Document Details

2012

Tamara Larre

Windsor Review of Legal and Social Issues

31

65

75-99

I. TREATING TEMPORARY MIGRANT WORKERS FAIRLY - WHAT ABOUT TAXES?

Canada, like much of the developed world, has turned to temporary migrant workers ("TMWs") to fill temporary labour needs2 through inexpensive, flexible, and politically and legally acceptable labour. Data from Citizenship and Immigration Canada ("CIC") shows a 76% increase in TMWs present in Canada on December 1st from 2006 to 2010,3 and much greater increases since 2002.4 Much of this growth is attributable to the increase in workers in lower-skilled occupa tions.5 Significant increases are most notable in Alberta and British Columbia, where the number of TMWs admitted has more than doubled over the past decade.6

[*66] The vulnerability of lower skilled TMWs has led to concerns of exclusion, abuse, and lack of availability of legal protection and social programs. Canadian governments have recently made efforts to treat TMWs more fairly;7 however these reforms have failed to include consideration of the fairness of Canada's Income Tax Act (ITA) as it applies to TMWs.8 In the context of the active debate concerning the fair treatment of TMWs, this paper explores their a ccess to tax credits offered to taxpayers supporting dependents. The paper concludes that the non-application of the dependent tax credits to the many TMWs supporting dependents in their home countries adds to the list of injustices suffer ed by TMWs, and that a limited extension of the dependent tax credits will make the tax system more equitable and will help to ameliorate the economic hardship experienced by TMWs without unduly compromising important objectives of the income tax system.

Presently, the available literature does not evaluate the availability of dependent tax credits to TMWs in Canada, and this article strives to fill this void through demonstrating the substantive differences in the taxation of mig rant workers, despite being formally subject to the same tax rules as others. This work draws on Francine J Lipman's analysis of the taxation of undocumented workers in the United States9 in which she considers the disadvantages experienced by migrant workers supporting spouses and children that are living in other countries.10 Because of important distinctions between the Canadian and United States tax systems, the analysis and findings in this paper are unique to the Canad ian context.

Part II of this paper provides context by setting out details about the program under which TMWs are admitted to Canada, data on the characteristics of the workers, and information on remittances sent back to their home countries. Part II also includes a review of the literature on the unjust treatment of TMWs and their limited legal protection.

Part III describes the tax credits available to taxpayers who support dependents and discusses why some of these credits will not be available to TMWs who support dependents in their home countries. The barriers to accessing these credits are the requirements of living with the dependent or the dependent being resident in Canada. The discussion in Part III also recommends some changes to the legislation that would make the credits apply more equitably among TMWs.

[*67] Part IV analyzes the extent to which dependent tax credits should be made available to TMWs separated from their dependents. The paper concludes that most of the credits should be made available to TMWs based on principles of tax equity and broader equality, but only to the extent that provisions are designed to preserve the integrity of the tax system by minimizing opportunities for fraudulent claims. For TMWs it is recommended that (1) the cohabitation requirement be removed for common law partners under the Spouse/CLP Credit; (2) the cohabitation requirement be removed and the support requirement be modified under the equivalent to spouse credit; and (3) the cohabitation requirement be removed and the su pport requirement be added under the child credit. These proposals represent one small step towards equal and fair treatment of TMWs in Canada.

II. WHO ARE TEMPORARY MIGRANT WORKERS AND WHY SHOULD WE BE CONCERNED ABOUT THEM?

This part begins with a profile of TMWs, followed by a summary of the literature highlighting the unjust treatment many workers experience while working temporarily in Canada. Low skilled workers are particularly vulnerable to exp loitation and are often separated from their families. Though governments have worked on expanding legal protection of TMWs, they have not yet addressed nearly all of the concerns raised.

A. The Temporary Foreign Worker Program

The term "temporary migrant worker" is used in this paper to describe employed persons who do not have permanent residency or citizenship status and who are legally permitted to work in Canada. In Canada, TMWs are increasingly rel ied upon to fill short and long term labour needs. The labour shortages are, at least in part, due to changing demographics.11 Flexible and inexpensive labour supplied through TMWs is beneficial to the receiving country's economy.12 As Kamaa l R. Zaidi explains, "[m]igration is vital to the country's growth and prosperity because it provides the necessary workforce to fill labour shortages, while at the same time creating foreign investment opportunities to stimulate domestic gr owth."13

[*68] The legal requirements to temporarily work in Canada are set out in the Immigration and Refugee Protection Act14 and the Immigration and Protection Regulations.15 CIC incorporates these requirements into its Temporary Foreign Worker Program. Prior to working in Canada under this program, workers must usually obtain a temporary resident visa and a work permit.16 Employers are usually required to obtain a favourable Labour Market Opi nion to show that a foreign worker is needed to fill the position.17

