Judgments

[1995] 1 F.C. 130

A-1655-92

Deborah Lister (Applicant)

v.

Her Majesty the Queen (Respondent)

A-1656-92

Kenneth Lister (Applicant)

v.

Her Majesty the Queen (Respondent)

Indexed as: Lister v. Canada (C.A.)

Court of Appeal, Heald, Létourneau and Robertson JJ.A.—Edmonton, June 13; Ottawa, July 8, 1994.

Constitutional law — Charter of Rights — Equality rights — Income Tax Act, s. 122.5 providing Goods and Services Tax credit to Canadian residents either married, parents, or 19 or over — Applicants aged 13, 18, living with father, alleging s. 122.5 discriminatory based on age — As disadvantage under s. 15 may have to be found outside impugned legislation, larger social, political, legal context examined — Age used to determine dependency, whether included in family unit for purpose of receiving benefit — No prejudice in relation to age-based definition of dependency — Purpose of s. 122.5, to lessen effect of regressive tax, not discriminatory — In view of remedial nature, larger context in which operating, inherent limits in implementation of such benefit program, s. 122.5 not creating discriminatory, prejudicial difference of treatment — Stereotyping, prejudice not proven.

Income tax — Income Tax Act, s. 122.5 (providing GST credit to Canadian residents, either married, parents, or 19 or over) not discriminatory based on age — Larger social, political, legal context examined to determine whether discrimination — GST credit not taxing, but benefit program — Purpose to lessen effect of regressive tax on lower-income Canadians — Not reinforcing disadvantages, stereotyping — Neither purpose nor effects discriminatory.

These were applications for judicial review of the Tax Court’s dismissal of appeals from refusal of the Goods and Services Tax credit for 1990. Income Tax Act, section 122.5 provides a refundable tax credit of $190 to individuals who are resident in Canada and either married, parents of a child, or 19 years of age or over. In 1990 the applicants were 13 and 18 respectively and lived at home with their father. They alleged that section 122.5, both in its purpose and effect, violates their equality rights under Charter, section 15 on the basis of age. They argued that children under age 19 are discriminated against by reason of age because it is their parents who are entitled to claim the tax credit on their behalf, while children aged 19 and over can claim the refund for themselves. The applicants submitted that there is no logical connection between age and financial status. They submitted that the credit should have been granted on the basis of income and consumption, and not age.

Held, the applications should be dismissed.

Per Létourneau J.A. (Robertson J.A. concurring): For there to be a Charter, section 15 violation there must be evidence of discrimination in stereotyping or prejudice. The need for discrimination, as opposed to mere difference in treatment, in relation to economic legislation has been emphasized. Differentiation that is so grossly unfair to an individual or group and so devoid of any rational relationship to a legitimate state purpose as to offend against the principle of equality before and under the law, or where it is the last constitutional resort to protect the individual from fundamental unfairness, would merit intervention.

A disadvantage under section 15 may have to be found outside the impugned legislation, and therefore a court must look at the impugned legislation and at the larger social, political and legal context to determine whether the differential treatment is discriminatory. There was no evidence suggesting that unmarried children under the age of 19 were members of a group whose claim fit within the overall purpose of section 15, namely to remedy or prevent discrimination against groups subject to stereotyping, historical disadvantage and political and social prejudice.

In the broader context, the GST, like all taxes, is regressive in that the amount of consumption tax paid as a percentage of income increases as income declines. By utilizing the mechanisms already in place, the objective of the GST credit was to identify efficiently and to redistribute taxes to lower-income Canadians.

There are important differences between age discrimination and the other grounds enumerated in subsection 15(1). The applicants misconstrued the nature of the relationship between age and the allocation of the GST credit. Age was not invoked as a criterion to deny a benefit, but rather to determine whether a child is likely to be a dependant and therefore ought to be included in the family unit for the purpose of receiving the benefit. It was linked to marital and parental status and had an obvious and logical connection with dependency. In turn, family status was linked to income since the availability and amount of the refundable credit depended on the level of income of the family itself. Age is a most relevant factor in the context of determining whether a child is dependent on his parents. There was no evidence of prejudice in relation to an age-based definition of dependency in the family.

Section 122.5 was not discriminatory in its purpose. The GST credit is not a taxing program, but a benefit program. It was not intended to impose a burden on taxpayers generally and discriminate against some of them, but to lessen the adverse effect of a regressive tax upon lower-income Canadians.

Nor was section 122.5 discriminatory in its effects. It does not reinforce disadvantages or promote stereotyping. There was nothing wrong for Parliament, in its search for an equitable solution to the regressive nature of the GST, to confer benefits upon those who suffer most from the imposition of that tax, namely lower-income Canadians. In view of the remedial nature of the impugned provision, the larger context in which it operates, and the inherent limits in the implementation of such a benefit program, section 122.5 does not create a discriminatory and prejudicial difference of treatment.

The applicants had failed to establish any prejudice or stereotyping. They did not establish fundamental unfairness or that section 122.5 is so grossly unfair or so devoid of any rational relationship to a legitimate state purpose as to offend against the equality principle entrenched in the Charter. Section 122.5 creates a distinction, but one which is not discriminatory.

