effect discrimination. It arises where an employer for genuine business reasons adopts a rule or standard which is on its face neutral, and which will apply equally to all employees, but which has a discriminatory effect upon a prohibited ground on one employee or group of employees in that it imposes, because of some special characteristic of the employee or group, obligations, penalties, or restrictive conditions not imposed on other members of the work force.

In the same case, McIntyre J. came to the related conclusion that animus is irrelevant to discrimination. A finding of discrimination can be made even if there has been no intention to discriminate.

The second aspect of discrimination I wish to note may be less a requirement of s. 15(1), and more of an analytical trend which can be discerned in Andrews, supra, and which has been expanded in subsequent cases. In considering the extent to which non‑citizens permanently resident in Canada could claim the protection of s. 15(1), McIntyre J. suggested in Andrews that this group constitutes a "good example of a `discrete and insular minority'" (at p. 183). In borrowing this statement from American jurisprudence, McIntyre J. adverted to the need to contextualize the discrimination analysis. Wilson J. expanded upon this beginning in R. v. Turpin, 1989 98 (SCC), [1989] 1 S.C.R. 1296, where she stated (at pp. 1331‑32):

In determining whether there is discrimination on grounds relating to the personal characteristics of the individual or group, it is important to look not only at the impugned legislation which has created a distinction that violates the right to equality but also to the larger social, political and legal context.... Accordingly, it is only by examining the larger context that a court can determine whether differential treatment results in inequality or whether, contrariwise, it would be identical treatment which would in the particular context result in inequality or foster disadvantage. A finding that there is discrimination will, I think, in most but perhaps not all cases, necessarily entail a search for disadvantage that exists apart from and independent of the particular legal distinction being challenged.

What is recognized by both Andrews and Turpin is that the working definition of "discrimination" established in the former case is not self‑applying. Instead, within the analytical parameters established by that definition, this Court must "search for indicia of discrimination": Turpin, at p. 1333.

In R. v. Swain, 1991 104 (SCC), [1991] 1 S.C.R. 933, Lamer C.J. summarized s. 15(1) jurisprudence in terms which encapsulate the main elements of the s. 15(1) discussion I have set out here. He stated (at p. 992):

The court must first determine whether the claimant has shown that one of the four basic equality rights has been denied (i.e., equality before the law, 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 available to others. Furthermore, in determining whether the claimant's s. 15(1) rights have been 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.

Before making this statement, the Chief Justice acknowledged that it is unwise to attempt exhaustive definitions during the early years of s. 15(1) interpretation (see Turpin, supra, at p. 1326). Likewise, I must mention that by repeating points set out in other cases, I am not proposing that those points now constitute a "test" for s. 15(1). Rather, I simply believe that on the facts of this case, it is not necessary to go beyond the view of equality summarized above.

(c)Section 15(1) of the Charter in this Case

The appellant argues that she has been denied the equal benefit of the law in this case, and she further argues that this inequality constitutes sex‑based discrimination. More particularly, in light of my interpretation of the Act, the appellant would seem to argue two related points. First, she seems to argue that an Income Tax Act deduction may be characterized as a benefit of which she can be deprived. Second, she seems to argue that s. 15(1) of the Charter is infringed by s. 63 of the Act to the extent that s. 63 prevents her from fully deducting her child care expenses under s. 9. The appellant's arguments relate only to that portion of her child care expenses incurred after April 17, 1985, the date on which s. 15(1) became operative.

It is important to clarify my understanding of the appellant's Charter challenge at the outset, since the focus of her s. 15(1) attack is by no means obvious. In particular, I must deal with the appellant's preliminary characterization of Income Tax Act deductions as "benefits" which are equivalent to "government expenditures". This characterization implicitly involves a tax theory concept known as the "tax expenditure". To prevent that concept from introducing confusion with respect to the s. 15(1) challenge, I must comment upon it briefly.

In his important work, Pathways to Tax Reform (1973), Professor Stanley S. Surrey of Harvard proposed that a deduction which departs from the normative tax system is, in many ways, the logical equivalent of a direct government subsidy. Such deductions have been called "tax expenditures", and they have been explained in the following terms (S. S. Surrey and P. R. McDaniel, Tax Expenditures (1985), at p. 3):

The tax expenditure concept posits that an income tax is composed of two distinct elements. The first element consists of structural provisions necessary to implement a normal income tax, such as the definition of net income, the specification of accounting rules, the determination of the entities subject to tax, the determination of the rate schedule and exemption levels, and the application of the tax to international transactions. These provisions compose the revenue‑raising aspects of the tax. The second element consists of the special preferences found in every income tax. These provisions, often called tax incentives or tax subsidies, are departures from the normal tax structure and are designed to favor a particular industry, activity, or class of persons. They take many forms, such as permanent exclusions from income, deductions, deferrals of tax liabilities, credits against tax, or special rates. Whatever their form, these departures from the normative tax structure represent government spending for favored activities or groups, effected through the tax system rather than through direct grants, loans, or other forms of government assistance.

I believe that to characterize initially the child care expense deduction as a tax expenditure in this case can be problematic. In order to view the child care expense deduction as a government expenditure within the meaning of the above quotation, one must conclude that the deduction is allowed outside the normative tax system, a system which directly disallows the deduction. Following this line of argument, it then seems that two Charter challenges rather than one would arise: one would challenge the expenditure as a benefit, the other would challenge the scheme of the normative system.

In this case, however, my approach to statutory interpretation does not involve any attempt to determine whether s. 63 constitutes a part of the normative tax system or not. In fact, that determination is not a legal goal, but a goal of tax theory. Instead, I have simply found that s. 63 constitutes a complete code with respect to child care expenses. In my view, therefore, there is only one Charter argument available in this case, and the proper focus of that argument is s. 63.

I acknowledge that in enacting s. 63, Parliament chose to dissociate child care expenses from those provisions traditionally viewed as part of the "revenue‑raising aspects of the tax": Surrey and McDaniel, supra, at p. 3. In other words, through s. 63, Parliament chose not to deal with the exclusionary interpretation placed upon ss. 9, 18(1)(a) and 18(1)(h), which has traditionally precluded the deductibility of child care expenses. Parliament chose instead to establish a separate system to address such expenses. Having created such a system in s. 63, however, the relevant question is not whether the government's response should have been theoretically attached to the so‑called normative provisions located elsewhere in the Act, since the Act is silent with respect to normative and tax expenditure classifications. There is no Charter "right" which demands that the Act label a particular deduction as a "business expense deduction". There is only a right to ensure that the Act's systemic response to child care expenses is coherent with the Charter.

In this respect, I agree with the following statement which considers the impact of the tax expenditure concept in Charter analysis (Woodman, "Some Modest Proposals", supra, at p. 386):

Tax expenditure analysis is based on the concept of a normative tax system. In other words, tax expenditures are deviations from something; that is, the revenue‑raising part of the tax system. Therein lies the Achilles heel of the concept. Deciding what comprises the normative tax system is no easy task....

Tax expenditure analysis does not solve the problems inherent in Charter challenges to the income tax system. It does, however, make it clearer what the argument is about. [Emphasis added.]

As alluded to within this quotation, it may become useful, at some stage of a Charter analysis of income taxation, to return to the notion that a deduction can be viewed as a kind of expenditure, since such an approach allows one to examine the government's overall approach to related expenditures. Such an examination, however, is not the first problem to be addressed under a s. 15(1) Charter analysis. As will be discussed, such an examination more properly belongs within a s. 1 analysis.

These brief remarks will, I hope, clarify the proper focus for the appellant's Charter challenge. To proceed, the Charter s. 15(1) question can be restated. Since this Court is confronted with a provision in a federal statute, there is no doubt that a "law", i.e. s. 63, exists within the meaning of s. 15(1): Andrews, supra, at p. 164. The relevant question is, therefore, the following: does s. 63 of the Act infringe the right to equality guaranteed by s. 15(1) of the Charter?

As my summary of s. 15(1) jurisprudence above demonstrates, the answer to this question must come in parts. First, it must be determined whether s. 63 establishes an inequality: does s. 63 draw a distinction (intentionally or otherwise) between the appellant and others, based upon a personal characteristic? Second, if an inequality is found, it must be determined whether the inequality results in discrimination: does the distinction drawn by s. 63 have the effect of imposing a burden, obligation or disadvantage not imposed upon others or of withholding or limiting access to opportunities, benefits and advantages available to others? Finally, assuming that both an inequality and discrimination can be found, it must be determined whether the personal characteristic at issue constitutes either an enumerated or analogous ground for the purposes of s. 15(1) of the Charter.

With respect to whether s. 63 creates a distinction, the language of s. 63 must be separated from its effect. Clearly, the language of that provision does not include terms which expressly limit the child care expense deduction to one sex or the other. Instead, for the sake of simplicity in light of s. 63's multifaceted requirements, I can state that s. 63 creates a facial distinction between those supporting persons who incur child care expenses with respect to an eligible child, and those persons who do not. In passing, I note that, while the trial judge discussed s. 15(1) of the Charter with respect to the "personal characteristics of sex and family or parental status" (p. 84), the appellant's arguments before this Court narrowed and effectively dealt only with the first of these. Facially, then, the distinction created by s. 63 is not based upon the personal characteristic put forward by the appellant, namely, sex.

What, however, is the effect of the distinction created by s. 63? Does s. 63 have an effect which draws a distinction on the basis of sex? More particularly, in light of the manner in which this appeal has been framed, does s. 63 have an adverse effect upon women who must incur child care expenses to enable the pursuit of business income?

An abundance of information was placed before this Court which conclusively demonstrates that women bear a disproportionate share of the child care burden in Canada. For example, at trial, the expert witness asserted this point, and stated further that the burden is disproportionate whether or not women work outside the home. Similarly, Statistics Canada reports that working men are primarily responsible for child care in only six percent of families: S. Crompton, "Who's Looking After the Kids? Child Care Arrangements of Working Mothers", in Statistics Canada, Perspectives on Labour and Income, vol. 3, No. 2 (Summer 1991), at p. 68. Likewise, it has been noted that "most women, even those with very young children, are now in the labour force", and that "fully 70% of employed mothers with children younger than 6 years old work full time": D. S. Lero, et al., Canadian National Child Care Study: Parental Work Patterns and Child Care Needs (1992), at p. 23.

Other material before this Court makes similar points with respect to women entrepreneurs, and particularly, women lawyers. Worthy of note in this regard is the study entitled The Glass Box: Women Business Owners in Canada (M. Belcourt, R. J. Burke and H. Lee‑Gosselin (Canadian Advisory Council on the Status of Women, 1991)), which found that most women entrepreneurs assume primary responsibility for raising and caring for children. Further, I have already made reference to survey results obtained by the Law Society of Upper Canada. Those results suggest that women lawyers spend an average of 48.82 hours per week on child care, whereas the people they live with spend 21.38 hours per week on such care: Transitions, supra, at p. 47. In other words, women lawyers, too, have the primary responsibility for child care, notwithstanding their professional positions.

Based upon this information ‑‑ indeed, even based upon judicial notice ‑‑ I have no doubt that women disproportionately incur the social costs of child care. Whether or not such costs are imposed by society upon women, however, is not the s. 15(1) issue. The s. 15(1) issue is whether s. 63 of the Act has an adverse effect upon women in that it unintentionally creates a distinction on the basis of sex. In my view, in order to establish such an effect, it is not sufficient for the appellant to show that women disproportionately bear the burden of child care in society. Rather, she must show that women disproportionately pay child care expenses. Only if women disproportionately pay such expenses can s. 63 have any effect at all, since s. 63's only effect is to limit the tax deduction with respect to such expenses.

Unfortunately, the factual background of this case tends to obscure the problem faced by the appellant with respect to s. 15(1). As I have already discussed, the appellant and her husband made a "family decision" to the effect that the appellant alone was to bear the financial burden of having children. If, extrapolating from this circumstance, it could be said that women, far more than men, pay child care expenses, the limitations imposed by s. 63 might well create the adverse effect the appellant must demonstrate. However, it is difficult to imagine how such statistics could arise. I say this because the "family decision" made by the appellant and her husband is not mandated by law and public policy. In the Criminal Code provisions alluded to, supra, in contemporary family law, and particularly in the definition of "supporting person" in s. 63(3)(d) of the Act, parents (and particularly parents living with children) are viewed as having joint legal responsibility to care for children. In most households involving more than one supporting person, therefore, regardless of "family decisions", the law will impose the legal duty to share the burden of child care expenses, if not necessarily a duty to share the child care burden itself.

Stated another way, I believe that the appellant has presented this Court with evidence of the social burden of child care, and has asked that from this burden, we infer that a positive child care expense burden is also placed directly upon women, and particularly upon businesswomen, including businesswomen who are married. I note the following remark from the Abella Report on equality in employment (R. S. Abella, Report of the Commission on Equality in Employment (1984), at p. 177):

By Canadian law both parents have a duty to care for their children, but by custom this responsibility has consistently fallen to the mother. It is the mother, therefore, who bears any guilt or social disapprobation for joining the workforce. And it is the mother who normally bears the psychological and actual responsibility for making childcare arrangements.

If the adverse effects analysis is to be coherent, it must not assume that a statutory provision has an effect which is not proved. We must take care to distinguish between effects which are wholly caused, or are contributed to, by an impugned provision, and those social circumstances which exist independently of such a provision. In this case, that means that one must be cognizant of the fact that s. 63 defines child care expenses as an actual expense of money. In order to demonstrate a distinction between the sexes within an adverse effects analysis, one therefore needs to prove that s. 63 disproportionately limits the deduction with respect to actual expenses incurred by women.

In my opinion, the appellant taxpayer has failed to demonstrate an adverse effect created or contributed to by s. 63, although she has overwhelmingly demonstrated how the issue of child care negatively affects women in employment terms. Unfortunately, proof that women pay social costs is not sufficient proof that women pay child care expenses. Those social costs, although very real, exist outside of the Act. In the same fashion that our income taxation system does not recognize various forms of imputed income, it equally does not involve itself with any form of imputed expense. In this respect, this appeal was not argued to suggest that the government had a positive obligation to account for the social costs of child care prior to taxing its citizens. Such a suggestion would lead this Court well beyond the confines of the present appeal.