The Temporary Foreign Worker Program functions not only to fill short term labour market shortages, but also longer term shortages due to failures of the immigration system to fill these needs.18 While the program originally ta rgeted highly specialized skilled workers, there has been significant growth in lower skilled workers.19 Three major low skill programs operate under the umbrella of the Temporary Foreign Worker Program: the Live-in Caregiver Program ("LCP") , the Seasonal Agricultural Workers Program ("SAWP"), and the Low Skill Pilot Project ("LSPP"). Requirements for LCP applicants with an employment contract include the equivalent to secondary schooling and either training or work experience as a caregiver.20 "In 2005, Filipino women accounted for 95.6% of Canada's live-in caregivers."21 The SAWP program is based on agreements between provinces and Mexico and Caribbean countries, and the requirements vary from province to province. Some temporary workers, including those under the LCP, are eligible to apply for permanent residency,22 though it is not a general right.23

The greatest number of TMWs present in Canada on December 1st, 2009 were from the Philippines, with 51,325 workers.24 The United States was next with 29,970 workers present in Canada, and Mexico was in third place with [*69] 22 , 308 workers present.25 Nakache and Kinoshita point out that TMWs are more likely to be members of visible minorities as there has been an increase in workers from developing countries.26 TMWs are dispersed across the country, but in 200 9, most workers were in Ontario (33.6%), Alberta (23.34%), and British Columbia (24.5%).27 The percentage of workers in Ontario and Quebec declined significantly between 2000 and 2009, and large increases were seen in Alberta and British Colum bia.28

In 2009, the Standing Committee on Citizenship and Immigration released a report on temporary foreign workers and non-status workers.29 The committee recommended improvements to working conditions, reduced opportunities for exp loitation by recruitment agencies, and increased opportunities for TMWs to apply for permanent residency.30 Some of the recommended changes have been announced following the report.31

B. Family Separation and Remittances

Lower skilled workers admitted under Canada's TWP are nearly always separated from their families. Usually, the worker is unable to show an ability to support dependents in Canada, and his or her family members are unable to meet the requirements of acquiring a labour market opinion to get their own work permits.32 Spouses of skilled workers, in contrast, are entitled to an open work permit.33 The negative impact of the prolonged separation has been noted in the lite rature.34 As well, the Parliamentary Standing Committee on Citizenship and Immigration's 2009 report stated: where family separation occurs, "it is not in the best interests of anyone - workers, their children, or [*70] Canadian society."35 This separation of families is important to the analysis later in this paper, much of which rests on the fact that workers will often be separated from their dependents.

Many TMWs support families in their home countries through sending money home. In fact, these remittances are so significant they represent an important part of many developing economies.36 While there is little data available for remittances by TMWs in Canada, useful information can be gleaned from a comprehensive 2008 Statistics Canada report on remittance behaviours of recent immigrants. In the report, authors Rene Houle and Grant Schellenberg found that 41% of land ed immigrants who participated in their study remitted funds to family members within their first 48 months in Canada.37

Remittance behaviour was linked to a number of factors in the Statistics Canada report. Firstly, the amount of remittances generally decreased the longer the immigrant had been in Canada, and ranged from averages of $1,400 to $2,4 00 per year.38 Secondly, percentages of immigrants remitting and amounts remitted varied by region and country of birth, with respondents from Southeast Asia, the Caribbean and Guyana having the highest percentage remitting (over 50%).39 Aver age amounts remitted over the four years since landing were highest among immigrants from South Asia ($3,600); East Asia ($3,500); and North America, Western Europe and Oceana ($3,400).40 Immigrants with higher financial capacity generally remitted more.41 There was a 36% likelihood that immigrants sponsoring or intending to sponsor a spouse or child would remit, as compared to a 23% likelihood for immigrants with no sponsorship plans.42 Immigrants with plans to sponsor a chi ld or parent also remitted 23% more than those with no sponsorship plans.43 This is "consistent with other studies reporting that immigrants remitting to support children and spouses tend [*71] to send more than those remitting to other family m embers."44 While data shows an average of less than 4% of family income being sent as remittances in the second and fourth years after landing,45 "remittances may still represent a considerable expenditure for some families."46

The Statistics Canada study on remittance behaviour of recent immigrants supports an inference that many TMWs also send remittances to their home countries. In fact, there is evidence to suggest that TMWs remit more than those per manently migrating.47 Houle and Schellenberg speculate that "[t]his may reflect a concerted economic strategy on the part of families who have opted to send members abroad for a limited period of time to bolster the families' financial resources."48 Also, as compared to permanent migrants, TMWs are more likely to have close family members still residing in the home country, a factor positively correlated with the likelihood of sending remittances.49