Per Heald J.A. (concurring in the result): The applicants had not discharged the onus on them of establishing infringement of their Charter, subsection 15(1) rights. Section 122.5 draws a distinction on the basis of age for the purpose of allocating GST credits. The issue was whether that distinction was discriminatory. The record presented a problem because there was insufficient evidence to support a finding that section 15 had been infringed. Both applicants were, at all relevant times, of an age which imposed upon their parents a legal obligation to support them. There was no evidence showing that they did not receive the GST credit, at least indirectly through parental support. The applicants had not shown that they were adversely affected by section 122.5. Nor was there any evidence which addressed the question of whether teenagers, unmarried and living away from home would constitute a historically disadvantaged group. To have decided these applications on the basis of the record would have resulted in decisions made in a factual vacuum. In view of the frailties of the record, it was unnecessary to engage in an extensive analysis of Charter, subsection 15(1).

STATUTES AND REGULATIONS JUDICIALLY CONSIDERED

Canadian Charter of Rights and Freedoms, being Part I of the Constitution Act, 1982, Schedule B, Canada Act 1982, 1982, c. 11 (U.K.) [R.S.C., 1985, Appendix II, No. 44], ss. 1, 15.

Income Tax Act, R.S.C. 1952, c. 148 (as am. by S.C. 1970-71-72, c. 63, s. 1), s. 122.5 (as enacted by S.C. 1990, c. 45, s. 48).

CASES JUDICIALLY CONSIDERED

APPLIED:

Andrews v. Law Society of British Columbia, [1989] 1 S.C.R. 143; (1989), 56 D.L.R. (4th) 1; [1989] 2 W.W.R. 289; 34 B.C.L.R. (2d) 273; 25 C.C.E.L. 255; 10 C.H.R.R. D/5719; 36 C.R.R. 193; 91 N.R. 255; R. v. Swain, [1991] 1 S.C.R. 933; (1991), 75 O.R. (2d) 388; 71 D.L.R. (4th) 551; 63 C.C.C. (3d) 481; 5 C.R. (4th) 253; 3 C.R.R. (2d) 1; 125 N.R. 1; 47 O.A.C. 81; McKinney v. University of Guelph, [1990] 3 S.C.R. 229; (1990), 76 D.L.R. (4th) 545; 91 CLLC 17,004; 2 C.R.R. (2d) 1; 118 N.R. 1; 45 O.A.C. 1; R. v. Turpin, [1989] 1 S.C.R. 1296; (1989), 48 C.C.C. (3d) 8; 69 C.R. (3d) 97; 39 C.R.R. 306; 96 N.R. 115; 34 O.A.C. 115; Rudolf Wolff & Co. v. Canada, [1990] 1 S.C.R. 695; (1990), 69 D.L.R. (4th) 329; 43 Admin. L.R. 1; 41 C.P.R. (2d) 1; 46 C.R.R. 263; 106 N.R. 1; 39 O.A.C. 1; MacKay v. Manitoba, [1989] 2 S.C.R. 357; [1989] 6 W.W.R. 351; (1989), 61 Man. R. (2d) 270; Smith, Kline & French Laboratories Ltd. v. Canada (Attorney General), [1987] 2 F.C. 359; (1986), 34 D.L.R. (4th) 584; 11 C.I.P.R. 181; 12 C.P.R. (3d) 385; 27 C.R.R. 286; 78 N.R. 30 (C.A.).

CONSIDERED:

Washington v. Davis, 426 U.S. 229 (1976); Regan v. Taxation with Representation of Washington, 461 U.S. 540 (1983); Symes v. Canada, [1993] 4 S.C.R. 695; (1993), 110 D.L.R. (4th) 470; 161 N.R. 243.

REFERRED TO:

Brushaber v. Union Pacific R. R., 240 U.S. 1 (1916); Thibaudeau v. M.N.R., [1994] 2 F.C. 189; (1994), 167 N.R. 161 (C.A.); Stubart Investments Ltd. v. The Queen, [1984] 1 S.C.R. 536; (1984), 10 D.L.R. (4th) 1; [1984] CTC 294; 84 DTC 6305; 53 N.R. 241; Dickason v. University of Alberta, [1992] 2 S.C.R. 1103; (1992), 95 D.L.R. (4th) 439; 141 N.R. 1.

AUTHORS CITED

Bittker, Boris I. “Federal Income Taxation and the Family” (1975), 27 Stan. L. Rev. 1389.

Canada. Department of Finance. Goods and Services Tax: Technical Paper. Ottawa: Dept. of Finance, 1989.

Canada. Department of Finance. Integration of Social Program Payments into the Income Tax System: A Discussion Paper on the Feasibility of Integration. Ottawa: Dept. of Finance, 1978.

Canada. Federal Sales Tax Review Committee. Report of the Federal Sales Tax Review Committee. Ottawa: The Committee, 1983.

Report of the Royal Commission on Dominion-Provincial Relations, Book 1, Canada: 1867-1939. Ottawa, 1940.

Report of the Royal Commission on Taxation, vols. 2, 3, 5. Ottawa: Queen’s Printer, 1966 (Chair: K. M. Carter).

Sheppard, Colleen “Equality in Context: Judicial Approaches in Canada and the United States” (1990), 39 UNB LJ 111.

Tax Reform 1987: Income Tax Reform. Ottawa: Dept. of Finance, 1987.

Tax Reform 1987: Sales Tax Reform. Ottawa: Dept. of Finance, 1987.

Woodman, Faye “The Charter and the Taxation of Women” (1990), 22 Ottawa L. Rev. 625.