I conclude, therefore, that the appellant is unable to demonstrate a violation of s. 15(1) of the Charter with respect to s. 63 of the Act, since she has not proved that s. 63 draws a distinction based upon the personal characteristic of sex. In reaching this conclusion, however, I wish to note that I do not reject that such a distinction might be proved in another case. The appellant in this case belongs to a particular subgroup of women, namely, married women who are entrepreneurs. It is important to realize that her evidentiary focus was skewed in this direction.

I pause to note that the appellant's focus upon self‑employed women to the exclusion of women employees is a very curious aspect of this case. It is useful to note the following commentary by Professor Macklin, supra, at p. 512:

If the goal of section 15 in this context is to redress the discriminatory impact of tax laws on members of disadvantaged groups, there can be no pretext for confining the inquiry to section 18(1) of the Act or the remedy to business women. Insofar as tax deductions are concerned, the real issue would be the inadequacy of the partial deduction under section 63 in facilitating self‑employed and salaried women's access to the paid workforce.... Their identity as self‑employed or salaried women is largely immaterial to the question of whether the existing system perpetuates their subordination. [Emphasis in original.]

Undoubtedly, it was the juxtaposition of s. 8(2) with s. 9 of the Act which led the appellant to take the position she took. By virtue of s. 8(2) of the Act, employees are generally prohibited from making any deductions from employment income. Accordingly, the appellant thought it desirable to distance herself from employees in this case. When considering her arguments with respect to statutory interpretation, this approach is understandable. When considering her Charter arguments, it is less so.

In another case, a different subgroup of women with a different evidentiary focus involving s. 63 might well be able to demonstrate the adverse effects required by s. 15(1). For example, although I wish to express no opinion on this point, I note that no particular effort was made in this case to establish the circumstances of single mothers. If, for example, it could be established that women are more likely than men to head single‑parent households, one can imagine that an adverse effects analysis involving single mothers might well take a different course, since child care expenses would thus disproportionately fall upon women. That would be a question of proof, and it might involve other complicated questions associated with the alimony and maintenance provisions of the Act. This Court has not had the benefit of argument with respect to any of these issues.

Equally, the material which has been placed before this Court demonstrates certain distinctions created by s. 63, but no attempt has been made to link these distinctions to personal characteristics comprehended by an enumerated or analogous grounds approach to s. 15(1) of the Charter. In this respect, I note the following comment from the Report of the Task Force on Child Care, supra, at p. 173, which relates to the earned income limitations in s. 63:

These limitations penalize families in which one spouse, either regularly or temporarily, has a very low income. This affects primarily part‑time‑working women with low earnings, business people who experience short‑term business losses, and farmers who experience a loss or a period of low income.... Even if the other spouse has earned income, no deduction is allowed because only the lower‑income spouse can make the claim.

To the extent that this quotation discusses a s. 63 distinction between parents and others, I reiterate that the appellant's equality argument before this Court effectively ignored the relevance of a parental status distinction. The same is certainly true with respect to business people in a loss position and farmers. Finally, to the extent that this quotation discusses an effect upon "part‑time‑working women with low earnings" and, therefore, seems to indicate an effect upon women as a class, I have two comments.

First, to say that the s. 63 deduction is more often denied to women is to recognize a reality, namely, that when there are two supporting persons in a household, the woman is more often the lower income earner. Although both supporting persons contribute to the actual child care expenses incurred, the deduction will be denied to the woman as the lower income earner. In this sense, then, the woman is more often "affected" by s. 63. However, to describe s. 63 in this fashion is not to admit that s. 63 has an "adverse effect" which subordinates women. As I described above, to deny the deduction to women would only exaggerate a societal inequality if the woman in question actually paid more child care expenses. Since, as I have already indicated, proof is lacking on this point, the only obvious distinction is a parental one. And, as just noted, the appellant's focus has effectively excluded parental status arguments.

My second comment follows from the first. If one accepts that two supporting persons actually contribute in monetary terms to child care expenses, by denying a deduction through the earned income limitation, s. 63 will not always work a hardship. For example, in families involving part‑time working women with low income, s. 63 may provide limited recognition of "the untaxed preference that the tax system gives to imputed family income contributed by non‑earning spouses by way of non‑market household services", Report of the Task Force on Child Care, supra, at p. 295. The earned income limitation would, under this reasoning, underscore a position of inequality in the case of families with an overall low income. Such families would arguably be denied the s. 63 deduction in the face of a demonstrated need for it. Certainly, there has been no attempt to involve the circumstances of low income Canadians in this Charter challenge.

Having discussed the manner in which this s. 15(1) case was brought forward, it is only fair to add a few comments with respect to the remainder of the s. 15(1) analysis, which is not, strictly speaking, necessary to decide. As my comments immediately above relating to single mothers imply, if I were convinced that s. 63 has an adverse effect upon some women (for example, in this case, self‑employed women), I would not be concerned if the effect was not felt by all women. That an adverse effect felt by a subgroup of women can still constitute sex‑based discrimination appears clear to me from a consideration of past decisions: Brooks v. Canada Safeway Ltd., supra; Janzen v. Platy Enterprises Ltd., 1989 97 (SCC), [1989] 1 S.C.R. 1252; see also Schachtschneider v. Minister of National Revenue (1993), 1993 2982 (FCA), 154 N.R. 321 (F.C.A.), per Linden J.A.

At issue in Brooks v. Canada Safeway Ltd. was whether a health insurance plan which denied benefits to pregnant women was discriminatory on the basis of sex. Obviously, not all women become pregnant, nor do those women who become pregnant all become pregnant at the same time. Nonetheless, discrimination on the basis of sex was found. Dickson C.J. stated (at p. 1247):

While pregnancy‑based discrimination only affects part of an identifiable group, it does not affect anyone who is not a member of the group. Many, if not most, claims of partial discrimination fit this pattern.

Similarly, in Janzen v. Platy Enterprises, supra, sexual harassment was realized to constitute discrimination on the basis of sex, notwithstanding the reality that a harasser will not uniformly harass all women. Dickson C.J. expressed this realization in the following way (at pp. 1288‑89):

While the concept of discrimination is rooted in the notion of treating an individual as part of a group rather than on the basis of the individual's personal characteristics, discrimination does not require uniform treatment of all members of a particular group. It is sufficient that ascribing to an individual a group characteristic is one factor in the treatment of that individual. If a finding of discrimination required that every individual in the affected group be treated identically, legislative protection against discrimination would be of little or no value.

In my view, if it were possible in another case to prove that s. 63 of the Act caused an adverse effect for some subgroup of women, s. 63 would be discriminatory on the basis of sex following both Brooks, supra, and Janzen, supra. In some respects, this seems like a broad result, in so far as the basis of discrimination is not narrowed beyond "sex". However, a finding of sex discrimination need not necessarily have widespread effects. One must always consider whether the discriminatory provision could be saved by s. 1 of the Charter. And, assuming it could not be, it would seem self‑evident that if only some women were adversely affected by a provision, it might be possible to fashion remedies to respond only to the affected subgroup, rather than to all women.

In addition to recognizing remedial issues which might need to be addressed, I acknowledge that to find sex‑based discrimination with respect to s. 63 would involve a feature not present in either Brooks or Janzen. Whereas in Brooks it was noted that "only women have the capacity to become pregnant" (at p. 1242), and whereas in Janzen it was noted that "only female employees ... ran the risk of sexual harassment" (at p. 1290), in a case involving an adverse effects analysis under s. 63 of the Act, it would be possible to point to both men and women who would be negatively affected by a limitation on the child care expense deduction.

Following upon this acknowledgment, however, the important thing to realize is that there is a difference between being able to point to individuals negatively affected by a provision, and being able to prove that a group or subgroup is suffering an adverse effect in law by virtue of an impugned provision. As already noted, proof of inequality is a comparative process: Andrews, supra. If a group or subgroup of women could prove the adverse effect required, the proof would come in a comparison with the relevant body of men. Accordingly, although individual men might be negatively affected by an impugned provision, those men would not belong to a group or subgroup of men able to prove the required adverse effect. In other words, only women could make the adverse effects claim, and this is entirely consistent with statements such as that found in Brooks, supra, to the effect that "only women have the capacity to become pregnant" (at p. 1242).

Looking at this point a different way, if s. 63 creates an adverse effect upon women (or a subgroup) in comparison with men (or a subgroup), the initial s. 15(1) inquiry would be satisfied: a distinction would have been found based upon the personal characteristic of sex. In the second s. 15(1) inquiry, however, the sex‑based distinction could only be discriminatory with respect to either women or men, not both. The claimant would have to establish that the distinction had "the effect of imposing a burden, obligation or disadvantage not imposed upon others or of withholding or limiting access to opportunities, benefits and advantages available to others" (Swain, supra, at p. 992). The burden or benefit could not, as a logical proposition, fall upon both sexes. Likewise, to the extent that a court might undertake a broader search for "disadvantage that exists apart from and independent of the particular legal distinction being challenged" (Turpin, supra, at p. 1332), I cannot imagine how such disadvantage could be located for both men and women at the same time.

(d)Conclusions With Respect to s. 15(1) of the Charter

Given the evidentiary focus of this case, I have concluded that the appellant has not proved that s. 63 of the Act involves a distinction between men and women, as required by the equality challenge she has brought under s. 15(1) of the Charter. Accordingly, the limitations upon child care deductions in that section have not been proved to be unconstitutional in this case. Revenue Canada's reassessment of the appellant's deductions in respect of taxation year 1985 is affirmed.

3.Concluding comments with respect to s. 1 of the Charter

Although many complex equality issues inform the present appeal, I have concluded that the appeal should be dismissed since the evidentiary foundation inadequately supports the appellant's position. In concluding in that fashion, however, I felt compelled above to make certain remarks relating to the kind of evidence needed in such a case, and relating to the nature of sex discrimination in an adverse effects case involving the Income Tax Act. To complete this process, it may be helpful to make two remarks with respect to s. 1 of the Charter, notwithstanding that recourse to s. 1 is unnecessary in this case, and notwithstanding that I do not intend to engage in a s. 1 analysis as such.

First, I must express some concerns with the extent to which the respondent presented a s. 1 argument. The government, of course, bears the burden of proving that a Charter infringement is a reasonable limit, demonstrably justified in a free and democratic society: R. v. Oakes, 1986 46 (SCC), [1986] 1 S.C.R. 103, at pp. 136‑37. Although a variety of information was placed before this Court which could be used in a s. 1 analysis (such as the white papers, Hansard, and reports on child care referred to by the Federal Court of Appeal below), most of this information was not specifically related to s. 1 of the Charter in any way. Instead, these materials formed a background with respect to the statutory interpretation of the Act. As noted by this Court in Schachter v. Canada, 1992 74 (SCC), [1992] 2 S.C.R. 679, at p. 695, courts should not be left in a factual vacuum when the legislative objective embodied in an impugned provision falls to be determined.

Having expressed this point, however, I must nonetheless make a second point which relates to the analysis of legislative objective under s. 1 of the Charter. As I discussed at the outset of the s. 15(1) analysis, the appellant's Charter arguments did not consider the importance of viewing s. 63 as a complete response to child care expenses. I believe that one effect of this approach is that the appellant's arguments were presented in a curious isolation. We were invited to consider the Charter only with respect to self‑employed women, and it was suggested to us that a remedy could be granted, without the need to consider the position of other women, other parents, or the government's overall response to child care needs.

Instead of focusing upon the manner in which s. 63 of the Act operates as a child care system, the present appeal focused only upon the propriety of an instrumental result. This Court was invited to use the Charter to rectify a disadvantage allegedly suffered by businesswomen vis à vis businessmen, and, in the process, this Court was invited to ignore the effect of allowing a complete deduction on the rest of the system. At the s. 1 stage of Charter analysis, however, such an instrumental approach is inappropriate. In order to examine properly the validity of legislative objectives in a case such as the present one, it is important to consider both the operation of the Act as a whole, and the operation of other government systems relating to child care.

With respect to the Act itself, it is certainly relevant to consider how income tax deductions affect the class of taxpayers who need help with child care. In particular, I advert to the well known fact that tax deductions operate as upside‑down subsidies. This feature of deductions was well canvassed in the Report of the Task Force on Child Care (supra, at p. 169):

... because the value of the deduction is dependent on the taxpayer's highest marginal rate of tax, the value of the deduction is greater for high‑income earners than for low‑income earners, a prime characteristic of a regressive tax measure. Indeed, surprisingly, the premise of the deduction seems to be that a person's need for it rises proportionately with income. Moreover, the deduction is of no benefit whatsoever to individuals who, because of insufficient income, do not have tax to pay, although their need is greatest of all.

The Task Force on Child Care did not recommend that the future development of a child care system contain relief in the form of tax measures, although, in the interim, it was recommended that the deductibility levels established by s. 63 be left intact: supra, at p. 375. In my opinion, it would be strange indeed for this Court to consider uncapping a child care expense deduction, without even considering the very real drawbacks of tax deductions in equality terms.

In a similar fashion, I do not believe that the tax deduction for child care expenses could be properly examined by this Court without consideration being given to the entire range of government responses to family and child care issues. If inequities are proved to exist within s. 63, surely it must be relevant to consider the extent to which other government programs respond to those inequities. I do not, by any means, wish to suggest that a complete response to child care exists in Canada, nor do I say that courts need only arrange the pieces of a complicated child care puzzle. Instead, I simply wish to recognize that proper examination of a taxation response to child care expenses requires one to contextualize the fiscal response to the greatest degree possible, in order to determine whether an apparent inequality discloses a justifiable legislative objective of a much broader kind.

Having made these brief remarks, I consider it unnecessary to further consider s. 1 of the Charter, or the appropriateness of the s. 15(1) challenge in this case.

VI.Conclusion

For the foregoing reasons, I conclude that child care expenses are deductible solely under s. 63 of the Act, and that s. 63 represents a systemic response to child care in income tax terms. With respect to the constitutional questions, I conclude that no violation of s. 15 of the Charter has been proved in this case, and, in particular, that s. 63 has not been proved to violate the appellant's right to equality. This being the case, it is unnecessary to consider the second constitutional question.

More specifically, I would answer the constitutional questions as follows:

Question 1:If ss. 9, 18 and 63 of the Income Tax Act are not open to an interpretation other than that full child care expenses of the appellant are not deductible as business expenses, does any part, or do any or all of these sections, infringe or deny rights guaranteed by s. 15 of the Canadian Charter of Rights and Freedoms?

