There have been many cases in which Tax Court judges question the tax treatment of legal fees spent by spouses seeking to reduce the amount of spousal or child support they must pay. The recipient spouse can deduct her legal fees to enforce support (on the basis that the expense is incurred to “gain or produce income from property” and the pre-existing right to support is “property”). But the payor spouse has not been able to claim a deduction for legal fees spent to resist the other spouse’s attempts to increase or enforce support payments. The rationale has been that the payor spouse does not have a pre-existing right to property; so in trying to reduce the expense, he is not gaining or producing income from property that he owns.
Here, the FCA refused to reconsider its prior decision:
[30] This Court will only depart from a previous decision where it is manifestly incorrect or where subsequent decisions require that it be reconsidered;Miller v. Canada (Attorney General), 2002 FCA 370 (CanLII). Neither of these criteria apply to the interpretation accorded paragraph 18(1)(a) by this Court in Nadeau and, accordingly, this ground of appeal fails.
The appellant had attacked spousal deduction rules on the basis that they unfairly discriminate against men because men pay support 92.8% of the time. The FCA rejected that argument because:
[42] Paragraph 18(1)(a), as interpreted, does not affect men differently than women. Women payees are affected in the same manner and to the same extent as male payees. The impact of the law is, in terms of its effect, neutral.
[43] The Charter argument fails because it confounds the underlying social circumstances with the consequences of the law. Assume, for example, a special tax on the highest earning 1% of income earners in Canadian society. Such a tax may fall disproportionately on men, but that does not mean that men are subject to differential treatment within the meaning of section 15. Similarly, the fact that more women may receive the Guaranteed Income Supplement because of age and income levels than men does not mean that women are given a benefit that men are not. Special taxes and withholding provisions in respect of foreign nationals may affect people of one ethnicity or country of origin than another.
[44] In each case, it must be established that the tax measure affects them because of or by reason of, a prohibited ground, their gender, age or ethnicity, and not as a consequential effect.
Grenon v. Canada, 2016 FCA 4 (Rennie, Boivin, Gauthier)