APPLICATIONS for judicial review of the Tax Court’s dismissal of appeals from refusal of the Goods and Services Tax credit, provided in Income Tax Act, section 122.5, to applicants, both under age 19 and living with their father (Lister v. Canada (Minister of National Revenue—M.N.R.), [1992] T.C.J. No. 674 (QL)). Applications dismissed.

COUNSEL:

Philip Lister, Q.C. for applicants.

J. E. Ted Fulcher for respondent.

SOLICITORS:

Lister and Associates, Edmonton, for applicants.

Deputy Attorney General of Canada for respondent.

The following are the reasons for judgment rendered in English by

Heald J.A.: I have read the reasons for judgment prepared herein by my brother Létourneau J.A. and while I agree with him that the within applications for judicial review should be dismissed, I differ as to the reasons which, in my view, support that conclusion.

I agree that there was no infringement of subsection 15(1) of the Charter [Canadian Charter of Rights and Freedoms, being Part I of the Constitution Act, 1982, Schedule B, Canada Act 1982, 1982, c. 11 (U.K.) [R.S.C., 1985, Appendix II, No. 44]] in the circumstances of this case. The applicants carry the onus of establishing infringement of the rights accruing to them under subsection 15(1). On this record, the applicants have not discharged that onus. In Andrews v. Law Society of British Columbia,[1] Mr. Justice McIntyre stated:

It is not every distinction or differentiation in treatment at law which will transgress the equality guarantees of s. 15 of the Charter. It is, of course, obvious that legislatures may— and to govern effectively—must treat individuals and groups in different ways.

At page 171, he stated the purpose of section 15 as follows: “to ensure equality in the formation and application of the law.” Section 15 guarantees equality without discrimination. At pages 174-175, he added:

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. Distinctions based on personal characteristics attributed to an individual solely on the basis of association with a group will rarely escape the charge of discrimination, while those based on an individual’s merits and capacities will rarely be so classed.

Accordingly it is clear from Andrews, supra, that subsection 15(1) applies where there is discrimination based on the personal characteristics of an individual or a group which results in disadvantages to that individual or group. It does not matter whether or not the discrimination is intentional. In this case, the Court is required to consider the purpose and the effects of discrimination in the context of age. Section 122.5 of the Income Tax Act [R.S.C. 1952, c. 148 (as am. by S.C. 1970-71-72, c. 63; 1990, c. 45, s. 48)] draws a distinction on the basis of age for the purpose of allocating GST credits. The main issue before us is whether that distinction is discriminatory. As I see it, the record before us presents a problem for these applicants, because there is insufficient evidence to support a finding that section 15 of the Charter has been infringed. As noted by my colleague, the applicants were 13 and 18 year of age respectively at the relevant time. They lived at home with their father. They were refused the GST credit under section 122.5 because of their age and the fact that they were unmarried and had no children. Their submission was that section 122.5 violates, both in purpose and effect, their equality rights under section 15 of the Charter on the basis of age. The specific submission was that children under the age of 19 are discriminated against by reason of age because it is their parents who are entitled to claim the tax credit on their behalf while children 19 and over can claim the refund for themselves.

In order to engage the rationale of Andrews, supra, it must be shown that the statutory provision under attack must necessarily have the “effect of imposing burdens, obligations, or disadvantages on such individual or group not imposed upon others.” There is no evidence on the record which addresses this issue. Both applicants were, at all relevant times, of an age which imposed upon their parents a legal obligation to support them. There was no evidence adduced to show that these applicants did not receive the GST credit, at least indirectly, through parental support. Accordingly, in my view, they have not shown that they are adversely affected by section 122.5 in such a manner as to attract the constitutional protection of subsection 15(1) of the Charter.

I now turn from the position of these applicants to the position of other teenagers, unmarried and living away from home. On this question as well, little, if any, evidence was adduced. Specifically, there was no evidence which addressed the question as to whether these teenagers would constitute a historically disadvantaged group from the perspective of subsection 15(1). In the case of R. v. Turpin,[2] Wilson J. stated:

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.

Such a search for “existing disadvantage” would impel the introduction of evidence which goes much beyond that contained in this record. To decide these applications on the basis of the present record would result in the decisions being made in a factual vacuum. As noted by my colleague, such an approach has been found unacceptable.[3]

In view of the factual frailties on this record, it is unnecessary, in my view, to engage in an extensive analysis of subsection 15(1) of the Charter. For the foregoing reasons, I have concluded that these applications for judicial review cannot succeed.

Similarly, since a subsection 15(1) breach has not been established on this record, a section 1 Charter analysis becomes unnecessary. In my view, issues relating to policy objectives and legislative intent should not be considered at the initial stage of Charter analysis (i.e., the inquiry into whether there is, in fact, a breach). Indeed, given the possibility of indirect or effects-based discrimination, that is, discrimination not apparent on the face of the statute, a consideration of legislative intent at this juncture does not answer the question as to whether the legislative provision under review is discriminatory under the Charter.

Accordingly, and for these reasons, I would dismiss the applications for judicial review herein.

* * *

The following are the reasons for judgment rendered in English by

Létourneau J.A.:

Facts and Issues

This is yet another challenge to the Income Tax Act, R.S.C. 1952, c. 148, as amended, (the Act) pursuant to section 15 of the Canadian Charter of Rights and Freedoms (the Charter). In the present applications for judicial review, section 122.5 of the Act, which provides the rules for determining the Goods and Services Tax credit (GST credit) for individuals, is attacked.[4]The section provides a refundable tax credit of $190 to an individual who is resident in Canada and is either married, a parent of a child or 19 years of age or over.