Answer:No.

Question 2:To the extent that the above sections of the Income Tax Act infringe or deny the rights and freedoms guaranteed by s. 15 of the Canadian Charter of Rights and Freedoms, are these sections justified by s. 1 of the Canadian Charter of Rights and Freedoms and therefore not inconsistent with the Constitution Act, 1982?

Answer:It is not necessary to answer this question.

I would dismiss the appeal with costs and affirm the Minister's reassessments which disallowed the deductions claimed by the appellant.

The following are the reasons delivered by

L'Heureux-Dubé J. (dissenting) -- Ms. Elizabeth Symes is a lawyer and as such a businesswoman; she is also the mother of two children. During the taxation years 1982 through 1985, she claimed her child care expenses as a "business expense" under the provisions of the Income Tax Act, R.S.C. 1952, c. 148 (the "Act"). This appeal concerns the statutory interpretation of the Act and, in particular, ss. 9, 18(1)(a), 18(1)(h) and 63. It also requires that we ask fundamental and complex questions about the visions of equality and inclusivity that mould our legal constructs.

I.Facts

The relevant facts can be easily summarized and are not contested. Elizabeth Symes practises in the legal profession and between 1982 and 1985 hired a nanny, Mrs. Simpson, to care for her two children so that she could work. During the 1982, 1983, 1984 and 1985 taxation years, she deducted the salary she paid to Mrs. Simpson as a business expense. The Minister of National Revenue (MNR) disallowed these deductions, although he allowed a revised child care deduction under s. 63(1) of the Act of $1,000 for the 1982 expense, a $2,000 deduction for the 1983 and 1984 expense and a $4,000 deduction for the 1985 expense. The MNR disallowed the deductions on the basis that the wages paid were personal or living expenses under s. 18(1)(h) of the Act, and not outlays or expenses incurred for the purpose of gaining or producing income from business under s. 18(1)(a) of the Act.

Ms. Symes appealed the MNR's reassessments to the Federal Court, Trial Division. Cullen J. concluded that the child care expenses could be deducted as a business expense. The respondent appealed to the Federal Court of Appeal, which allowed the appeal and restored the notices of reassessment issued by the MNR.

II.Relevant Statutory Provisions

Income Tax Act, R.S.C. 1952, c. 148, as amended:

3. The income of a taxpayer for a taxation year for the purposes of this Part is his income for the year determined by the following rules:

(a) determine the aggregate of amounts each of which is the taxpayer's income for the year ... from a source inside or outside Canada, including, without restricting the generality of the foregoing, his income for the year from each office, employment, business and property;

4. (1) For the purposes of this Act,

(a) a taxpayer's income ... for a taxation year from an office, employment, business, property or other source ... is the taxpayer's income ... computed in accordance with this Act on the assumption that he had during the taxation year no income ... except from that source ... and was allowed no deductions in computing his income for the taxation year except such deductions as may reasonably be regarded as wholly applicable to that source ... and except such part of any other deductions as may reasonably be regarded as applicable thereto ...

(2) Subject to subsection (3), in applying subsection (1) for the purposes of this Part, no deductions permitted by sections 60 to 63 are applicable either wholly or in part to a particular source....

(4) Unless a contrary intention is evident, no provision of this Part shall be read or construed to require the inclusion or to permit the deduction, in computing the income of the taxpayer for a taxation year or his income or loss for a taxation year from a particular source or from sources in a particular place, of any amount to the extent that that amount has been included or deducted, as the case may be, in computing such income or loss under, in accordance with or by virtue of any other provision of this Part.

9. (1) Subject to this Part, a taxpayer's income for a taxation year from a business or property is his profit therefrom for the year.

10. (1) In computing the income of a taxpayer from a business or property no deduction shall be made in respect of

(a) an outlay or expense except to the extent that it was made or incurred by the taxpayer for the purpose of gaining or producing income from the business or property;

(h) personal or living expenses of the taxpayer except travelling expenses (including the entire amount expended for meals and lodging) incurred by the taxpayer while away from home in the course of carrying on his business;

63. (1) Subject to subsection (2), in computing the income of a taxpayer for a taxation year the aggregate of all amounts each of which is an amount paid in the year as or on account of child care expenses in respect of an eligible child of the taxpayer for the year may be deducted

(b) by the taxpayer or a supporting person of the child for the year ...

to the extent that

(c) the amount is not included in computing the amount deductible under this subsection by an individual (other than the taxpayer), and

(d) the amount is not an amount (other than an amount that is included in computing a taxpayer's income and that is not deductible in computing his taxable income) in respect of which any taxpayer is or was entitled to a reimbursement or any other form of assistance,

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; but not exceeding the amount, if any, by which

(e) the least of

(i) $8,000,

(ii) the product obtained when $2,000 is multiplied by the number of eligible children of the taxpayer for the year in respect of whom the child care expenses were incurred, and

(iii) 2/3 of the taxpayer's earned income for the year

exceeds

(f) the aggregate of all amounts each of which is an amount deducted, in respect of the eligible children of the taxpayer that are referred to in subparagraph (e)(ii), under this subsection for the year by an individual (other than the taxpayer) to whom subsection (2) is applicable for the year.

(3) In this section,

(a) "child care expense" means an expense incurred for the purpose of providing in Canada, for any eligible child of a taxpayer, child care services including baby sitting services, day nursery services or lodging at a boarding school or camp if the services were provided

(i) to enable the taxpayer, or the supporting person of the child for the year, who resided with the child at the time the expense was incurred,

(A) to perform the duties of an office or employment,

(B) to carry on a business either alone or as a partner actively engaged in the business,

(b) "earned income" of a taxpayer means the aggregate of

(i) all salaries, wages and other remuneration, including gratuities, received by him in respect of, in the course of, or by virtue of offices and employments, and all amounts included in computing his income by virtue of sections 6 and 7,

(ii) amounts included in computing his income by virtue of paragraph 56(1)(m), (n) or (o), and

(iii) his incomes from all businesses carried on either alone or as a partner actively engaged in his business.

(c) "eligible child" of a taxpayer for a taxation year means

(i) a child of the taxpayer or of his spouse, or

(ii) a child in respect of whom the taxpayer deducted an amount under section 109 for the year,

if, at any time during the year, the child was under 14 years of age or was over 13 years of age and dependent on the taxpayer by reason of mental or physical infirmity; and

(d) "supporting person" of an eligible child of a taxpayer for a taxation year means

(i) a parent of the child,

(ii) the taxpayer's spouse, or

(iii) an individual who deducted an amount under section 109 for the year in respect of the child,

if the parent, spouse or individual, as the case may be, resided with the taxpayer at any time during the year and at any time within 60 days after the end of the year.

III.Judgments

Federal Court, Trial Division, 1989 9511 (FC), [1989] 3 F.C. 59 (Cullen J.)

Finding for the appellant Symes, the trial judge stated that to determine which expenses may be considered business expenses in the calculation of business profit, one should examine whether the expense was consistent with "ordinary principles of commercial trading or well accepted principles of business practice" (pp. 66-67). Furthermore, the expense should be made or incurred "for the purpose of gaining or producing income from the business" (p. 67). Cullen J. found that there was an increasing tendency to interpret s. 18(1)(a) of the Act more liberally. He added that, since the term "profit" in s. 9 of the Act was not defined, it was up to the courts to "infuse the term with meaning, which will reflect the realities of the times" (p. 71).

To that end, Cullen J. took note of the testimony of the expert witness, Dr. Patricia Armstrong, who indicated that there has been significant social change in the late 1970s and into the 1980s, in terms of the influx of women of child-bearing age into business and into the workplace. Since this change post-dated the cases in which child care expenses were not allowed as a legitimate business deduction, Cullen J. found that his interpretation was not restricted by these cases.

He concluded that "it can be said that there is a causal relationship between the dedication of resources generated in [the appellant's] practice to child care and the generation of those resources" (p. 73). He also was satisfied that the plaintiff exercised good business judgment is deciding to dedicate part of her resources from the law practice to the provision of child care. He stated, at p. 73:

This decision was acceptable according to business principles which include the development of intellectual capital, the improvement of productivity, the provision of services to clients and making available the resource which she sells, namely her time.

Further, Armstrong's evidence supports the notion that the availability of child care increases productivity by enhancing the peace of mind of employees. Enhancing productivity is something that is totally in keeping with well established business practices.

Cullen J. then examined s. 63 of the Act, which deals with child care expenses, and found that this section had been enacted "to facilitate the entry of women into the labour force, thereby promoting economic equality between the sexes as well as providing relief for low income families" (p. 75). However, he concluded that, since the nanny's salary was deductible as a business expense pursuant to ss. 9 and 18(1)(a) of the Act, s. 63 could not "prevent it from being allowed as such" (p. 75).

Having found that Ms. Symes' child care expenses were legitimate business expenses, Cullen J. was not required to examine the impact of s. 15 of the Canadian Charter of Rights and Freedoms. However, he did. He held that s. 15 of the Charter, which was proclaimed into force on April 17, 1985, was applicable to part of the 1985 taxation year and to the subsequent taxation years. Cullen J., relying on the decision of the Supreme Court of Canada in Andrews v. Law Society of British Columbia, 1989 2 (SCC), [1989] 1 S.C.R. 143, concluded that the MNR, by refusing the appellant's deduction, was "treating her differently from other taxpayers with expenses that are considered necessary to generate business income" (p. 80). He added that the MNR was not treating the appellant "like a serious business person with a serious expense incurred for a legitimate purpose" (p. 81). In fact, the appellant was "treated like any employer who is incurring a business expense but yet she is not allowed to deduct that expense", which meant that she was paying more taxes. He found this to be contrary to the purpose of s. 15 of the Charter.

Cullen J. also used s. 15 of the Charter as an aid in interpreting the Act. In his view, since the Andrews decision, the Act must be interpreted in a way which recognizes the specific experience of women as principally responsible for child care. He also observed that an interpretation of the Act which ignores the reality that women bear a major responsibility for child rearing and which ignores that the cost of child care is a major barrier to women's participation in the workforce would by itself violate s. 15 of the Charter.

Thus, the trial judge concluded that the appellant had suffered discrimination based on her personal characteristics as a parent and a woman and that this had the effect of imposing on her burdens, obligations and disadvantages not borne by others.

Turning, then, to s. 1 of the Charter, Cullen J. found that the respondent had not proven a "pressing and substantial" objective to justify the disallowance of child care expenses as a business deduction, and felt no need to engage in a lengthy s. 1 analysis. He asserted that his interpretation of the word "profit" in the Act was in conformity with the Charter.

In the result, Cullen J. held that the appellant was allowed to deduct the cost of her nanny as a business expense, pursuant to the relevant provisions of the Act. He added (at p. 87) that, although the concepts of profit and business expense permitted the deduction of the nanny's salary in the present case, "[t]his is not to say that nanny expenses will always be treated as a business expense, or that section 63 of the Act has been invalidated under section 52 of the Charter".

Federal Court of Appeal, 1991 13553 (FCA), [1991] 3 F.C. 507 (Décary J.A., Pratte and MacGuigan JJ.A. concurring)

The Federal Court of Appeal reversed the decision of Cullen J. Décary J.A., for the court, dismissed the argument that the existence of a legal obligation to care for children was a reason for allowing child care expenses to be deducted as a business expense. According to him, this obligation, imposed equally on both sexes, was a "natural obligation" which affected parents at all times, since "[t]he law does not impose an obligation on the [appellant] to look after her children because she is operating a business" (p. 522). While agreeing that judicial interpretation should be "flexible and sensitive to adapt to changing circumstances", Décary J.A. pursued at p. 523:

... the concept of a business expense has been developed exclusively in relation to the commercial needs of the business, without any regard to the particular needs of those in charge of the business, and I have difficulty in seeing how a change in the particular needs of these persons [businesspersons] could justify modifying an interpretation which has nothing to do with these needs.... I consider that the case at bar does not require a conclusion on this point for the simple reason that Parliament has itself already amended the Income Tax Act to provide for the specific situation relied on by the [appellant].

Décary J.A. based his conclusion on the fact that, in his view, ss. 63(3)(a)(i) and 63(3)(b) of the Act covered self-employed parents as well as salaried parents, the term "parent" meaning the individual providing support for a child. He held that "[h]ad section 63 been drafted to apply specifically to the [appellant's] case, it would not have been drafted otherwise" and added that s. 63(3)(b)(iii) of the Act, which defined "earned income" as including "incomes from all businesses carried on either alone or as a partner actively engaged in the business", led him to the conclusion that the appellant's earned income which derived from her partnership was "income which is covered by section 63" (p. 524). He stated at p. 525:

Section 63 is really a code in itself, complete and independent, and it does not matter in the circumstances whether it was inserted in one subdivision of the Act rather than another, as by its very wording, which is clear and not open to question, it covers a parent carrying on a business and income earned by the parent from the operation of a business.

In his view, s. 63 of the Act had been amended many times to take into account social and economic changes and he concluded that the appellant's situation was exactly the kind of situation that Parliament had in mind when it enacted s. 63 of the Act and its amendments.

Décary J.A., then, turned to s. 15 of the Charter, in the context of economic rights. To that end, he examined the jurisprudence and, in particular, Andrews v. Law Society of British Columbia, supra, and PSAC v. Canada, 1987 89 (SCC), [1987] 1 S.C.R. 424, to conclude that the appellant's approach "risks trivializing the Charter" and, moreover, at pp. 530-31, that:

The respondent's proposition appears to mean, for all practical purposes, that through the right to equality recognized in section 15, the Charter guarantees individuals every right, whether or not included in those expressly defined in the Charter. For example, in the case at bar, though the right to work and the right to be in a position to work are not recognized by the Charter, an individual -- on these facts a woman, a parent, but it could be anyone who can make use of the provisions of section 15 -- could under cover of section 15 require legislatures to adopt measures enabling him or her to work and be in a position to work. That is not the effect of section 15.

In my opinion, no one could have required Parliament to adopt section 63 and allow a parent to deduct child care costs. Parliament adopted section 63 in the enlightened exercise of its discretion, and I do not see on what basis a particular group of professional women or parents, benefitting from the deduction allowed by that section, could require that the section be amended by the legislature or interpreted by the courts so as to give the group the right to take a further deduction....

