T-4788-79
The Queen (Plaintiff)
v.
Aldo Diaz (Defendant)
Trial Division, Marceau J.—Montreal, April 1;
Ottawa, April 16, 1981.
Income tax — Deductions — In 1976, the taxpayer claimed
a deduction for the support of his parents and his wife's
parents in Argentina — Minister disallowed deduction and
issued a reassessment — Board set aside reassessment —
Defendant relies on s. 109(1)(f) of Income Tax Act — Whether
constituent elements of s. 109(1)(1) were complied with —
Appeal allowed except with respect to deduction claimed for
support of taxpayer's mother — Income Tax Act, S.C. 1970-
71-72, c. 63, as amended, ss. 109(1)(f), 252(2)(c).
Zaki v. The Minister of National Revenue 78 DTC 1583;
[1978] C.T.C. 2843, referred to.
INCOME tax appeal.
COUNSEL:
R. Roy for plaintiff.
A. Ross for defendant.
SOLICITORS:
Deputy Attorney General of Canada for
plaintiff.
Arthur J. Ross, Montreal, for defendant.
The following are the reasons for judgment
rendered in English by
MARCEAU J.: The taxpayer-defendant, an econ
omist, comes from Argentina but has been for
some years residing and working in Montreal, P.Q.
In computing his taxable income for the year
1976, the defendant claimed a special deduction of
$2,965.38, being an amount allegedly expended by
him during the taxation year for the support of
relatives in Argentina, namely his father ($823),
his mother ($650), his father-in-law ($720.75),
and his mother-in-law ($771.63). The Minister
disallowed the deduction and issued a reassessment
accordingly. The reassessment was set aside by the
Tax Review Board. It is this decision of the Board
which is here under appeal.
The provision of the Income Tax Act (S.C.
1970-71-72, c. 63, as amended) on which the
defendant relies to support his claim for the
exemption is that of paragraph 109(1)(f) which
reads as follows:
109. (1) For the purpose of computing the taxable income of
an individual for a taxation year, there may be deducted from
his income for the year such of the following amounts as are
applicable:
(/) an amount expended by the individual during the year for
the support of a person who, during the year, was dependent
upon the individual for support and was
(i) his parent or grandparent and dependent by reason of
mental or physical infirmity,
(ii) his brother or sister
(A) under 21 years of age,
(B) 21 years of age or over and dependent by reason of
mental or physical infirmity, or
(C) 21 years of age or over and in full-time attendance
at a school or university,
not exceeding an amount equal to,
(iii) if the person has not attained the age of 16 years
before the end of the year, $300 less h of the amount, if
any, by which the income for the year of the person
exceeds $1,100, and
(iv) in any other case, $550 less the amount, if any, by
which the income for the year of the person exceeds
$1,150; 1
The question of course is whether the defendant
was entitled in the circumstances revealed by the
evidence to invoke this provision of the law, or, put
another way, whether the constituent elements of
this exempting provision had in his case been
complied with. This is what must be examined,
bearing in mind that the burden of proof is on the
defendant since the assumptions made by the Min
ister have to be left undisturbed unless and until
found to be wrong.
When one reads paragraph 109(1)(f), one is
immediately confronted with what appears to be
major difficulties of construction and implementa
tion. What is the exact import of the phrases
"amount expended ... for the support of a per
son", "dependent upon the individual for support"
and "by reason of mental or physical infirmity"?
The member who wrote the judgment for the Tax
Review Board, after having noted that the provi-
1
Those figures must be annually adjusted as required by
section 117.1 of the Act: for the taxation year 1976, the
amounts to be used were $720 and $1,470.
sion had been in effect for quite a long time since
"paragraph 109(1)(f) of the new Act for all prac
tical purposes is analogous to paragraph 26(1)(d)
of the old Act", expressed his surprise that an
enactment which poses such "extreme difficulty"
could have been so little challenged or argued over
the years. And in fact there is, to my knowledge,
no decision of the Court with respect thereto. It
appears to me, however, that the practical difficul
ties raised by the enactment, at least since the
coming into force of the new Act, are not as great
as one might expect.