The applicants request a review of the decision of Judge Margeson of the Tax Court of Canada, delivered on November 12, 1992 [[1992] T.C.J. No. 674 (QL)], which dismissed their appeals launched in respect of the 1990 taxation year. At the outset of the trial before the Tax Court, it was agreed that the evidence, law and arguments given and made in one case would apply equally to the other.

The applicants who, at the relevant time, were 13 and 18 years of age respectively and lived at home with their father were refused the GST credit on account of their age and the fact that they were unmarried or had no children. They allege that section 122.5 violates, both in its purpose and effect, their equality rights under section 15 of the Charter on the basis of age.

More precisely, they contend that children under the age of 19 are discriminated against by reason of age because it is their parents who are entitled to claim the tax credit on their behalf while children aged 19 and over can claim the refund for themselves.

Furthermore, in their written submissions, they alluded to the fact that there may exist potential discrimination on the basis of marital or family status as children under the age of 19 who are married are eligible for the rebate. However, as that ground of review was not pursued at the hearing, I shall not rule on it although my reasoning would certainly be applicable thereto.

For the 1990 taxation year, both applicants reported in their income tax returns a modest income from various sources. In the court below and before us, they were represented by their father who is a practising lawyer in Edmonton, Alberta.

The applicants’ contention as to the unconstitutionality of section 122.5 did not find favour with the Tax Court of Canada and, in my view, rightly so.

The Difference between the American and the Canadian Approach to Discrimination in Fiscal Matters

A review of the American approach to alleged discrimination in respect of Internal Revenue matters is instructive to the extent that it contrasts sharply with the Canadian approach. The American courts have widely accepted the principle of indirect or disparate impact discrimination in the enforcement of human rights legislation. However, they have refused to apply this latter principle to constitutional matters, specifically in relation to the guarantee of equality, where evidence of an intent to discriminate or an overt differential treatment is required.

In an article entitled “Equality in Context: Judicial Approaches in Canada and the United States,” the author writes:

The first area where we can see the paradigm of equality as sameness of treatment running into difficulties is disparate impact discrimination. The essence of disparate impact discrimination is recognition that the application of a “facially neutral” law or policy, or sameness of treatment, can generate unequal results. Some laws or policies have disproportionately negative effects on certain groups, depending on differences in social, economic or cultural realities. And this can occur even and often in the absence of any intent to discriminate. Although this type of discrimination has been acknowledged in the interpretation of human rights legislation in the United States, it has been rejected by the courts in constitutional cases. A majority of the U.S. Supreme Court has held consistently that there must be overt differential treatment or evidence of an intent to discriminate for there to be a violation of the constitutional guarantee of equality. (See for e.g. Washington v. Davis, 426 U.S. 229 (1976); Personnel Administrator of Massachusetts v. Feeney, 442 U.S. 256 (1979); McCleskey v. Kemp, 481 U.S. 279 (1987)).[5] [My emphasis.]

A similar conclusion can be found in an interesting article written by Ms. Faye Woodman. The following comments are noteworthy:

There are two other higher levels of constitutional review which theoretically might be applied to some of the distinctions of the Internal Revenue Code. The “strict scrutiny” test applies to legislation that classifies on the basis of a “suspect” characteristic (for example, race) or in respect of a “fundamental interest” (for example, mobility rights). Under the strict scrutiny test, legislation, including tax legislation, would be declared unconstitutional unless the classification can be shown as necessary to further a compelling government interest. “Intermediate level scrutiny” applies to “quasi-suspect” characteristics (for example, sex). It requires that the classification be substantially related to an important governmental interest.

In practice, the United States Internal Revenue Code is generally not subject to these higher levels of scrutiny since distinctions drawn in the American income tax legislation, as in its Canadian counterpart, are not based on any of these suspect or quasi-suspect characteristics. The fact that the classifications may have a disparate and adverse impact on women or minorities is immaterial. In the United States, unlike Canada, no theory of general application has been developed to subject legislation to constitutional scrutiny on the basis of its effects as compared to its purposes.[6] [My emphasis.]

Indeed, as early as 1916, the Supreme Court of the United States validated the categories, classifications and distinctions made and used in Internal Revenue legislation by stating that “the Constitution does not conflict with itself by conferring upon the one hand a taxing power and taking the same power away on the other by the limitations of the process clause.”[7] The Court in that case, however, acknowledged that a taxing provision could be so arbitrary and unjust as to amount to an improper confiscation of property rather than to a proper exercise of a taxation power.

The reluctance of the American courts to introduce the concept of indirect discrimination in the field of taxation and more broadly in economic legislation clearly appears in the following comments of Mr. Justice White in Washington v. Davis:

A rule that a statute designed to serve neutral ends is nevertheless invalid, absent compelling justification, if in practice it benefits or burdens one race more than another would be far reaching and would raise serious questions about, and perhaps invalidate, a whole range of tax, welfare, public service, regulatory, and licensing statutes that may be more burdensome to the poor and to the average black than to the affluent white.[8]

In fact, the Supreme Court of the United States has demonstrated substantial deference to legislatures exercising their taxation power since it is believed that this realm necessarily involves the making of distinctions and classifications which will normally reflect the taxpayer’s ability to pay. Accordingly, the American courts have validated such differences of treatment provided they bear a rational relationship to a legitimate governmental purpose.