I do not see how a provision which favours all women could directly or indirectly infringe the right of women to equality, and I am not prepared to concede that professional women make up a disadvantaged group against whom a form of discrimination recognized by section 15 has been perpetrated by the adopting of section 63, or would be perpetrated by this Court's refusal to interpret paragraph 18(1)(a) so as to give a self-employed mother an additional deduction for a business expense....

In the event, however, that there was discrimination within the meaning of s. 15 of the Charter, Décary J.A. felt that it was not the function of the court, based on the evidence of justification presented before the court, to substitute its choice for that of Parliament.

IV.Issues

The Chief Justice formulated the following constitutional questions:

1. If ss. 9, 18 and 63 of the Income Tax Act are not open to an interpretation other than that full child care expenses of the appellant are not deductible as business expenses, does any part, or do any or all of these sections, infringe or deny rights guaranteed by s. 15 of the Canadian Charter of Rights and Freedoms?

2. To the extent that the above sections of the Income Tax Act infringe or deny the rights and freedoms guaranteed by s. 15 of the Canadian Charter of Rights and Freedoms, are these sections justified by s. 1 of the Canadian Charter of Rights and Freedoms and therefore not inconsistent with the Constitution Act, 1982?

In order to reach these constitutional questions, one must first determine whether ss. 9, 18 and 63 of the Act are open to an interpretation that child care expenses are, in fact, deductible as a business expense. Although this issue is primarily one of statutory interpretation, nevertheless, this case remains deeply pervaded by issues of equality. The appellant asks that the Court find that s. 15 of the Charter would be infringed by an interpretation of the Act that would disallow the deduction of child care as a legitimate business expense. The arguments of the parties and interveners make it clear that, though ostensibly about the proper statutory interpretation of the Act, this case reflects a far more complex struggle over fundamental issues, the meaning of equality and the extent to which these values require that women's experience be considered when the interpretation of legal concepts is at issue. The answer, with regard to the statutory interpretation of the Act, requires that the Court consider the reality of the relationship of both women and men to child care and to work, as well as the impact of concepts of equality on the interpretation of legislation. As Professor Claire F. L. Young has written in "Impact of Feminist Analysis on Tax Law and Policy" in Feminist Analysis: Challenging Law and Legal Processes (1992 Institute of Continuing Legal Education, Canadian Bar Association -- Ontario, January 31, 1992), at p. 1:

The tax system is ... a powerful tool used to direct social and economic activity in Canada.

The role that this "powerful tool" may play in the prevention of the attainment of substantive equality for women cannot be overlooked.

V.Statutory Interpretation

What type of expense constitutes a business expense? In order to rule on the meaning to be given to the term "business expense" in the Act, the following questions must be answered:

1What is the meaning of income from business or property in s. 9?

2How do the limitations set out in s. 18(1) as expenses made or incurred for the purpose of gaining or producing income (paragraph (a), or as personal or living expenses (under paragraph (h), affect this determination?

3Does s. 63 affect a taxpayer's ability to deduct child care as a business expense?

I do not agree with my colleague Iacobucci J.'s reasons with regard to s. 63 of the Act, nor to s. 15 of the [Charter](https://www.canlii.org/en/ca/laws/stat/schedule-b-to-the-canada-act-1982-uk-1982-c-11/latest/schedule-b-to-the-canada-act-1982-uk-1982-c-11.html> and the eventual result he reaches. I do, however, substantially agree with the approach he has taken with regard to the definition of "business expense" through ss. 9(1), 18(1)(a) and 18(1)(h) of the Act and, as a result, I will not repeat a similarly detailed analysis in this regard, but will only review the essential points and provide my own insight into the two first questions at hand. In my view, the logical conclusion to my colleague's analysis, although he does not state it as such, is that ss. 9, 18(1)(a) and 18(1)(h) do not prevent the deduction of child care expenses as a business expense. My analysis, therefore, will focus primarily on the clear differences between our two positions, specifically with respect to s. 63 of the Act.

A.Section 9 of the Income Tax Act: The Ordinary Principles of Commercial Trading

Before embarking upon a detailed analysis of these questions, it is crucial to recognize that the Canadian system of taxation is premised on taxation of income based on source distinctions, pursuant to s. 3 of the Act, reproduced above. One such source of income is income from business, pursuant to s. 3(a), and it is this source with which we are concerned in the present appeal.

Pursuant to s. 9(1) of the Act, reproduced earlier, a taxpayer's income for a taxation year from a business is the taxpayer's profit therefrom for the year. "Profit", although not defined in the Act, has been interpreted to be a net concept. The determination of "profit" is dependent upon the question of whether an expenditure is a proper business expense to be included in the calculation of such net gain (Daley v. Minister of National Revenue, 1950 616 (CA EXC), [1950] Ex. C.R. 516). In order to arrive at a calculation of net profit, the all-encompassing question one must ask is whether a deduction is prohibited because it is not incurred for the purpose of earning income as required by s. 18(1)(a), or because the expense is personal pursuant to s. 18(1)(h). It is my view, a view shared by my colleague Iacobucci J., that this determination is essentially an examination of the interplay between s. 9, which allows deductions, and the prohibition of some of these potential deductions by ss. 18(1)(a) and (h).

These two significant criteria emerged in Cullen J.'s analysis of the case law for the purposes of determining whether an expense may be deducted from business income. He held that: (1) it must be in accordance with ordinary commercial principles and business practice, having regard to the circumstances of each case; and (2) it must be made or incurred for the purpose of gaining or producing income from the business. This test has been applied by this Court in Mattabi Mines Ltd. v. Ontario (Minister of Revenue), 1988 58 (SCC), [1988] 2 S.C.R. 175, in which Wilson J. asserted (at p. 189):

The only thing that matters is that the expenditures were a legitimate expense made in the ordinary course of business with the intention that the company could generate a taxable income some time in the future. [Emphasis added.]

Such a broad strategy was adopted by the trial judge, as well as by my colleague Iacobucci J. Its main function is to focus on a particular taxpayer and to consider what that taxpayer has legitimately expended in order to do business.

The Court of Appeal, however, rejected this approach considering that "the concept of a business expense has been developed exclusively in relation to the commercial needs of the business, without any regard to the particular needs of those in charge of the business" (p. 523). As a result, Décary J.A. found that child care expenses did not constitute a "business expense", since he had "difficulty in seeing how a change in the particular needs of these persons [businesspersons] could justify modifying an interpretation which has nothing to do with these needs" (p. 523). I cannot agree with the approach taken by the Court of Appeal. What, in my view, has traditionally been recognized as a "commercial need" has everything to do with those persons who have traditionally held positions in the commercial sphere -- primarily men. Further, a review of the developments in income tax legislation and its interpretation clearly demonstrates that, as the needs of those pursuing business have changed, the definition of what constitutes a business expense has similarly expanded. I will review some of these developments and then, briefly, the foundation upon which the determination of these complex questions must be made.

B.Section 18(1)(a) of the Income Tax Act: For the Purpose of Gaining or Producing Income from Business

There is a long history of jurisprudence with respect to the meaning of this section, which my colleague Iacobucci J. has thoroughly reviewed, and, as a result, I will not. What I do wish to re-emphasize, however, is that in Premium Iron Ores Ltd. v. Minister of National Revenue, 1966 76 (SCC), [1966] S.C.R. 685, at p. 702, this Court contemplated the present wording of s. 18(1)(a). Martland J., for the Court, held that the wording change, from the earlier section which stated: "purpose of earning the income", to the new one which provided for: "gaining or producing income", was intended to broaden the definition of deductible expenses. My colleague speculates that this expansion is perhaps due to the fact that, prior to subsequent amendments, deductions for capital intangibles were unavailable other than through the general deduction provided for by the predecessor of s. 18(1)(a) and, as such, an expansive view of s. 18(1)(a) developed. This expansive approach to s. 18(1)(a) may actually demonstrate that the income tax system has had a long-standing capacity to accommodate novel situations and developments, through the general sections allowing deductions. As my colleague points out, however, no test has any greater certainty and clarity than that which is proclaimed by the precise wording of the statute. Therefore, the basic question which must be asked is whether the appellant incurred child care expenses for the purpose of gaining or producing income from business.

At this time, I would like to make a brief comment on the gendered analysis entangled in the statutory interpretation in this case. While it happens that the appellant is a woman lawyer claiming child care expense deductions as a business expense, s. 9 of the Act is gender neutral. Such a claim may also have been made by a businessman in the same situation as Ms. Symes. If such a businessman were, for example, the primary caretaker of his children, the rationale as well as the end result would have been the same. The ability to deduct a legitimate business expense that one incurs in order to gain or produce income from business should not be based on one's sex. Any businessperson would be entitled to a deduction if he or she can prove that such expenses have been incurred for business purposes. The reality, however, is that generally women, rather than men, fulfil the role of sole or primary caregiver to children and, as such, it is they alone who incur and pay for such expenses. Men, until very recently, have rarely been primary caregivers, nor single parents and, as a result, they have not incurred direct child care expenses. In many traditional family situations child care issues were not concrete business expenses for men in business, as most often their wives stayed home to care for their children or made such child care arrangements. Consequently, such a businessman would have no basis on which to claim child care expenses as a business expense. However, in light of our changing society, in which men are being called upon to bear a greater burden of child care responsibilities and expenses, which may impede their ability to earn a profit, it is quite possible that businessmen will accordingly be entitled to claim such expenses should they meet the criteria for business expense deductions, as set out in s. 18(1)(a). Regardless of this future possibility, however, at this time the reality is that it is primarily women who incur the cost, both social and financial, for child care and this decision cannot, as such, ignore the contextual truth when examining whether child care may be considered a business expense.

As my colleague asserts, child care expenses have traditionally been viewed as expenses that were not incurred for the purpose of gaining or producing income, as they were considered personal in nature and, accordingly, could not be regarded as commercial. My colleague is of the view (at pp. 742-43) that:

... there is value in the traditional tax law test which seeks to identify those expenses which simply make a taxpayer available to the business, and which proceeds to classify such expenses as "personal" for the reason that a "personal need" is being fulfilled. [Emphasis in original.]

In my view, such a test serves no purpose. The rationale of availability to the business is neither objective nor determinative. To be available for the business is the first requirement of doing business, otherwise, there can be no business. In this regard, it would be unthinkable for a businessperson's special needs, for example those associated with a disability, to be ineligible for deduction because they satisfy a "personal need". A woman's need for child care in order to do business is no different. One's personal needs can simply not be objectively determined, they are by their very definition subjective.

Courts in the past, and the Court of Appeal in this case, have also always assumed that commercial needs were an objectively neutral set of needs. As a consequence, they did not examine the close relationship between child care and women's business income. It is crucial, in my view, to examine the link between child care and the generation of income from business, as did Cullen J. After consideration of the evidence of the expert witness Dr. Armstrong, the trial judge went on to say (at p. 72):

... there has been a significant social change in the late 1970's and into the 1980's, in terms of the influx of women of child-bearing age into business and into the workplace.

Dr. Armstrong testified that dramatic and fundamental changes have been taking place in both the labour market and the family structure over the past 40 years. In 1951, only 24 percent of Canadian women participated in the labour force. By 1987, this number had risen to 56 percent. With respect to how the increase took place Dr. Armstrong testified that:

It's been quite rapid from the mid-'70s - early '70s on. It was fairly slow to increase in the '50s, but then the '60s, the acceleration was faster and it increased in the '70s.

Further, the increase was most dramatic for women in their childbearing years, with nearly three-quarters of women between the ages of 16 and 44 being counted as members of the labour force, particularly in the 1980s. Today, a majority of women, even those with very young children, are now in the labour force. Fully 70 percent of employed mothers with children younger than six years old work full time, as do 75 percent of employed mothers with school-age children (6 to 15 years). Current forecasts suggest that by the year 2000, fully 88 percent of women aged 25 to 34 years will be in the work force. This increasing trend is particularly noteworthy, since women aged 25 to 34 years are the group most likely to have young children at home, thus requiring child care. It is evident that for most Canadian families, the issue of child care is of crucial importance.

It is with these statistics and expert testimony in mind that we must consider whether child care expenses can be accommodated within the definition of a business expense. In this regard, I agree with Cullen J.'s thoughtful and thorough analysis of the complex issues in this case, which recognizes the evolution of our societal structure and mandates that the interpretation of statutes be done in context, not in a vacuum (Edmonton Journal v. Alberta (Attorney General), 1989 20 (SCC), [1989] 2 S.C.R. 1326, at p. 1355).

At the forefront of this analysis are general and well known concepts of statutory interpretation, for example, that the clear and unambiguous meaning of words which do not lead to an unreasonable result must be followed and further, that the interpretation of a law may change over time in order to coincide with an altered and ever-changing societal context. (See E. A. Driedger, Construction of Statutes (2nd ed. 1983), at p. 89, and P.-A. Côté, The Interpretation of Legislation in Canada (2nd ed. 1991), at p. 227.) Our Court has, in the past, altered its interpretation of legislation in a number of cases to conform with our changing social framework (see Murdoch v. Murdoch, 1973 193 (SCC), [1975] 1 S.C.R. 423, Rathwell v. Rathwell, 1978 3 (SCC), [1978] 2 S.C.R. 436, and, most recently, Canada (Attorney General) v. Mossop, 1993 164 (SCC), [1993] 1 S.C.R. 554). Furthermore, the respect of Charter values must be at the forefront of statutory interpretation (see Hills v. Canada (Attorney General), 1988 67 (SCC), [1988] 1 S.C.R. 513, and Slaight Communications Inc. v. Davidson, 1989 92 (SCC), [1989] 1 S.C.R. 1038).

As I noted in Mossop, supra, at p. 613, in Canadian National Railway Co. v. Canada (Canadian Human Rights Commission), 1987 109 (SCC), [1987] 1 S.C.R. 1114 ("Action Travail des Femmes"), Dickson C.J. reviewed the jurisprudence on the interpretation of legislation and, at p. 1134, enunciated the following principle:

Human rights legislation is intended to give rise, amongst other things, to individual rights of vital importance, rights capable of enforcement, in the final analysis, in a court of law. I recognize that in the construction of such legislation the words of the Act must be given their plain meaning, but it is equally important that the rights enunciated be given their full recognition and effect. We should not search for ways and means to minimize those rights and to enfeeble their proper impact. Although it may seem commonplace, it may be wise to remind ourselves of the statutory guidance given by the federal Interpretation Act which asserts that statutes are deemed to be remedial and are thus to be given such fair, large and liberal interpretation as will best ensure that their objects are attained. [Emphasis added.]

