We often think of the tax system as a means for the government to collect revenues and sometimes forget that the system is also used to effect social policy.
This year marks the 25th anniversary of Elizabeth Symes's first attempt to challenge the tax system's child-care deduction rules. Perhaps no other case in the history of Canadian jurisprudence has provoked as much debate about the role of women, child care and tax policy as the now-infamous "Symes decision."
It was 1982 when Ms. Symes, a lawyer and partner working full-time in a Toronto law firm, first hired a nanny to look after her child. She paid the nanny a salary of about $10,000 in 1982 and deducted the appropriate payroll taxes, including CPP and EI. Ms. Symes also issued the nanny a T4 slip at the end of the year reporting the salary paid. She did this each year through the birth of her second child in 1985.
On her tax returns for 1982 through 1985, she deducted the amounts paid to her nanny as business expenses incurred for the purposes of earning business income (i.e. the professional income she earned as a lawyer during the years in question.)
The Canada Revenue Agency denied her claims arguing that these expenses should be more properly characterized as "personal or living expenses" and thus not tax deductible. Instead, the CRA was prepared to allow only the maximum child-care deductions permitted under the Income Tax Act, which were $1,000 in 1982, $2,000 in 1983 and 1984 and $4,000 in 1985. These were all significantly less than the amounts Ms. Symes actually paid her nanny.
Ms. Symes objected, essentially arguing that since women bear the primary responsibility for child care, the inability for them to write off the full cost of
such child care under the Tax Act was a violation of the Charter of Rights and Freedoms and constituted "sex-based discrimination."
She took her case to court, winning at the Tax Court of Canada but ultimately losing at the Federal Court of Appeal and at the Supreme Court of Canada.
The Supreme Court's reasons for its judgment, including the dissenting opinion of the two female justices, has been dissected and analyzed extensively in the nearly 14 years since the decision was released.
One of the most extensive analysis of the Symes's case and its implications for women, tax policy and child care can be found in University of Victoria law professor Rebecca Johnson's 2002 book
Taxing Choices: The Intersection of Class, Gender, Parenthood and the Law.
With Parliament prorogued until mid-October, perhaps this book should go on the fall reading lists of both Prime Minister Stephen Harper and Liberal Leader Stephane Dion as they each grapple with whether broad-based income splitting, which is often tied to the childcare debate, should form part of their party's future platform.
Although there have been some favourable tax changes on the child-care front since Symes was decided, such as increasing the child-care deduction to$7,000 per child for kids under seven ($4,000 per child for ages eight to 15) and last year's introduction of the Univeral Child Care Benefit of $100 per month per child under age six, these measures still do not adequately address what some are calling the child-care crisis in Canada. Clearly, more work needs to be done. -