Date: 19980610
Docket: 97-3263-IT-I
BETWEEN:
RACHEL BLAIS,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
GUY TREMBLAY, J.T.C.C.
Point at issue
[1] According to the Notice of Appeal and the Reply to the Notice of Appeal the question is whether the sum of $4,272 paid in 1995 to a Chinese institution, namely the Nanchang Social Welfare Institute of Jiangxi, for the care of the child Daphné, can be regarded as child care expenses.
[2] The issues are:
a. whether the payment of $4,272 can be deducted as child care expenses in calculating the appellant's income for the 1995 taxation year;
b. in the alternative, whether the appellant can treat the sum of $4,272 as a charitable gift in calculating her non-refundable tax credits for the 1995 taxation year; and
c. whether the interest on arrears was correctly calculated for the 1995 taxation year.
Burden of proof
[3] The appellant has the burden of showing that the respondent's assessment is incorrect. This burden of proof derives from a number of judicial decisions, including that of the Supreme Court of Canada in Johnston v. Minister of National Revenue.[1]
[4] In Johnston the Supreme Court held that the facts assumed by the respondent in support of assessments or reassessments are also presumed to be true until the contrary is shown. In the instant case the facts assumed by the respondent are described in subparagraphs (a) to (e) of paragraph 6 of the Reply to the Notice of Appeal. Paragraph 6 reads as follows:
[TRANSLATION]
6. On August 5, 1997 the Minister, in confirming the reassessment of November 19, 1996, took into account inter alia, in addition to the facts mentioned in paragraph 4 regarding child care expenses, the following facts:
a. the amount of $4,272 paid by the appellant to the Nanchang Social Welfare Institute in China was not a gift; [admitted]
b. the appellant, as an adoptive parent, had a legal or moral obligation to pay this amount; [admitted]
c. the Chinese organization, the Nanchang Social Welfare Institute, is not a registered charity within the meaning of the Income Tax Act ("the Act") or a charitable organization outside Canada to which Her Majesty in right of Canada made a gift during the 1995 taxation year or the 12 months immediately preceding that taxation year; [admitted]
d. the receipt for US$3,000 (C$4,272) obtained by the appellant from the Nanchang Social Welfare Institute thus does not meet the requirements of s. 3501 of the Income Tax Regulations; [admitted] and
e. the appellant is accordingly not entitled to a tax credit for a charitable gift for the 1995 taxation year in respect of this amount of $4,272. [admitted]
[5] The evidence shows that in 1995 the appellant did in fact pay the sum of US$3,000, that is, the equivalent of C$4,272, to the Nanchang Social Welfare Institute in Jiangxi, China.
[6] The appellant submitted that this amount was eligible as a deduction for child care expenses. As a gift, this amount was fixed by the Chinese government. The purpose of the gift was to pay the expenses of the day care centre.
[7] The appellant maintained that she had even gone to pick up a little girl in that country in early 1998. She again had to pay a similar amount as a gift.
[8] On the question of gifts s. 3501(1)(a) of the Income Tax Regulations reads as follows:
3501. (1) Every official receipt issued by a registered organization shall contain a statement that it is an official receipt for income tax purposes and shall show clearly in such a manner that it cannot readily be altered,
(a) the name and address in Canada of the organization as recorded with the Minister . . . .
[9] The appellant also maintained that when a gift is made to a university located outside Canada, such a gift is allowed as a deduction. First, not all gifts to all foreign universities are deductible: only those to universities which have been recognized in advance meet the required standards.
[10] Second, a day care centre is not a university. There is nothing in the Act authorizing such a deduction. The appellant's appeal therefore cannot be allowed.
[11] However, the Court concedes that the instant case is one deserving of sympathy. People who are required to pay such gifts must, in addition to the journey, quite frequently make heavy sacrifices essentially in order to save the lives of these children.
[12] In my opinion, Parliament should allow a child care expense deduction, especially as a Canadian court has rendered a judgment declaring that Canadian citizens who have made adoption applications are legal parents, and that this is sometimes true over a year before they are authorized to go and get the children.
Conclusion
[13] The appeal is dismissed.
Signed at Québec, Quebec, June 10, 1998.
"Guy Tremblay"
J.T.C.C.
[OFFICIAL ENGLISH TRANSLATION]
Translation certified true on this 13th day of November 1998.
Stephen Balogh, Revisor