In my view, this approach is equally apposite in the case at hand. The provision for deduction pursuant to s. 9(1) should also be given a "fair, large and liberal interpretation".

In the past, the scope of deductible business disbursements has been expanded constantly. It has been held to include a wide array of expenditures, such as club dues, meals and entertainment expenses, car expenses, home office expenses, legal and accounting fees, to name only a few. In order that the expense the appellant claims as a business expense be analyzed in the context of other "business expenses", I will briefly examine some of the many deductions that have been held to be legitimately expended for the purpose of gaining or producing income from business.

Section 18(12) of the Act provides that a businessperson may deduct the expense of a home office. The test for the deduction of one's home office is, however, very stringent. The office must be used exclusively for the business, it must be the taxpayer's principal place of business and it must be used regularly and continuously, in order that the deduction be available.

Self-employed persons are also able to deduct 80 percent of their entertainment and meal expenses that are expended for the purpose of gaining or producing income. Section 67.1 of the Act limits the deductible portion of an expense in recognition of the partly personal benefit which is received from these expenses (C. F. L. Young, "Case Comment on Symes v. The Queen", [1991] Brit. Tax Rev. 105).

With respect to charitable donations, Olympia Floor & Wall Tile (Quebec) Ltd. v. Minister of National Revenue, [1970] Ex. C.R. 274, and Impenco Ltd. v. Minister of National Revenue, 88 D.T.C. 1242 (T.C.C.), clearly indicate that some seemingly personal charitable donations may fall within the realm of acceptable business deductions. In both these cases, the companies donated significant sums of money to charitable organizations in order to gain or produce income. That income, as they indicated, arose from the fact that those with whom they did business were encouraged to purchase their product because of their generally held reputation in the community that the company was extremely generous toward charitable organizations.

Other deductions found to be business expenses are those incurred for legal and accounting fees and damages. In Kellogg Co. of Canada Ltd. v. Minister of National Revenue, 1942 278 (CA EXC), [1942] C.T.C. 51 (Ex. Ct.), for example, the legal expenses incurred through legal dealing with a trademark infringement were allowed as a deduction incurred for the purpose of gaining or producing income. Damages and fines, according to Eva Krasa in "The Deductibility of Fines, Penalties, Damages, and Contract Termination Payments" (1990), 38 Can. Tax J. 1399, have also been allowed as business expenses on occasion.

In Royal Trust Co. v. Minister of National Revenue, 1957 302 (CA EXC), 57 D.T.C. 1055, the Exchequer Court of Canada held that the appellant trust company should be able to deduct club dues and initiation fees paid on behalf of its executives and senior personnel. The court held that the evidence proved conclusively that the practice of paying the club dues resulted in business from which the appellant gained or produced income.

In Friedland v. The Queen, 89 D.T.C. 5341 (F.C.T.D.), the taxpayer was allowed to deduct the expenses which he incurred for his Rolls Royce and BMW, to the extent that these automobiles were used for business.

Finally, particularly relevant to the case at hand is the general recognition that the concept of profit is a net calculation and, as such, it is clear that an employer or a business may claim a deduction for employees' salaries and for employer's contributions to an employee benefit package. A daycare centre may constitute such an employee benefit. (See Kathleen Mahoney, "Daycare and Equality in Canada" in Research Studies of the Commission on Equality in Employment (1985), 157, at p. 166.) In fact, as was set out by Cullen J., at p. 70, with regard to business operations:

There is no dispute that salaries paid to employees are deductible as business expenses, provided they are laid out to earn income and are reasonable. Further, under certain circumstances, wages or salaries paid to spouses or children are also deductible as business expenses. If this is so, the plaintiff contends, why shouldn't the wages paid to the plaintiff's nanny be deductible as a business expense? Certainly, if the plaintiff hired a junior lawyer or articling student whose duties also included looking after the partner's children (if perhaps a daycare service was provided by the firm), there would be no dispute that the wages of the junior or the articling student would be deductible as a business expense.

As is apparent, the variety of allowable deductions has been expanded to a number of situations not envisaged in earlier times to accommodate many diverse and new business practices. This development falls within principles of deductions which have been succinctly reviewed by Neil Brooks in "The Principles Underlying the Deduction of Business Expenses" in Hansen, Krishna and Rendall, eds., Essays on Canadian Taxation (1978), 249. The author notes that a number of tests are used in order to determine what type of expense may be deducted as a business expense. These considerations include whether the expense is deductible according to generally accepted accounting principles, whether the expense is normally incurred by others in the particular business, whether the expense would have been incurred by the taxpayer even if he or she had not been earning income from a business, whether the taxpayer could have avoided the expense without affecting gross income, as well as many other facts and circumstances from which one may infer the taxpayer's purpose in incurring the expense. The multiplicity of tests, in my view, leaves it open for one to conclude that any legitimate expense incurred in relation to a business may be deducted as a business expense. In fact, in this regard, Brooks confirms that a judge's personal experience may strongly influence the conclusion that he or she may reach as to whether a particular disbursement may be classified as a business expense. He writes (at p. 259):

Judges know on the basis of their own experience that an expense incurred under certain circumstances would be incurred by them for a personal purpose; they infer, therefore, that it is probable that some other person, under similar circumstances, would incur the expense for the same purpose.

When we look at the case law concerning the interpretation of "business expense", it is clear that this area of law is premised on the traditional view of business as a male enterprise and that the concept of a business expense has itself been constructed on the basis of the needs of businessmen. This is neither a surprising nor a sinister realization, as the evidence well illustrates that it has only been in fairly recent years that women have increasingly moved into the world of business as into other fields, such as law and medicine. The definition of "business expense" was shaped to reflect the experience of businessmen, and the ways in which they engaged in business. As Dorothy Smith points out in "A Peculiar Eclipsing: Women's Exclusion From Man's Culture" (1978), 1 Women's Studies Int. Quart. 281, when only one sex is involved in defining the ideas, rules and values in a particular domain, that one-sided standpoint comes to be seen as natural, obvious and general. As a consequence, the male standard now frames the backdrop of assumptions against which expenses are determined to be, or not to be, legitimate business expenses. Against this backdrop, it is hardly surprising that child care was seen as irrelevant to the end of gaining or producing income from business but rather as a personal non-deductible expense.

As Cullen J. recognized, the world of yesterday is not the world of today. In 1993, the world of business is increasingly populated by both men and women and the meaning of "business expense" must account for the experiences of all participants in the field. This fact is enhanced by expert evidence which indicates that the practices and requirements of businesswomen may, in fact, differ from those of businessmen. When we look at the current situation, it becomes clear that one of the critical differences in the needs of businessmen and businesswomen is the importance of child care for business people with children, particularly women. Cullen J., as confirmed by the expert evidence before him, recognized that child care is vital to women's ability to earn an income. In this regard, I am wholly in agreement with Cullen J.'s conclusion that it made "good business sense" for Ms. Symes to hire child care and that this expense should come within the calculation of profit. In my view, Ms. Symes' child care expenses come within the definition of "the purpose of gaining or producing income" and, as a result, are not prevented by the wording of s. 18(1)(a) from deduction under s. 9(1).

The second point, to which I will now turn, is whether child care expenses may be disallowed as a business expense pursuant to s. 18(1)(h) as being personal in nature.

C.Section 18(1)(h) of the Income Tax Act: Personal or Living Expenses

As previously discussed, taxation logic allows deductions from gross income for legitimate business expenses when calculating income. Personal expenses are not, however, seen as legitimate deductions. These expenses are considered to be expenses of "consumption" which should appropriately be included within the tax base. It is argued that child care is just such an expense, and that child bearing and caring decisions are private decisions, having nothing to do with business. Under this logic, it is argued that Ms. Symes should not be granted special or preferential treatment, by allowing her to deduct a personal expense -- her child care cost. Although my colleague, Iacobucci J., has examined this issue, I wish to express my own views with regard to what makes an expense personal and whether child care qualifies as any other such expense.

In my view, it is important to look closely at the dichotomy of business as opposed to personal expenses. If we survey the experience of many men, it is apparent why it may seem intuitively obvious to some of them that child care is clearly within the personal realm. This conclusion may, in many ways, reflect many men's experience of child care responsibilities. In fact, the evidence before the Court indicates that, for most men, the responsibility of children does not impact on the number of hours they work, nor does it affect their ability to work. Further, very few men indicated that they made any work-related decisions on the basis of child-raising responsibilities. The same simply cannot currently be said for women. For women, business and family life are not so distinct and, in many ways, any such distinction is completely unreal, since a woman's ability to even participate in the work force may be completely contingent on her ability to acquire child care. The decision to retain child care is an inextricable part of the decision to work, in business or otherwise. This reality is expressed by Grace Blumberg in "Sexism in the Code: A Comparative Study of Income Taxation of Working Wives and Mothers" (1971-1972), 21 Buff. L. Rev. 49, at p. 64, in similar terms:

Child care ... is an expense ... which necessarily arises only when both parents are employed.... A working mother's provision for child care is a nondiscretionary expense directly related to the fact of her employment.

In the recently released study by the Canadian Bar Association Task Force on Gender Equality in the Legal Profession entitled Touchstones for Change: Equality, Diversity and Accountability (1993), the difficulties many women lawyers face when attempting to balance career and family were highlighted. The report states (at p. 65):

One of the main causes of discrimination against women lawyers is the culture that surrounds work in the legal profession. That culture has been shaped by and for male lawyers. It is predicated on historical work patterns that assume that lawyers do not have significant family responsibilities. The "hidden gender" of the current arrangements for legal work manifests itself in many ways, including: the extremely long and irregular hours of work; assumptions about the availability of domestic labour to support a lawyer's activities at work; promotion within law firms which is incompatible with the child bearing and child rearing cycles of most women's lives; and the perceived conflict between allegiances owed to work and family.

Particularly with respect to child care responsibilities, provincial surveys provided clear evidence that women lawyers bear by far a greater responsibility for child care than do their male counterparts, at p. 67:

The proportion of responsibility borne by women lawyers for their children is almost double that borne by male lawyers.

When asked about the proportion of responsibility they bear, women responded 49% (Ontario); 40% (British Columbia) and 44% (Alberta) while men responded 26% (Ontario); 20% (British Columbia); and 26% (Alberta).

The Saskatchewan survey revealed that women assume primary responsibility for child care in all areas broken down by activity. For example, 59% of women report they care for children when the latter are ill compared to only 4% of men.

Further, the surveys revealed that women lawyers had a much greater reliance on paid child care workers than did male lawyers, at pp. 67-68:

Women lawyers are much more likely to rely on paid child care givers than are male lawyers -- by a ratio of three to one.

In Ontario, female respondents identified the proportion of responsibility borne by paid child care workers as 26%, while men responded 10%. In British Columbia the proportion of child care responsibility borne by paid child care workers was reported as 26% by women lawyers and 10% by men. Again, in Alberta, this proportion was 29% for female lawyers and 8% for male lawyers.

In the Saskatchewan and Quebec surveys, 70% of women reported having the responsibility for making child care arrangements.

Conversely, male lawyers can count on a spouse or spousal equivalent to be responsible for child care at a rate of approximately three times the spousal assistance available to women.

Although both male and female lawyers have experienced stress as a result of competing demands of career and child care responsibilities, women reported negative material effects in the form of loss of income or reduced career opportunities to a degree not reported by men.

For example, a majority of women reported loss of income due to child rearing whereas only a small minority of men did so. [Emphasis in original.]

The reality of Ms. Symes' business life necessarily includes child care. The 1993 concept of business expense must include the reality of diverse business practices and needs of those who have not traditionally participated fully in the world of business. Décary J.A.'s statement that the "concept of a business expense has been developed ... without any regard to the particular needs of those in charge of the business" (p. 523), fails to recognize this reality. In this regard, comments made by Isabel Grant and Lynn Smith in a paper prepared for the Ontario Law Reform Commission ("Gender Representation in the Canadian Judiciary", in Appointing Judges: Philosophy, Politics and Practice (1991), 57, at p. 79) ring true:

... no one is "objective" in the sense of being without a frame of reference, yet we sometimes fail to notice the frame of reference of those who have been in a position to define the very terms and concepts in which we think.

Audrey Macklin in "Symes v. M.N.R.: Where Sex Meets Class" (1992), 5 C.J.W.L. 498, at p. 507, retorted that Décary J.A.'s above assertion:

... failed to acknowledge that as long as business has been the exclusive domain of men, the commercial needs of business have been dictated by what men (think they) need to expend in order to produce income. The fact that these expenditures also have a "personal" element was never treated as a complete bar. Thus, the courts have in the past permitted businessmen to deduct club fees because men like to conduct business with each other over golf. [Royal Trust Co. v. Minister of National Revenue, supra] ... Because some men believe expensive cars enhance their professional image, driving a Rolls Royce has been held to be an incident of a professional business. [Friedland v. The Queen, supra.]

As a consequence, one must ask whether the many business deductions available, for cars, for club dues and fees, for lavish entertainment and the wining and dining of clients and customers, and for substantial charitable donations, are so obviously business expenses rather than personal ones. Although potentially personal, each one of these expenses has been accepted as a legitimate business expense and, as each reflects a real cost incurred by certain kinds of business people to produce income from business, a deduction has been allowed. The real costs incurred by businesswomen with children are no less real, no less worthy of consideration and no less incurred in order to gain or produce income from business.

Finally, with regard to the potentially personal nature of child care expenses, the issue of "choice" has been raised as a barrier to the availability of a deduction. As I am in agreement with my colleague Iacobucci J.'s reasoning in this regard, I will make only a few brief points. While there is a personal component to child raising, and while the care of children may be personally rewarding, this "choice" is a choice unlike any others. This "choice" is one from which all of society benefits, yet much of the burden remains on the shoulders of women. Women "choose" to participate in an activity which is not for their benefit alone, and, in so doing, they undertake a function on behalf of all society. As Dickson C.J. very appropriately remarked in Brooks v. Canada Safeway Ltd., 1989 96 (SCC), [1989] 1 S.C.R. 1219, at p. 1243:

That those who bear children and benefit society as a whole thereby should not be economically or socially disadvantaged seems to bespeak the obvious. It is only women who bear children; no man can become pregnant.... it is unfair to impose all of the costs of pregnancy upon one half of the population.