In this latter regard, the United States Supreme Court, in a case involving a challenge to the Internal Revenue Code [26 U.S.C. (1982)] at the federal level, held that it was rational for Congress to agree to subsidize lobbying by veteran organizations and to refuse to subsidize substantial lobbying by charities generally. Mr. Justice Rehnquist wrote:

Legislatures have especially broad latitude in creating classifications and distinctions in tax statutes. More than 40 years ago we addressed these comments to an equal protection challenge to tax legislation:

“The broad discretion as to classification possessed by a legislature in the field of taxation has long been recognized.... [T]he passage of time has only served to underscore the wisdom of that recognition of the large area of discretion which is needed by a legislature in formulating sound tax policies. Traditionally classification has been a device for fitting tax programs to local needs and usages in order to achieve an equitable distribution of the tax burden. It has, because of this, been pointed out that in taxation, even more than in other fields, legislatures possess the greatest freedom in classification. Since the members of a legislature necessarily enjoy a familiarity with local conditions which this Court cannot have, the presumption of constitutionality can be overcome only by the most explicit demonstration that a classification is a hostile and oppressive discrimination against particular persons and classes. The burden is on the one attacking the legislative arrangement to negative every conceivable basis which might support it.” Madden v. Kentucky, 309 U.S. 83, 87-88 (1940).[9]

It would be fair to say that the American approach has so far been cautious. I suppose it has reflected a pragmatism dictated by more than a century of judicial interpretation of constitutional guarantees within the economic context.

The Canadian courts, unlike their American counterparts, have been more aggressive in the application of our Charter and they have shown a willingness to be less deferential, at least on a section 15 as opposed to a section 1 analysis, to challenges to legislative provisions, including those relating to economic legislation. Accordingly, Mr. Justice Iacobucci stated in Symes:

[I]t 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] 1 S.C.R. 424, at p. 442. Such cases do not advocate a deferential approach at any earlier stage of Charter analysis.[10] [Emphasis in the original text.]

The courts, in interpreting the Charter as a vigorous and meaningful right protecting instrument within the Constitution, have brought on the constitutional battlefield the notion of indirect discrimination (not apparent on the face of the statute) which is also widely recognized in their interpretation of human rights legislation.[11] This approach has not gone unnoticed and has created a fair degree of uncertainty and numerous expectations. The present case is yet another example of such expectations where Charter relief is sought and Charter provisions are used.

The Purpose and Requirements of Section 15

a)         The Need for a Discriminatory and Prejudicial Difference of Treatment

In my opinion, the applicants’ contentions fail to meet the test enunciated by Chief Justice Lamer in R. v. Swain[12] where he properly and conveniently summarized the purpose and requirements of subsection 15(1) of the Charter as follows:

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.[13] [My emphasis.]

The purpose of section 15 and the need for prejudice and stereotyping were acknowledged and affirmed in other decisions of the Supreme Court. In Andrews v. Law Society of British Columbia, Wilson J. wrote in relation to the standard of proof under section 1:

This, in my view, remains an appropriate standard when it is recognized that not every distinction between individuals and groups will violate s. 15. If every distinction between individuals and groups gave rise to a violation of s. 15, then this standard might well be too stringent for application in all cases and might deny the community at large the benefits associated with sound and desirable social and economic legislation. This is not a concern, however, once the position that every distinction drawn by law constitutes discrimination is rejected as indeed it is in the judgment of my colleague, McIntyre J. Given that s. 15 is designed to protect those groups who suffer social, political and legal disadvantage in our society, the burden resting on government to justify the type of discrimination against such groups is appropriately an onerous one.[14]

In the subsequent decision of McKinney v. University of Guelph, Madam Justice Wilson reasserted the same views:

In Andrews it was acknowledged that the key to s. 15 is the word “discrimination”. At page 172 of his reasons McIntyre J. said:

The right to equality before and under the law, and the rights to the equal protection and benefit of the law contained in s. 15, are granted with the direction contained in s. 15 itself that they be without discrimination. Discrimination is unacceptable in a democratic society because it epitomizes the worst effects of the denial of equality, and discrimination reinforced by law is particularly repugnant. The worst oppression will result from discriminatory measures having the force of law. It is against this evil that s. 15 provides a guarantee.

In Reference Re Workers’ Compensation Act, 1983 (Nfld.), [1989] 1 S.C.R. 922; R. v. Turpin, [1989] 1 S.C.R. 1296; Rudolf Wolff & Co. v. Canada, [1990] 1 S.C.R. 695, and R. v. S. (S.), [1990] 2 S.C.R. 254, this Court repeatedly affirmed that in order to establish a violation of s. 15(1) there must be evidence of discrimination in stereotype and prejudice. For example, quoting from Turpin at p. 1333:

Differentiating for mode of trial purposes between those accused of s. 427 offences in Alberta and those accused of the same offences elsewhere in Canada would not, in my view, advance the purposes of s. 15 in remedying or preventing discrimination against groups suffering social, political and legal disadvantage in our society. A search for indicia of discrimination such as stereotyping, historical disadvantage or vulnerability to political and social prejudice would be fruitless in this case....

It is, I think, now clearly established that what lies at the heart of s. 15(1) is the promise of equality in the sense of freedom from the burdens of stereotype and prejudice in all their subtle and ugly manifestations.[15] [My emphasis.]

