Allott v The Queen, 2012 TCC 232

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Deductibility of Babysitting Fees Pursuant to Subsection 63(1) – What is Required and What is Not.

Allott v The Queen, 2010 TCC 232

 At issue was whether the taxpayer could deduct babysitting expenses pursuant to subsection 63(1) of the ITA, despite not having a receipt from one teenager who babysat his children and not having that teenager’s SIN number.

The Court held that subsection 63(1)’s reference to receipts and SIN numbers is directory only, and obtaining those items is not a condition precedent to deducting babysitting expenses.

The relevant portions of subsection 63(1) read:

…where a prescribed form containing prescribed information is filed with a taxpayer’s return of income…under this Part for a taxation year, there may be deducted in computing the taxpayer’s income for the year such amount as the taxpayer claims not exceeding the total of all amounts each of which is an amount paid, as or on account of child care expenses incurred for services rendered in the year in respect of an eligible child of the taxpayer,

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…

The Court stated that on numerous occasions the TCC has ruled that words requiring the filing of receipts are “directory” and NOT “mandatory”, and referred to the decision in Senger-Hammond v. The Queen, [1997] 1 CTC 2728 at paragraph 26, where Justice Bowman stated:

The essence of section 63 is the deduction of child care expenses, not the collection of tax from babysitters.  The language of the provision does not support the view that the filing of receipts is mandatory.  For one thing, the word ‘shall’ is not used.  Rather it describes a method of proof, which is clearly formal, evidentiary and procedural.

The question is for a court to decide whether the expenses were incurred in the manner required by statute, and the provision of receipts and SIN numbers are evidentiary only.

Sas Ansari, BSc BEd PC JD LLM PhD (exp) CPA In-Depth Tax 1, 2 &3

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