The decision to have children is not like any other "consumption" decision. To describe the raising of children in comparable terms to "choosing" to purchase a certain kind of automobile or live in a certain dwelling is simply untenable. As well, the many complexities surrounding child care make it inappropriate to adopt the language of voluntary assumption of costs, where those costs may, in fact, be allocated in a discriminatory fashion -- the burden falling primarily on women.

In conclusion to the question of whether child care expenses are precluded from being deducted as a business expense under s. 9(1) by the interplay of either s. 18(1)(a) or s. 18(1)(h) of the Act, I answer that child care may be held to be a business expense deductible pursuant to ss. 9(1), 18(1)(a) and 18(1)(h) of the Act, all other criteria being respected. This result leads me to the most crucial consideration in this appeal, that is whether s. 63 of the Act precludes the deduction of child care expenses as a business expense. Here, I part company with my colleague since, in my view, s. 63 of the Act, properly interpreted, is no such bar.

D.Section 63 of the Income Tax Act

(i)Overview

Section 63 of the Act, reproduced earlier, provides a limited deduction for child care expenses. The deduction is available, in most circumstances, to the lower income earning spouse in a family unit. It is a non-source-based deduction available to all parents. At trial, the effect of s. 63 was not argued at length since, as Cullen J. briefly noted (at p. 75):

. . . the defendant [respondent] has admitted that if the nanny expense is a proper business expense pursuant to sections 3, 9 and 18 of the Act, then section 63 cannot prevent it from being allowed as such.

On appeal, however, the MNR withdrew this admission and the relevance of s. 63 became of much greater import. Décary J.A. for the Court of Appeal concluded that s. 63 was a complete code, and precluded the deduction of anything more than the limits set out. Thus, even if child care had the potential to be construed as a business expense, which he did not find, s. 63 foreclosed this possibility. My colleague adopts the same view. I disagree.

Computation of income under the Act is, as already indicated, based on the concept of income from source. Section 3 of the Act, to which I have referred earlier in these reasons, provides that, in computing income for a taxation year, a taxpayer must compute the income from each source from which the income is received and the aggregate of each is the total income. In this case, we are concerned only with income from one source: the business. According to s. 3 of the Act, after calculating income, a taxpayer must compute and subtract any deductions allowed under subdivision e of Division B -- Computation of Income. It is in this calculation that a s. 63 deduction is taken into account. Subdivision e differs from deductions allowable under subdivisions a, b and c, which are each concerned only with a particular source of income. According to s. 4(2) of the Act, the s. 63 deduction is not applicable either wholly or in part to a particular source of income. The argument of the respondent rests on the proposition that the availability of deductions under s. 63 is incompatible with the availability of child care deductions pursuant to s. 9(1). In other words, the mere existence of s. 63 prevents any deduction for child care under s. 9(1) of the Act.

My answer is twofold. First, there is nothing in the wording of s. 63 that overrides the application of s. 9. Second, such an interpretation is, in my view, in contradiction with the purpose and historical basis for the enactment of s. 63, with traditional approaches to diverse deductions under the Act and, finally, with the Charter. Since its inception, the Act has been extensively interpreted. In Stubart Investments Ltd. v. The Queen, 1984 20 (SCC), [1984] 1 S.C.R. 536, Estey J. writing for the Court held at p. 578, quoting Driedger, Construction of Statutes, supra, at p. 87, that:

Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.

I suggest that, in this light, many of the same questions, that were examined with regard to the above analysis of ss. 9(1), 18(1)(a) and 18(1)(h), must take place in the context of s. 63. Just as these sections of the Act have developed with regard solely to the needs of a traditionally male practice of business, so has the history of s. 63 been tainted by a specific view of the world. In this regard, the following comment by Oliver Wendell Holmes in The Common Law (1881), at p. 1, rings as true today, in the context of judicial reasoning with respect to income tax legislation, as it did in 1881, with respect to the development of the common law:

The life of the law has not been logic: it has been experience. The felt necessities of the time, the prevalent moral and political theories, intuitions of public policy, avowed or unconscious, even the prejudices which judges share with their fellow-men, have had a good deal more to do than the syllogism in determining the rules by which men should be governed.

Recognition that laws are not neutral is not new. As the interpretation of "business expense" has been shown to be wrought with male perspective and subjectivity, so is an interpretation of business expense that is limited by s. 63 of the Act. Section 63 was implemented in order to adapt to the needs of a society at that time. In 1972, when that section was enacted, societal ideals with regard to equality of the sexes and the equal participation of women in all aspects of society had not evolved to the point where they have today. Now, in 1993, as we approach the interpretation of laws, one hopes, as is observed by Joan Brockman in "Social Authority, Legal Discourse, and Women's Voices" (1992), 21 Man. L.J. 213, at p. 233, that "[t]he myth of law's neutrality has been largely eroded." An interpretation which holds that s. 63 prevents the deduction of child care costs which would otherwise constitute a valid business expense is guided, in my opinion, by the myth of neutrality, a matter I will now examine.

(ii)Section 63 Interplay with Section 9(1)

According to my colleague and, for that matter, Décary J.A., since the wording of s. 63 of the Act clearly includes the appellant's nanny expenses, s. 63 acts as a complete bar, rendering the appellant Symes ineligible to deduct her child care expenses as a business expense. I do not interpret s. 63 of the Act in such a fashion. Sections 63 and 9(1), in my view, may co-exist. The fact that Parliament enacted a section to benefit all parents in the paid work force without distinction does not prevent a taxpayer who is in business from deducting an expense which can be legitimately claimed as a business expense. Section 63 provides general relief to parents, but nothing in its wording implies that deductions available under s. 9(1) are abolished or restricted in this respect. Had Parliament intended to submit the deduction of child care expenses to the application of s. 63 it would have expressed it in clear language. In providing that none of the deductions permitted by ss. 60 to 63 are applicable to a particular source of income, s. 4(2) of the Act clearly provides for some deductions which may legitimately fall under two sections of the Act. In addition, it is not insignificant that the text of s. 63 is permissive as opposed to the negative wording of ss. 18(1)(b) and 18(1)(e), which are clearly intended to limit the allowable deductions to only those permitted under these paragraphs. Finally, it is important to note that the taxpayer in this case is not seeking to claim a s. 63 deduction from a source, but is seeking a source deduction, independent of the s. 63 deduction for child care, for a business expense.

The appellant argues that the availability of a deduction for child care expenses is consistent with principles of income tax as accepted in Olympia Floor & Wall Tile (Quebec) Ltd. v. Minister of National Revenue, supra (followed in Impenco Ltd. v. Minister of National Revenue, supra). In Olympia, the taxpayer was allowed to deduct, as a business expense, moneys which it had donated to charity for the purpose of gaining or producing income from business. The court held that such a deduction was not prohibited under what is now s. 9 of the Act by the fact that it could also have been allowed under s. 27(1) of the Act. My colleague distinguishes Olympia, supra, in that the deduction there allowed is of a different order than that claimed in the case at hand. There, the taxpayer argued that the expense had been incurred for two distinct purposes, while, in the case at hand, only one purpose is argued. This, in my view, has absolutely no bearing on the interpretation of s. 63, contrary to the view of my colleague. While it is true that the taxpayer in this case has claimed only that the child care expenses she has incurred are in order to gain or produce income from her business, the rationale in both cases is the same and the cases cannot be distinguished with any significance. Jackett P.'s comments are apposite here and, as a consequence, I will cite the following extract from his reasons at length (at pp. 282 and 284):

Ordinarily, one thinks of charity as a personal matter. One gives of what one would otherwise have for oneself for the relief of poverty in others or for education or other "good works". In its original concept, therefore, one would not deduct a charitable gift in computing one's profit or income because it is, by definition, a gift made out of the profit or income after it is earned. Quite clearly, I should have thought, in its inception, a gift to charity was a "personal" outlay, the deduction of which would have been prohibited by the forerunner of section 12(1)(h).

While hitherto unforeseen, however, I can find no inherent incompatibility between an "outlay ... for the purpose of ... producing income" and a gift to a charitable organization. If, on the facts of a particular case, such a gift is found to have been made bona fide, as an outlay for the purpose of producing income, I am of the view that, prima facie, it escapes the prohibition in section 12(1)(a).

There remains for consideration the question whether, when section 27(1)(a) is read with the other provisions of the Act, one must reach the conclusion that Parliament intended that gifts to charitable organizations were not to be deducted except in the manner and to the extent authorized by that provision. In other words, must one infer from the existence of section 27(1)(a) a prohibition against any deduction of charitable contributions in the computation of income?

In my view, when a taxpayer makes an outlay for the purpose of producing income -- i.e. as part of his profit making process -- even though that outlay takes the form of a "gift" to a charitable organization, it is not a "gift" within the meaning of that word in section 27(1)(a) which, by reason of the place it holds in the process of computing taxable income, was obviously intended to confer a benefit on persons who made contributions out of income and was not intended to provide deductions for outlays made in the course of the income earning process. [Emphasis in original.]

Both Olympia and Impenco, supra, recognize that some people do business differently and incur different expenses than those traditionally viewed as business expenses. In Olympia and Impenco, the particular practices of Jewish businessmen were recognized. In this case, it is the particular situation of a businesswoman which is at stake. In principle, and according to the rationale which underlies s. 9 of the Act, the two situations are similar. The fact that s. 63 may be available to others or to the same taxpayer who would prefer to claim the deductions under that section does not in any way impede the application of s. 9, which clearly applies to business expenses.

Further, even if the case at hand could be distinguished, as my colleague suggests, I find that these cases advance, rather than negate, the proposition that even when one's deductions seemingly fall under one section of the Act, this does not render such expenses inadmissible for a different purpose covered under another section of the Act. In fact, there are a number of instances under the Act where a taxpayer may claim a deduction under more than one section of the Act for an expense incurred for a single purpose. Tuition deductions may be deducted under the section for tuition expenses or under general business expenses incurred for the purpose of gaining or producing income. As Professor Woodman, in "A Child Care Expenses Deduction, Tax Reform and the Charter: Some Modest Proposals" (1990), 8 Can. J. Fam. L. 371, suggests at p. 377, footnote 30, "a businessperson can deduct tuition fees that may or may not fall within the tuition fee provisions of ITA sec. 118.5 (now a tax credit but formerly a deduction in ITA sec. 60)". As well, expenses incurred by a salesperson may be deducted, according to the wording of the Act, under multiple sections, ss. 8(1)(f), (h), 8(9) and 18(1)(l).

Regardless of whether the many factors I have set out above are determinative, certainly these many considerations lead one to the conclusion that, at the very least, s. 63 is ambiguous in its effect on s. 9(1). In such circumstances one must resort, as did Cullen J., to the general rules of statutory interpretation which make it clear that ambiguities are to be resolved in favour of the taxpayer. In Johns-Manville Canada Inc. v. The Queen, 1985 43 (SCC), [1985] 2 S.C.R. 46, at p. 72, Estey J. stated:

The characterization in taxation law of an expenditure is, in the final analysis (unless the statute is explicit which this one is not), one of policy.... Such a determination is, furthermore, consistent with another basic concept in tax law that where the taxing statute is not explicit, reasonable uncertainty or factual ambiguity resulting from lack of explicitness in the statute should be resolved in favour of the taxpayer. This residual principle must be the more readily applicable in this appeal where otherwise annually recurring expenditures, completely connected to the daily business operation of the taxpayer, afford the taxpayer no credit against tax either by way of capital cost or depletion allowance with reference to a capital expenditure, or an expense deduction against revenue. [Emphasis added.]

Professor Woodman, supra, at p. 377, expresses the view, however, that Estey J.'s statement was directed only to an income tax system that failed to recognize capital expenditures. Independent of the particular facts of that case, the basic concept in tax law that ambiguities should be resolved in favour of the taxpayer is an accepted one. Applying, if need be, this rule of statutory interpretation to the present situation, in the absence of precise and clear wording in the Act with regard to the effect of s. 63 on s. 9(1), general child care expenses which might be deductible under s. 63 may coexist with child care expenses deductible as a business expense. Richard B. Thomas in "No to Nanny Expense Deduction" (1991), 39 Can. Tax J. 950, at p. 953, underlines this ambiguity:

In our view, the Crown's admission at the trial level was probably correct -- the existence of section 63 should not determine whether the child care expenses in question are a business expense for the purposes of paragraph 18(1)(a). At best, the existence of section 63 might, on an object-and-spirit approach to the scheme of the Act, suggest that Parliament assumed that child care expenses were not deductible business expenses.

Deductions under s. 63 of the Act, as opposed to business expense deductions, clearly require that different criteria be met for one to be eligible for the deduction under one or the other section. In addition, each has its own purpose. Working parents, to whom the deduction under s. 63 applies, would not be eligible for any such deduction had s. 63 not been enacted. Businesspersons, however, may be eligible to deduct child care as they would any other business expense, provided they were able to meet the requirements for a deduction under ss. 9 and 18 of the Act. However, there may be many parents who own businesses who may not be able to meet these requirements and the deduction under s. 63 would, thus, be available to them.

Finally, in this regard, one must not lose track of the fact that s. 63, which is general in nature, was drafted at a time when, as discussed by Iacobucci J., child care expenses were considered an entirely personal expense. When Parliament enacted s. 63, a new benefit, not then allowed under any other section of the Act, was conferred on taxpayers generally in order to better the position of working parents in society. From this perspective, it seems obvious that Parliament could not have intended to prohibit the deduction of child care as a business expense. To conclude that s. 63 intends to limit the opportunity for a businesswoman to deduct child care expenses is antithetical to the whole purpose of the legislation, which was aimed at helping working women and their families bear the high cost of child care. A review of the history and the purpose of the enactment sheds some light in this regard.

(iii)Historical and Purposive Perspective

Iacobucci J. refers to the proposals that led to the introduction of s. 63 in 1972, and is "not impressed by the suggestion that Parliament intended s. 63 to limit deductibility only for employees" (p. 750). Although, like him, I find the history of s. 63 very telling, I draw a very different conclusion from the analysis.