It is not accurate to say that paragraph 26(1)(d)
of the old Act has simply been carried forward in
the new Act. Indeed, the limitation contained in
the last sentence of the new subparagraph was an
addition. From then on the deduction could not
exceed an amount equal to $550 "less the amount,
if any, by which the income for the year of the
person exceeds $1,150", (the two figures being
subject to adjustment as indicated above). The
exemption could therefore come into play only if
the dependant's income, for the year, had been less
than $1,600. I don't suppose the need for support
of someone whose annual net income from all
sources is so meagre could ever be contested, what
ever be the country in which he lives. As a result
and for all practical purposes, the exact meaning
of the words "for the support" became irrelevant
in 1970. On the other hand, another difficulty,
that raised by the undefined words "dependent
upon the individual" seems to me to be somewhat
lessened by the fact that the expense must have
been made for the support of a parent (including a
father-in-law and mother-in-law, pursuant to para
graph 252(2)(c) of the Act) or a brother or sister.
The requirement of "dependency" can hardly
become an issue when dealing with individuals tied
together by such a close family relationship. There
remains here, it is true, the question of whether the
taxpayer must have been the only person to whom
the parent in need could look for support; and the
question is, I agree, an uneasy one, since the
French version of the text, by using the expression
"était à la charge de", appears to favour a positive
answer, while the English version, taken literally,
and the intent that may be attributed to the provi
sion as a whole, do not support such a narrow view.
The practical advantage of having a clear answer
to that question appears however quite minimal
and that it never became an issue for the Court is
to me understandable. In any event, there is no
need for me to take a stand on this point in order
to deal with the case here.
That leaves us with one major difficulty. What
is the import of the phrase "dependent by reason
of mental or physical infirmity", and what evi
dence will be required of the taxpayer to satisfy
the onus cast upon him to show that this condition
in his case is properly fulfilled? The Board took
the view that because the condition could not be
dealt with objectively nor could it lend itself to any
"reasonable criteria", its existence in a particular
case should be left to the appreciation of the
taxpayer. I definitely disagree. The duty of the
Court is to apply the law as it is, however delicate
it may be to do so in a particular case. I believe,
however, that the "infirmity", especially the "mor-
al infirmity" contemplated by the provision is not
the state of being incompetent, "mentally
incompetent". In my view, the word "infirmity"
implies more than mere retirement age (compare
Zaki v. M.N.R. 78 DTC 1583 at page 1584;
[1978] C.T.C. 2843), but it must be taken in its
general sense, i.e. the state of being of poor or
deteriorated vitality (see Webster's New Collegiate
Dictionary). As to the manner in which such
"infirmity" may be proven, I do not see why a
clear, unequivocal, detailed and uncontradicted
statement or testimony of the taxpayer should not
be accepted as sufficient if it is convincing.
If my understanding of paragraph 109(1)(f) is
correct, the disposition of this appeal is very
simple.
First, with respect to the father. I would have
had no difficulty in finding that the defendant has
actually expended the amount he sought to deduct
for the support of his father who, because of his
age (68 years) and his eyesight problems (he was
operated on both eyes in 1976) was infirm within
the meaning of the Act. However, the defendant
himself adduced documentary evidence that his
father in 1976 was in receipt of a pension from the
Argentinian government amounting to the sum of
$2,489.96. No deduction can therefore be claimed.
Second, with respect to the mother. The mother
had no income in 1976. She had suffered from
high blood pressure since the late sixties and her
general physical condition was poor: she was
infirm within the meaning of the subparagraph.
The money claimed as a deduction was expended
for her support. The defendant was entitled to the
deduction.
Finally, with respect to the father-in-law and the
mother-in-law. The defendant did not adduce evi
dence that the amounts claimed were in fact paid
by him to his in-laws. The money orders produced
tend to show that the money was actually fur
nished by his wife who was a regular employee
earning a full salary in 1976. Besides, nothing in
the defendant's testimony can lead to the conclu
sion that either of them, then aged 65, could have
been in a weak state of physical or mental health
in 1976. Moreover, it was established that the
father-in-law was in receipt of a pension, the
amount of which was close to that of the father. It
is clear to me that the defendant is not entitled to
the deductions claimed with respect to either his
father-in-law, or his mother-in-law.
As a result of the foregoing, I am of the view
that the appeal must be sustained in part, and the
decision of the Board set aside in so far as it
relates to the deductions claimed with respect to
the father, the father-in-law and the mother-in-
law. The appeal as it relates to the deduction
claimed with respect to the mother is denied.
Although the action was for the most part suc
cessful, in compliance with the provision of subsec
tion 178(2). of the Act, the Minister shall pay all
reasonable and proper costs of the defendant in
connection therewith.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.