Words of caution specifically in relation to economic legislation and the need for discrimination, as opposed to a mere difference in treatment, can also be found in the reasons of La Forest J. in the Andrews case:

That having been said, I am convinced that it was never intended in enacting s. 15 that it become a tool for the wholesale subjection to judicial scrutiny of variegated legislative choices in no way infringing on values fundamental to a free and democratic society. Like my colleague, I am not prepared to accept that all legislative classifications must be rationally supportable before the courts. Much economic and social policy-making is simply beyond the institutional competence of the courts: their role is to protect against incursions on fundamental values, not to second guess policy decisions.

I realize that it is no easy task to distinguish between what is fundamental and what is not and that in this context this may demand consideration of abstruse theories of equality. For example, there may well be legislative or governmental differentiation between individuals or groups that is so grossly unfair to an individual or group and so devoid of any rational relationship to a legitimate state purpose as to offend against the principle of equality before and under the law as to merit intervention pursuant to s. 15. For these reasons I would think it better at this stage of Charter development to leave the question open. I am aware that in the United States, where Holmes J. has referred to the equal protection clause there as the “last resort of constitutional arguments” (Buck v. Bell, 274 U.S. 200 (1927), at p. 208), the courts have been extremely reluctant to interfere with legislative judgment. Still, as I stated, there may be cases where it is indeed the last constitutional resort to protect the individual from fundamental unfairness. Assuming there is room under s. 15 for judicial intervention beyond the traditionally established and analogous policies against discrimination discussed by my colleague, it bears repeating that considerations of institutional functions and resources should make courts extremely wary about questioning legislative and governmental choices in such areas.[16] [My emphasis.]

This approach of the Supreme Court is consistent with the view it expressed that a disadvantage under section 15 may have to be found outside the impugned legislation and, therefore, that a court, in assessing a claim of discrimination under section 15, has to look not only at the impugned legislation which is said to violate the Charter, but also at the larger social, political and legal context in which the difference of treatment arises. In R. v. Turpin, Wilson J. wrote:

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. McIntyre J. emphasized in Andrews (at p. 167):

For, as has been said, a bad law will not be saved merely because it operates equally upon those to whom it has application. Nor will a law necessarily be bad because it makes distinctions.

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.[17]

Applying these principles to the case at bar, I cannot say, nor is there for that matter any evidence in the present file to suggest, that unmarried children under the age of 19 are members of a group whose “claim,” to paraphrase the very words of Chief Justice Lamer in R. v. Swain, “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.”

I might add that it is not the function of this Court to speculate on the issue of stereotyping, historical disadvantage or political and social prejudice. The claimant has, under section 15, the burden of introducing the necessary evidence to prove these matters. The applicants’ failure to do so is a sufficient ground to deny their claim. As Mr. Justice Cory ruled in MacKay v. Manitoba:

A factual foundation is of fundamental importance on this appeal. It is not the purpose of the legislation which is said to infringe the Charter but its effects. If the deleterious effects are not established there can be no Charter violation and no case has been made out. Thus the absence of a factual base is not just a technicality that could be overlooked, but rather it is a flaw that is fatal to the appellants’ position.[18]

Furthermore, when one looks at the larger context to determine whether the differential treatment created by the impugned provision amounts to discrimination within the meaning of section 15, one finds oneself in a complex social, political, legal, fiscal and economic environment where Parliament is, in the State’s interest, trying to raise revenues to fund the Government, achieve equity among taxpayers in so doing and implement fiscal and social policies unrelated to the raising of revenue.[19]

It is in this broader context that the impugned provision has to be reviewed in order to determine whether the differential treatment is discriminatory because it results in inequality or fosters disadvantage.

The evidence before the Court established that the Goods and Services Tax, like all sales taxes, is regressive in nature in that the amount of consumption tax paid as a percentage of income increases as income declines. All major government studies of federal consumption taxes have noted the regressivity of such taxes and the need to develop policies and programs to combat such an effect.[20]

In the Government’s White Paper on Sales Tax Reform, one can find under the heading “Fairness to Individuals and Families” the following acknowledgment:

The fundamental argument against the use of general sales taxes as a major revenue instrument has always been their disproportionate burden on lower-income consumers. Two options are available to offset this impact in the context of the multi-stage sales tax: to permit the tax-free sale of certain categories of goods or lower the rates of tax applied to them; or to provide refundable tax credits for those in need.[21]

Indeed, as early as the time of the Carter Commission,[22] recommendations were made for tax credits that could be offset against a person’s tax liability. In addition, where the credit exceeded the tax liability of a person, it provided for a payment from the taxing authority to that person.

The logistics of establishing such a refundable tax credit ought not to be underestimated. In 1978, after a careful review of the possible options, the Department of Finance concluded that it was possible to define an income-tested refundable tax credit using any one of four basic recipient units: the individual, the primary earner in the family, the primary earner plus the spouse or all family members. It also concluded that the appropriate choice would depend on the objectives of any given credit and the trade off between payments to inappropriate recipient groups and the increased complexity both for the lower-income recipients who are required to complete tax returns as well as those administering the program. The following extract from the feasibility study highlights the options and their respective limits:

4.   INCOME-TESTED REFUNDABLE TAX CREDITS

General Features

The value of a refundable tax credit can be made to vary with the income of an individual filing unit by relating the credit to income and reducing its net value as income increases. The same elements must be defined for an income-tested refundable tax credit as for a simple refundable credit: Eligibility criteria, filing and recipient units, benefit structure, frequency of assessment and frequency and method of payment or delivery. Two additional elements arise: A definition of income and the problem of “stacking” of the benefit structure.