The 1966 report of the Carter Commission recommended that tax credits for working mothers be instituted (Report of the Royal Commission on Taxation, vol. 3, Taxation of Income: Part A - Taxation of Individuals and Families (1966), at p. 19). Six years later, in 1972, s. 63 formed part of a tax reform package, in which Parliament extended to employees a number of new deductions. After noting that six out of seven Canadian taxpayers earn wages or salaries, a limited deduction for child care expenses, together with a number of other employee deductions for tools and travelling expenses, was announced by E. J. Benson the then Minister of Finance in Proposals for Tax Reform (1969), at p. 10, para. 1.33, as follows:

Costs of looking after young children when both parents are working, or when there is only one parent and that parent is working, would be allowed as a deduction subject to certain conditions. This new plan is intended primarily to benefit mothers who need to work to support their families.... [Emphasis added.]

Benson, as quoted by Iacobucci J., further noted supra, at p. 15, paras. 2.7 and 2.9:

We propose to permit deduction of the child care expenses that face many working parents today. The problem of adequately caring for children when both parents are working, or when there is only one parent in the family and she or he is working, is both a personal and a social one. We consider it desirable on social as well as economic grounds to permit a tax deduction for child care expenses, under carefully controlled terms, in addition to the general deduction for children.

This new deduction for child care costs would be a major reform. While it is not possible to make an accurate forecast of the number who would benefit from this new deduction, it seems likely to be several hundred thousand families. It would assist many mothers who work or want to work to provide or supplement the family income, but are discouraged by the cost of having their children cared for.

The deduction available under s. 63 has consistently been described in relation to employed mothers as a "special tax allowance to working mothers" (House of Commons Standing Committee on Finance, Trade and Economic Affairs, Minutes of Proceedings and Evidence, June 23, 1970, at p. 70:145).

It is not insignificant that, as discussed earlier, the number of women in the work force in 1972 was ostensibly less than it is today and the number of women who were in business was minimal. It is highly probable that the legislators did not even put their mind to the fact that women may some day enter into business and the professions in large numbers and that these women may approach the world of business differently than did their male predecessors. Most importantly, it was certainly not within the legislators' frame of mind that child care would be viewed as anything other than a personal expense.

Secondly, I wish to address the concern raised by many commentators, including my colleague Iacobucci J., that to allow child care expenses to be deducted as a business expense would defeat and undermine the purpose of the provision of s. 63, to allow a general deduction of child care expenses to all parents, whether employed or self-employed. Clearly, this analysis is very much tied to the purpose one attaches to the legislation. In a very thoughtful response to these concerns, Audrey Macklin, supra, notes that, even under the s. 63 deduction, the more income a person has and, consequently, the higher tax bracket one falls into, the higher the deduction available. This fact also undermines the goal of equity. Further, the concern that employed persons and business people will not be treated in the same manner is a fact which stems from the rationale of the Act itself; business deductions generally are restricted to those in business and are not available to an employed person. An employee cannot deduct an office at home, car expenses, meal and entertainment expenses, nor club dues or fees. In addition, employers who hire staff can deduct their salaries and employers who provide day care for their employees may deduct the expense (D. Goodison, "Nanny Means Business", CGA Magazine, September 1989, 15). Employees enjoy no such comparable deductions.

As my colleague has indicated, our tax system is based on principles of horizontal and vertical equity. The former requires that we tax individuals in similar circumstances the same, while the latter focuses on the similar taxation of individuals in different circumstances. These are important objectives and were recognized as of the highest priority in the Report of the Royal Commission on Taxation, supra. The Carter Commission stated in vol. 2, at p. 17:

We assign a higher priority to the objective of equity than to all the others.... our task requires us to make recommendations that would lead to an equitable distribution of the burden of taxation. We are convinced that unless this objective is achieved to a high degree all other achievements are of little account. Thus the need for an equitable tax system has been our major concern and has guided us in all our deliberations.

At the same time as we value equity under the income tax system, however, it is apparent that the system creates and perpetuates many inequalities. As Professor Claire Young notes, supra, at pp. 108-9:

Income tax legislation is, by its very nature, both overtly and systemically discriminatory. For example, in Canada, the Act discriminates in favour of Canadian residents and against non-residents by imposing higher rates of tax on some forms of income realised by the latter. It discriminates in favour of the self-employed and against employees by allowing the self-employed a greater range of deductions from income. It discriminates in favour of investors in equity and against investors in debt by taxing capital gains at a lower rate than interest income and giving every resident a lifetime exemption from tax on $100,000 of capital gains.

The basic premise upon which discussion with respect to the differential treatment between employees and businesspersons must be laid is the recognition that the Act can be viewed to operate in a discriminatory fashion. While the Act may never have attempted to maintain equilibrium between persons in business and those who are employed, one must recognize that the realities of doing business cannot be ignored. Employees do not incur overhead expenses while businesses do. Employees are not able to deduct any expenses that they incur in order to work because their income is based on their gross salary, whereas business income is based on the calculation of the net profit or gain of the business. As a result, deductions are a regular occurrence. What constitutes a business expense for tax purposes is not cast immutably in stone. The concept of business expense should be interpreted in a way that takes into account the realities of businesswomen's expenses in relation to child care. However, in recognizing the distinction between the treatment of employees and businesspersons under the Act, in no way am I indicating that this may not constitute a real difficulty within our taxation system.

This said, this case is most fundamentally not about the many vertical inequities that may exist, but rather a question of horizontal equity and the need to treat all businesspersons alike. Further, the fact that the government has provided that a deduction for child care expenses be available to all parents, including employed persons, who ordinarily enjoy very few deductions, indicates governmental recognition that child care is a legitimate expense of working parents, in particular mothers. Finally, we must not assume that most self-employed entrepreneurs, whom the Act favours, are multi-millionaires -- they are not, as the evidence of Dr. Armstrong demonstrates. Dr. Armstrong indicated that self-employed women generally work in small businesses of three to four persons. Their businesses are mostly in the service sector, where, if they are not physically present at the work site, the business could not operate, for example: beauty salons, shops, doctors, lawyers, caterers, etc. As a result of long hours and the requirement to work at the place of business, rather than at home, child care needs are extremely critical for these women. Businesswomen and, for that matter, men who legitimately incur child care expenses for the purpose of gaining or producing income from business must not be deprived of the benefit of a business deduction for their expenses.

Finally, on a technical point, my colleague suggests that allowing a deduction for child care expenses may result in the distribution of child care responsibility becoming more of an "accounting measure" than a reality -- a fictitious creation in order to ensure that the self-employed spouse be eligible to deduct child care as a business expense. This determination, in my view, is not, however, sufficiently problematic to justify disallowing child care deductions as a business expense. First, the taxpayer, as for any other expense, will have to prove that child care is necessary for her or him to gain or produce income from business and, in this connection, will be required to indicate to what extent the taxpayer is responsible for child care. Such scrutiny is really no different from the procedure which the MNR undertakes to determine the deductibility of home office expenses and numerous other expenses.

E.Conclusion on Statutory Interpretation of the Income Tax Act

In conclusion, ss. 63 and 9(1) of the Act may, in my view, co-exist. There is nothing in the wording of s. 63 that excludes the application of s. 9. In addition, any such interpretation is contrary to the purpose and historical basis for the enactment of s. 63 and to traditional approaches to diverse deductions under the Act. In any analysis involving the examination of the interplay between ss. 9(1) and 63, one cannot overlook the effect of an interpretation which concludes that s. 63 overrides the possibility of a business deduction for child care. Although apparently neutral, such an interpretation may be shaped by a selective perspective. Though legislators, no doubt, strive toward objectivity, laws are inevitably drafted on the basis of the law makers' own vision of society and their own experience, experience which leads them to perceive certain interpretations and results as being obvious or neutral. However, different realities may give rise to different meanings, as Margrit Eichler notes in Nonsexist Research Methods: A Practical Guide (1988), at p. 78:

So long as the social positions of males and females are significantly different, it will be necessary to recognize that a given situation may have very different meanings and implications for the members of each sex.

The definition of a business expense under the Act has evolved in a manner that has failed to recognize the reality of businesswomen. It is thus imperative to recognize that any interpretation of s. 63 which prevents the deduction of child care as a business expense may, in fact, be informed by this partisan perspective.

Finally, as mentioned earlier, besides relying on the statute presently under examination, one must not lose sight of the fact that the values enshrined in the Charter must inform such interpretation: Hills v. Canada (Attorney General), supra, and Slaight Communications Inc. v. Davidson, supra. Since, in my view, either the Act permits the deduction of child care expenses as a business expense or it is ambiguous, one must, contrary to my colleague's view, examine that ambiguity through the prism of the values enshrined in the Charter and, in particular, in ss. 15 and 28. These sections encompass and embrace the importance and significance of equality between the sexes and the Act must be interpreted in a manner that does not run contrary to, but rather enhances, these principles. In this regard, when ensuring that laws conform with the imperatives of the Charter, it is important to consider whether a situation or law has different implications for men and women. To disallow child care as a business expense clearly has a differential impact on women and we cannot simply pay lip service to equality and leave intact an interpretation which privileges businessmen, and which continues to deny the business needs of businesswomen with children. In my view, consideration of the Charter values when interpreting the Act strengthens the conclusion that Ms. Symes should be able to deduct her child care expenses as a business expense.

Since I have reached the conclusion that, on the basis of statutory interpretation, Ms. Symes is entitled to deduct her child care expenses as a business expense pursuant to ss. 9(1), 18(1)(a) and (h) and 63 of the Act, the constitutional questions do not have to be answered. However, since my colleague, Iacobucci J., has raised many areas of concern and difficulty with respect to the effect and application of s. 15 of the Charter on the Act, I wish to make the following comments.

VI.The Charter: Section 15

My colleague, Iacobucci J., has set out the basic principles of Charter analysis, particularly with respect to s. 15 and the rights guaranteed by s. 15. I strongly agree that equality "is an elusive concept" (Andrews, supra, at p. 164) and that s. 15(1) guarantees much more than formal equality. The goal of s. 15, with regard to gender, is the attainment of true substantive equality between men and women and, as a consequence, the value of equality as enshrined in the Charter must be given considerable weight in the case at hand.

Contrary to my colleague, however, I believe that an interpretation which prevents Ms. Symes from deducting her child care expenses as a business expense under the Act results in an infringement of her right to equality pursuant to s. 15 of the Charter. There are a number of points made by my colleague, as well as by the Court of Appeal, on which I feel it necessary to comment. These include a focus on s. 63 of the Act rather than on business deductions as a whole, whether the actual cost incurred by Ms. Symes has been proven or if this is even necessary, and whether this case raises the question of the cost incurred by all women as a consequence of child care and not, simply, businesswomen. I will deal with each in turn.

My colleague focuses his Charter analysis primarily on s. 63. He suggests that one must examine whether the appellant has proven that she has suffered discrimination as a result of the effect of s. 63 of the Act. In order to satisfy this test, according to him, Ms. Symes must prove that "s. 63 disproportionately limits the deduction with respect to actual expenses incurred by women" and that "proof that women pay social costs is not sufficient proof that women pay child care expenses" (p. 7650). I beg to differ. Such inference is, in my view, inescapable and, further, in this case, it was proven that Ms. Symes did incur the expenses for which she claims the deduction.

Such inference is part and parcel of a recognition that child care responsibilities present a significant obstacle for women in the social and economic domain, that this issue is an equality issue and that the interpretation of legislation can and must accommodate equality and the changing realities of our society. According to Edward J. McCaffery, in "Taxation and the Family: A Fresh Look at Behavioral Gender Biases in the Code" (1993), 40 UCLA L. Rev. 983, at pp. 987-88:

... tax laws contribute to the marginalization of women in the workplace, and impede a more creative formulation of alternative models of work and family. Major, structural aspects of the tax laws were put in place at a time when traditional families -- meaning households with men working outside, and women working inside, the home -- were dominant. These aspects persist to this day, serving as an anchor against the emergence of more modern and flexible family models. [Footnotes omitted.]

This is the reality in which Ms. Symes lives -- as a lawyer and as a mother. A reality in which she suffers disproportionately to men and, as such, is discriminated against on the basis of her sex. She has proven that she has incurred an actual and calculable price for child care and that this cost is disproportionately incurred by women.

The fact that Ms. Symes has to compare herself to businessmen is not, in my view, a return to the similarly situated test. As McIntyre J. indicates of equality, in Andrews, supra, at p. 164:

It is a comparative concept, the condition of which may only be attained or discerned by comparison with the condition of others in the social and political setting in which the question arises.

We cannot ignore the reality that Ms. Symes is a businesswoman, but neither can this be taken as a return to a test, which has been described by Catharine A. MacKinnon in "Reflections on Sex Equality Under Law" (1991), 100 Yale L.J. 1281, at p. 1297, as follows:

Designed for the exceptional individual whose biography approximates the male one, this approach cannot touch the situation of most women, where the force of social inequality effectively precludes sex comparisons.

Ms. Symes is asking that she be treated equally, independently of her sex, under the Act. She has provided ample evidence that women suffer the social cost of child care and that the expense of child care which she incurs, and has paid, is not a purely personal expense but is incurred for the purpose of gaining or producing income from business. In my view, Ms. Symes suffers an actual and calculable loss as a result of not being able to deduct a legitimate business expense which she incurs. The goal and the requirement of equality, as set out by s. 15 of the Charter, makes it unacceptable that Ms. Symes be denied the right to deduct her business expenses merely because such expenses are not generally incurred by businessmen. Denial of these deductions would constitute discrimination under the Act.

Iacobucci J. suggests that the dilemma should not be framed as a business deduction but, rather, as an issue of the cost of child care that is placed on all women whether employed or self-employed. In this regard, he quotes Professor Audrey Macklin, supra, at p. 512, who states:

If the goal of section 15 in this context is to redress the discriminatory impact of tax laws on members of disadvantaged groups, there can be no pretext for confining the inquiry to section 18(1) of the Act or the remedy to business women. Insofar as tax deductions are concerned, the real issue would be the inadequacy of the partial deduction under section 63 in facilitating self-employed and salaried women's access to the paid workforce.... Their identity as self-employed or salaried women is largely immaterial to the question of whether the existing system perpetuates their subordination.

I am not unaware of the issues discussed by Professor Macklin. I certainly agree that all women suffer severe social and financial costs associated with child-bearing and rearing and that these costs are incurred whether a woman is a self-employed small business owner, a lawyer, an employee or a fulltime homemaker and caregiver. In fact, it is my view that all women, as a consequence of gender, suffer disadvantages associated with caring for children.

Further, I am not unaware that income tax deductions are undoubtedly not the best way for government to provide assistance with regard to the high cost of child care and that the allowed deductions under s. 63 are not representative of the real cost of child care. Perhaps child care should not even be subsidized through the tax system but, rather, provided for in another manner. As is obvious, income tax deductions benefit only those who have a taxable income and, as such, are a form of upside down subsidy which allows a person with more income to spend more on child care and, consequently, to receive a greater portion of the government tax expenditure program in return and the deduction does not help families who cannot afford child care in the first place. Finally, this type of government subsidy provides no assistance to the development of badly needed child care facilities.

Neither am I ignorant of the fact that the disparate treatment of employed persons and businesspersons under the Act is problematic and may require future examination. (See Ontario Public Service Employees Union v. National Citizens' Coalition Inc. (1987), 1987 4429 (ON SC), 60 O.R. (2d) 26 (H.C.), aff'd (1990), 1990 6959 (ON CA), 74 O.R. (2d) 260 (C.A.), where the Ontario Court of Appeal held that the deductions enjoyed by self-employed persons as opposed to employed persons did not constitute a violation of s. 15.) As I stated earlier, the Act treats different groups of people differently and vertical equity between the employed and the self-employed has never been maintained. There has been no concern about this dichotomy, however, with regard to other business deductions allowed under ss. 9 and 18 of the Act and, in my view, the differential treatment of business taxpayers and other taxpayers is not raised in this case. If these many and complex issues were before the Court, a critical examination of the interplay of socio-economic class in the income tax system, the position of all women in society and the implications of child care would have to be examined. However, these are not the issues before the Court. Ms. Symes has not put in issue the enormously complex quandary of the disadvantagement of women generally through the continuing social and economic cost of child care. She has raised the much narrower question, although not in any way insignificant, of the discrimination suffered by businesspersons -- primarily women -- under an interpretation of the Act that disallows child care expenses as a business expense incurred for the purpose of gaining or producing income from her business. That issue, specifically the distinction between business taxpayers, must be answered.

Ms. Symes' claim cannot be addressed simply by pointing to the greater issue of the position of women generally. To grant her a deduction to which she is clearly entitled under the Act in no way diminishes the larger issue of child care as it applies to all parents, particularly women, a matter to be left for another day. I agree with the intervener the Charter Committee on Poverty Issues that the appellant does not challenge s. 63 on the basis of either its inadequacy or its inclusiveness; Ms. Symes challenges the constitutionality of s. 63 only to the extent that it affects the court's interpretation and application of other provisions of the Act governing business deductions.

My colleague refers to family status as a possible alternative approach, as well as to the fact that single mothers may provide a clearer example of hardship suffered as a consequence of child care than does Ms. Symes. This may well be true, but this is no reason why the appellant's rights, under the Act or under s. 15 of the Charter, should not be protected. Discrimination cannot be justified by pointing to other discrimination. This is not the standard to which Mr. Andrews was held in Andrews v. Law Society of British Columbia, supra. In Andrews, the Court did not look at the respondent and justify the infringement of his rights under s. 15 on the basis that, in all other aspects of his life, as a white male lawyer of British descent, such discrimination on the basis of citizenship was acceptable, since he was likely better off than most other persons in the disadvantaged group of non-Canadian citizens. Neither can this be the standard to which Ms. Symes is to be held. This is not a case about the advantageous position in society some women garner as opposed to other women, but, rather, an examination of the advantaged position that businessmen hold in relation to businesswomen. If each claim under s. 15 of the Charter required that all the problems of discrimination with respect to a particular group be remedied as a result of one investigation, Andrews would probably not yet have been decided. The fact that Ms. Symes may be a member of a more privileged economic class does not by itself invalidate her claim under s. 15 of the Charter. She is not to be held responsible for all possible discriminations in the income tax system, nor for the fact that other women may suffer disadvantages in the marketplace arising from child care. As the appellant argues, we cannot "hold every woman to the position of the most disadvantaged women, apparently in the name of sex equality".

I believe that it is important to recall the context in which the determination of Charter issues must be considered, as was set out by my colleague in reference to Wilson J.'s statements in R. v. Turpin, 1989 98 (SCC), and as I wrote in R. v. Seaboyer, 1991 76 (SCC), [1991] 2 S.C.R. 577, at p. 647:

It is my view that the constitutional questions must be examined in their broader political, social and historical context in order to attempt any kind of meaningful constitutional analysis.

In the context of the Charter investigation in the case at hand, we must keep foremost in our minds the unequal cost of child care that women have traditionally borne, the effect of such cost on the ability of women to participate in business or otherwise be gainfully employed and, finally, the impact of child care on women's financial ability and independence. In my view, such a "contextual" approach is an attempt to attack the problem of privilege and to understand the diversity of people's experiences. When issues are examined in context, it becomes clear that some so-called "objective truths" may only be the reality of a select group in society and may, in fact, be completely inadequate to deal with the reality of other groups. As the Honourable Bertha Wilson comments in "Women, the Family, and the Constitutional Protection of Privacy" (1992), 17 Queen's L.J. 5, at p. 13:

Real lives, contemporary women's lives, should not only be taken seriously but should be regarded as primary in interpreting constitutional guarantees which impact directly or indirectly on women's equality. Experiences must not be "shoehorned" to fit within the constitutional guarantees; rather, the constitutional guarantees must be interpreted in a way that is responsive to women's reality.

The divergent effect of a different contextual approach can be significant to the outcome of a case such as the appeal at hand. As Professor Audrey Macklin, supra, describes, the contrasting contextual approaches to this case taken by the trial judge and the Court of Appeal played a pivotal role in the outcome (at pp. 508-9):

The simplest way to decipher the diverging views of Mr. Justice Cullen and Mr. Justice Décary on the Charter issue is to imagine the judges peering at Beth Symes through different pairs of glasses. When the trial judge looked at her, he saw a business woman standing next to a business man. When the judges of the Court of Appeal looked at her, they saw a self-employed, professional woman standing next to a salaried woman. In the former scenario, Symes was disadvantaged by her sex contrary to section 15 and deserved to have her business expenses treated the same as a businessman's. In the latter, she was privileged by her class and made a mockery of section 15 of the Charter by attempting to use her status as a business woman to obtain greater benefits than those available to salaried women.

The gist of Mr. Justice Décary's position is that it is absurd to grant Symes parity with businessmen if, in so doing, she is placed in a superior position to other women. To put it another way, it is preferable that all women be equally disadvantaged relative to men if the alternative is to improve the situation of the best-off women.

The proper interpretive approach to issues of equality must recognize that a real solution to discrimination cannot be arrived at without incorporating the perspective of the group suffering discrimination. In this case, s. 15 of the Charter demands that the experience of both women and men shape the definition of business expense. Whether child care is consistent with the values of equality and is representative of the reality faced by women is not doubtful in my mind.

More generally, I would like to make the following observations.

A.Women and Child Care

In the 1984 Report of the Commission on Equality in Employment,

Rosalie Abella (now of the Ontario Court of Appeal) stated (at p. 177):

By Canadian law both parents have a duty to care for their children, but by custom this responsibility has consistently fallen to the mother. It is the mother, therefore, who bears any guilt or social disapprobation for joining the workforce. And it is the mother who normally bears the psychological and actual responsibility for making childcare arrangements. [Emphasis added.]

The implementation of s. 15 of the Charter in 1985 has not led to an overnight reversal of this phenomenon. As Dr. Armstrong testified, research in Canada and abroad has consistently demonstrated that women remain primarily responsible for child care, and that this is so whether women work inside or outside the home. Dr. Armstrong, asked to give a synopsis of those studies, said that

they all produce very consistent results, I think, that while men do some child care work, that it is consistently across Canada, whether it is Vancouver, Halifax, Toronto, or Flin Flon, it's clear that the primary responsibility and the major work load is women's work load; that the kind of child care that men tend to provide tends to be the discretionary sort -- that you take the children for a walk or read them a bedtime story or something similar rather than the necessary tasks that are associated with children, and this research is consistent whether we're talking about a household in which the woman is employed full time or whether she's full time at home working there.

In fact, Statistics Canada reports that working men are chiefly responsible for child care in only 6 percent of families (Susan Crompton, "Who's Looking After the Kids? Child Care Arrangements of Working Mothers", in Statistics Canada, Perspectives on Labour and Income, vol. 3, No. 2 (Summer 1991), at p. 68).

Further, the responsibility for child care has also a very real impact on women's patterns of employment. According to the Statistics Canada Family History Survey, ongoing child care had a major impact on the continuity of work for the majority of women but almost no impact on men. This is consistent with research done on women in managerial and professional work which identifies having children as a major disruption in career patterns and as a problem for women. (See also M. Gunderson, L. Muszynski and J. Keck, Women and Labour Market Poverty (1990), at p. 30.) Dr. Armstrong was not aware of any similar research on men which identifies raising children as having an impact on men's careers. As well, as I discussed above, the study recently completed by the Canadian Bar Association indicates that male lawyers did not consistently report that child care had any impact on their career (Touchstones for Change, supra), whereas female lawyers indicated that they suffered financial losses as a result of child care responsibilities. In fact, Dr. Armstrong observed that the cost alone can consume a large portion of a woman's income. Self-employed women do not differ significantly from women as a whole with respect to the effect of child care.

B.Self-employed Women

In 1991, the Canadian Advisory Council of the Status of Women studied the lives and business experiences of more than 200 women business owners across Canada. The results of the Advisory Council's study were published in a document entitled The Glass Box: Women Business Owners in Canada. The authors of The Glass Box found that women's businesses are clustered in the retail and service sectors, notorious for their long hours, high personal demands, and low financial returns. As in the work force generally, where women are clustered in jobs such as office work and nursing, the effect of ghettoizing is to lower the financial return to the business owner.

The authors of the report describe the typical female surveyed in the following way (at p. 10):

The typical respondent could be described as a white woman, married, with two children, and owning 100% of a retail business. She is a high school graduate who worked in a related field before starting her business but had no experience as a manager.

Her current venture is her only one, which she founded six to ten years ago with less than $25,000 in start-up capital, financed by her own savings. She continues to finance the operation herself, taking less than $30,000 annually in salary, even though she works 50 to 70 hours a week. The business employs an average of three people. The strongest impression remaining after talking with hundreds of entrepreneurs is the modest nature of the business. For the most part, these businesses are not innovative, substantial ventures.

The annual incomes reported by the women in the Glass Box survey serve to debunk much of the myth of the wealthy businesswoman. One-third of the sample reported receiving no salary. Twenty percent made between $30,000 and $50,000, and only 15 percent made over $50,000. Male business owners reported annual earnings some 66 percent higher than earnings reported by women business owners.

Discrimination was reported by slightly more than half the entrepreneurs in the Glass Box study. Creditors, in particular, seem to be using irrelevant criteria such as marital status and age (linked to childbearing potential) to assess loan applications. The authors reported that being married and having children contributes to the perception of stability in male applicants, but these same factors are taken to suggest unreliability in women applicants. More subtle forms of differential treatment occur when women discover they are invisible to customers, suppliers, and creditors, many of whom assume that any man present in the business is the boss. On page 65 of their report, the authors of The Glass Box stated:

As we interviewed women entrepreneurs in industrial malls and crowded retail centres, the image of a woman alone in a glass box emerged. Isolated by her unusual occupation as an entrepreneur, by her sole ownership of the business, by her immigrant status, by her limited networks of colleagues and business friends, and particularly by the long hours required by business and household demands, the woman entrepreneur is surrounded by opportunities to which she cannot gain access. Thus, in addition to the difficulties facing all entrepreneurs in starting and making a success of a new business venture, a woman entrepreneur faces conditions that appear to be attributable almost completely to the fact that she is a woman in a non-traditional occupation. These factors co-exist with the challenges, personal satisfaction, and independence experienced by women entrepreneurs. This is the situation we have described as the glass box of female entrepreneurship. Surrounded by opportunities but hemmed in by circumstances, the woman entrepreneur sees her ability to realize business and personal success limited by a number of obstacles.

Nearly half of the respondents in the Glass Box study were married with children at home. Unlike men entrepreneurs, most women assumed complete responsibility for home and children. Only 10 percent hired household help, a reflection of either a lack of financial resources or reluctance to delegate any part of an important role. The authors of the Glass Box report found that child care responsibilities formed one of the major obstacles preventing businesswomen from realizing their full potential as entrepreneurs. It is with regard to this context: the reality of women's lives and the severe implications of child care, that the present Charter analysis must be approached.

VII.Conclusion

My incursion into s. 15 of the Charter was mandated only by my colleague's comments in that connection. In my view, Ms. Symes must succeed primarily on statutory interpretation of the Act and, in particular, ss. 9 and 18 of the Act. Moreover, if s. 63 is to inform these sections, they do clearly co-exist. Child care may be deductible as a business expense in those cases where the requirements for deductibility of business expenses are met. With regard to s. 15 of the Charter, it is my opinion that the values of equality it implies shape the determination of the issues in the interpretation of s. 63 of the Act. An interpretation that runs contrary to these values must be rejected.

In the result, I would allow the appeal, reverse the judgment of the Court of Appeal and restore the judgment of the trial judge, the whole with costs throughout.

The following are the reasons delivered by

McLachlin J. (dissenting) -- I agree with Justice L'Heureux-Dubé's interpretation of ss. 9, 18 and 63 of the Income Tax Act, R.S.C. 1952, c. 148, and s. 15 of the Canadian Charter of Rights and Freedoms, and with her conclusion that the appellant's child care expenses are deductible as business expenses under s. 9 of the Income Tax Act.

Appeal dismissed, L'Heureux‑Dubé and McLachlin JJ. dissenting.

Solicitors for the appellant: Tory Tory DesLauriers & Binnington, Toronto.

Solicitor for the respondent: John R. Power, Ottawa.

Solicitor for the intervener the Attorney General of Quebec: Monique Rousseau, Ste‑Foy.

Solicitors for the intervener the Charter Committee on Poverty Issues: Scott & Aylen, Toronto.

Solicitor for the intervener the Canadian Bar Association: The Canadian Bar Association, Ottawa.