The range of choices with respect to any of the design, assessment and delivery elements of an income-tested credit clearly depends on how these elements are defined in the tax system. The closer the elements of the credit are to existing tax definitions and concepts, the fewer the additional requirements involved in administering the credit. However, it may be that administrative simplicity can be achieved only at the expense of sacrifices to the achievement of the objectives of an income-tested credit. The areas in which these sacrifices may be particularly significant are: The filing unit, the definition of income; the frequency of assessment; and the benefit schedule and stacking.

(1)  Filing Unit

There are four main alternatives regarding whose income is to be taken into account for purposes of income-testing: The individual; the primary earner in the family (spouse with the higher income); the primary earner plus the spouse; and all family members.

Individual: The simplest unit is the individual because this is the nominal filing unit for the present income tax system. For example, the Ontario sales tax credit may be claimed by certain individuals who are 16 years or older, resident in Ontario on December 31 and not claimed as dependants on someone else’s return. Adopting the individual filing unit would achieve maximum compatibility with the current tax system. However, for those programs ideally based on family income, use of the individual as the filing unit would lead to unintended results in that low-income individuals would receive benefits even though total family income was quite high (e.g., the millionaire’s spouse).

Primary Earner or Spouse with Higher Income: One solution to the problem of the millionaire’s spouse is to allow only the spouse with the higher income (primary earner) to file for the credit. This approach is used in the case of the Ontario property tax credit. For example, one could define a family-based refundable tax credit where the gross benefit depended only on family size. The gross credit would then be reduced according to the income of the higher-income spouse. However, this type of income-testing could still result in inequities on a family basis as two families with the same total income could end up with different credits after income-testing, depending upon how that income was distributed within the family. A similar situation exists in the current income tax system, but it has not caused serious difficulties.

It should be recognized that Revenue Canada will not be able to identify the spouse with the higher income unless both spouses file (or are required to file) a tax return, or one spouse is claimed as a dependant by the other, and the definition of income is net income. The extent of this problem, in this and the two filing units discussed later, would have to be recognized and evaluated in any specific design decision.

Primary Earner Plus Spouse: In this approach the income of the filing unit would be defined as the sum of the incomes of the primary earner and his or her spouse. Under this approach unintended payments to families with low-income parents and high-income children would be possible. As with previous alternatives, if the information is present to determine and verify which spouse had the higher income, little additional auditing would be required to determine the sum of their incomes and to use this figure for income-testing. However, a move to any type of “joint filing” for purposes of the Income Tax Act would be very significant, both conceptually and in terms of administrative complexity.

Family: The final filing unit is the family itself, including the incomes of children. However, there is a range of possible definitions of the family. One possibility, in the spirit of the refundable child tax credit, would be to include only children 18 or under. In any event, the main issue distinguishing this form of filing unit from the preceding one is whether the reduction in unintended payments would be worth the increased complexity given that most children under 17 do not have significant incomes. The problem remains, however, that it might appear somewhat anomalous for a “low-income” family to be receiving a credit in respect of a child who has enough income to file his own tax return.

It is possible to define an income-tested refundable tax credit using any of these approaches. The choice will depend on the particular objectives of any given credit and the trade-off between payments to inappropriate recipient groups and increased filing and administrative complexity.[23] [My emphasis.]

Prior to the introduction of the GST credit, Canada adhered to a system of refundable tax credits. At the time of the introduction of the GST, a system was in place to deliver consumption tax credits to lower and middle-income Canadians. Evidence tendered at trial demonstrated that the percentage of those eligible and who actually applied for refundable tax credits had been good and close to 90% in such cases as the child tax credit.

Consequently, by utilizing those mechanisms already in place in the income tax reporting system, the objective of the GST credit was to identify efficiently and to redistribute an amount in the order of $47.50 (the basic credit) each quarter to approximately 8.7 million lower-income Canadians.

b)         Age as a Personal Characteristic

The Carter Commission recommended in 1966 that resident children form part of the family unit for tax purposes and that an age-based definition for dependent children be adopted. It proposed the age of 21 as the cutoff point. In unmistakable terms and for obvious reasons relating to the effective enforcement of the law, it rejected the implementation of an “actual support” test for determining dependency:

We suggest that in no circumstance should actual support be the test of dependency for purposes of inclusion or exclusion of a child from the family unit.[24] [My emphasis.]

Indeed, one can easily envisage the substantial costs and the undesirable intrusiveness that would be involved in measuring in each case the level of actual support and the degree of dependency. In a leading article on taxation, professor Boris I. Bittker reasserts the need to define clearly the group whose income is to be consolidated and warns against the difficulty, if not the impossibility, of administering a taxation statute where “squishy” phrases, categories or classifications are used. In this respect he writes:

The most objective boundary lines are those based on legal characteristics such as marital status, obligation to support, or right to inherit. Under existing law, the principal determinant of the tax burden is marriage, a status that is usually unambiguous. In a society that increasingly questions the legitimacy of traditional legal distinctions, however, one is tempted to substitute social “realities” in defining the boundaries of the group whose income is to be consolidated. But every departure from readily established definitional lines increases the problem of enforcement. If the tax on two unmarried persons depends on whether they live together, for example, how is their status to be verified by the Internal Revenue Service without an intolerable intrusion into their private lives? The attempt of social workers to apply the “man in the house” rule to deny welfare payments suggests the difficulties that would be encountered by the Internal Revenue Service in auditing claims that taxpayers are, or are not, living together. If the assertions of status on tax returns were taken at face value in order to minimize or eliminate costly and abrasive investigations, the revenue loss resulting from improper claims might be very large; perhaps more important, conscientious taxpayers would be offended by the government’s refusal to enforce its own rules against others. For these reasons, it does not seem feasible to consolidate the income of a group unless its boundaries can be crisply defined and readily verified.[25]

In the end, facing the difficult task of determining the parameters of dependency of children in the family unit, Parliament adopted the age-based criterion recommended by the Carter Commission, but lowered the age to 19 so as to adopt an objective standard which is closer to the present reality in Canada with regard to childhood and adulthood and which is also consistent with the community’s traditional approach to rite of passage issues such as alcohol consumption, voting and driving.

Counsel for the applicants submits that, while it is proper to use the age criterion in relation to such issues as voting, driving and consumption of alcohol, as he asserts a logical connection between age and these matters, it is improper to do so in relation to the GST refundable credit as there is no similar connection between age and wealth/poverty and between age and financial status. He submits that the credit should have been granted on the basis of income and consumption, and not age.

Section 15 of the Charter recognizes age as a prohibited ground of discrimination. It has also been recognized, however, that there are important differences between age discrimination and the other grounds enumerated in subsection 15(1).[26] As Mr. Justice La Forest stated in relation to age and the allocation of benefits:

The truth is that, while we must guard against laws having an unnecessary deleterious impact on the aged based on inaccurate assumptions about the effects of age on ability, there are often solid grounds for importing benefits on one age group over another in the development of broad social schemes and in allocating benefits.[27]

In the present case, I believe the applicants misconstrued the nature of the relationship between age and the allocation of the GST credit. Age has not been invoked as a criterion to deny a benefit, but rather is being used to determine whether a child is likely to be a dependant and, therefore, ought to be included in or excluded from the family unit for the purpose of receiving the benefit. It was linked to marital and parental status and had an obvious and logical connection with dependency. In turn, family status was linked to income since the availability and amount of the refundable credit depended on the level of income of the family itself.

In the context of determining whether a child is dependent on his parents or not, age is a most relevant factor. Barring the odd exception, it is the factor which applies, and is applied, most commonly, conveniently and fairly to the proper determination of the family unit for benefit-allocation purposes.

Although it is true that age has been associated with some stereotypes and prejudices in the context of employment or in respect of the elderly,[28] the evidence before the Tax Court of Canada and before this Court reveals no such prejudice in relation to an age-based definition of dependency in the family.

Whether the Impugned Legislative Provision is Discriminatory in its Purpose

As the learned Tax Court Judge found and the evidence establishes, the GST credit is not a taxing program but rather a benefit program. The purpose of section 122.5 of the Act was not to impose a burden on taxpayers generally and discriminate against some of them. On the contrary, it was to lessen the inevitable and adverse effect of a regressive tax such as the Goods and Services Tax upon lower-income Canadians. Section 122.5 of the Act is corrective in nature and the fact that the applicants do not find it sufficiently remedial to their liking is certainly not a ground to declare the provision unconstitutional under section 15 of the Charter.

Whether the Impugned Legislative Provision is Discriminatory in its Effects

In assessing the applicants’ claim of discrimination, I have reviewed at some length the evidence in order to properly place the impugned provision in its social, political and legal context and determine whether the alleged difference of treatment resulted in an inequality or fostered a disadvantage contrary to section 15. I have found no evidence that the impugned provision reinforces disadvantages or promotes stereotyping.

The purpose of section 122.5 of the Act was to redress the inequity generated by regressive taxation, which necessarily involved an assessment by Parliament of the various options and means available in order to do so. At the end of the day,[29] what resulted was the selection of a system that would best achieve the desirable equity, bearing in mind the practical constraints associated with the cost-effective implementation of a selected measure or program. Obviously, this selection process entailed the preference of one approach over the other with the inevitable result that some, but not all, taxpayers would have been better off with a different option than the one selected and vice versa.

There was nothing wrong for Parliament, in its search for an equitable solution to the regressive nature of the GST, to confer benefits upon those who suffer most from the imposition of that tax, namely lower-income Canadians and their families.

In view of the evidence as to the remedial nature of the impugned provision, the larger context in which it operates, and the inherent limits in the implementation of such a benefit program, I cannot say that the option finally selected by Parliament creates, in its effects, a discriminatory and prejudicial difference of treatment that the applicants can justifiably complain of. It does cut the Gordian knot by creating distinctions between dependent and non-dependent children, the former being included in the family unit and receiving their refundable tax credit through that channel, the latter being considered, as any other unattached individual, a tax unit on its own and receiving the tax credit personally.

In my view, the applicants have failed to establish any prejudice or stereotyping in these circumstances. Furthermore, to use the words of Mr. Justice La Forest in the Andrews case previously quoted, one cannot say that fundamental unfairness has been established or that the impugned provision is so grossly unfair to the applicants or their group or so devoid of any rational relationship to a legitimate state purpose as to offend against the equality principle entrenched in the Charter and thereby warrant our intervention under section 15. In short, section 122.5 of the Act creates a distinction but one which is not discriminatory within the meaning of section 15 of the Charter.

Consequently, the applications for judicial review should be dismissed.

Robertson J.A.: I agree.

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