C. The Vulnerability and Limited Legal Protection of Temporary Migrant Workers

The vulnerability and resulting unjust treatment of lower-skilled TMWs has been documented in the literature. For example, Harsha Walia relies on a government assessment of the SAWP as support for her description of some of the sp ecific ways in which TMWs are unfairly treated in Canada:

In Canada, temporary migrant worker programmes involve being tied to the importing employer; low wages, often below the official minimum, and long hours with no overtime pay; dan-gerous working conditions; crowded and unhealthy [* 72] accommodation; denial of access to public healthcare and employment insurance, despite paying into the programmes; and being virtually held captive by employers or contractors who seize identification documents.50

Sabaa A Kahn adds "social exclusion, abysmal working conditions, sub-standard living accommodations, sexual and racial discrimination, and exploitation on the part of employers, labour brokers, and employment agencies"51 to the list of egregious treatment.

The Canadian government has recognized these problems and has taken some steps to correct them.52 Provincial governments have also responded to pressure from organizations fighting for increased rights, such as employment insur ance benefits and the application of occupational health and safety regulations.53 However, these changes may not go to the root of the problem - the uncertain nature of the right of TMWs to stay in Canada, a country that offers economic opportu nities that they are unable to secure in their home countries. Walia explains:

It is their temporary legal status that makes TMWs migrant workers extremely vulnerable to abuse; any assertion of their rights leads not only to contract termination but also deportation ... Today, the denial of legal citizenship through temporary migrant worker programmes ensures legal control over the disposability of labourers, which, in turn, embeds exploitability of labour as an inherent feature of such programmes. Migrant worker programmes allow for capital to access cheap labour that exists under precarious conditions, the most severe of which is the condition of being deportable. This assures a pool of highly exploitable labour, excluded from the minimal protections of the welfare state, and readi ly disposed of without consequences.54

[*73] TMWs are therefore more exploitable, and are exploited more often,55 than citizens and permanent residents due to their precarious situation.56 They risk deportation and have no political voice within the electoral sy stem due to their inability to vote. This leads to a need to examine the treatment of this exceptionally vulnerable group separate from permanent migrants.

TMWs face incredible barriers to bringing legal claims, including lack of knowledge of their rights, risk of deportation, limited access to funds needed for legal advice, and the limited duration of their legal stay in Canada.5 7 Legal claims are therefore most likely to originate with, or at least be heavily supported by domestic groups.58 However, even when the cause is taken on by groups with resources, the application of human rights laws and the Canadian Cha rter of Rights and Freedoms is unclear.59

The issue of the treatment of TMWs under domestic law has attracted some attention in the human rights literature. Issues addressed in the literature include:

1.
What are the human rights obligations of Canada to TMWs? Basok and Carasco point out that "[t]he issue that is debated in the case of non-citizens is whether (and to what degree) host countries are obligated to guarantee univer sal rights to migrants."60 Canada is not a signatory to any of the conventions specifically concerning migrant workers,61 though there are a number of international instruments it has signed that affect the rights of migrant workers gener ally and have influenced the interpretation of the Charter.62

2.
Have Canadian governments met their obligation to TMWs? Sabaa A Kahn answers in the negative - "[i]t is evident that government policies that rely on the discriminatory treatment of migrants - through low income, limited access to rights, and exclusion from social benefits - in order to achieve economic efficiency do not correspond with contemporary international legal norms embodied in various ILO and UN treaties."63

[*74] 3. If obligations are not met, who can enforce them? According to Basok and Carasco "[w]hile all migrants by virtue of their humanity are covered by universal human rights, international law does not make it clear which sta te (or supra-state organization) is responsible for ensuring that these rights are respected."64 Amid this murkiness, what is clear is that there is increasing concern in the human rights discourse about the protection of TMWs.65

There is also potential to argue that the Charter applies to protect TMWs from discrimination under the law. Section 15 guarantees equal protection and equal benefit to the law without discrimination based on one of the enumerated or analogous grounds.66 As immigration status is not an enumerated ground, a threshold question is whether TMWs, or a subset thereof, are an analogous ground. While a full section 15 analysis is beyond the scope of this paper, two recent Su preme Court of Canada cases are reviewed briefly here to show that the availability of a section 15 argument to TMWs is a live, but unsettled issue. Dunmore v Ontario (Attorney General)67 and Ontario (AG) v Fraser68 both failed to conclusively address the question, but did give some insight into how this might be decided in the future. Both cases concerned the right of SAWP workers to unionize and focused on freedom of association in section 2(d) of the Charter. It was argued that section 15 was violated in both cases. In Dunmore, the majority did not consider section 15 because it had already decided that section 2(d) had been breached.69 In their minority decisions, J ustice L'Heureux-Dubé found that the occupational status of agricultural workers was an analogous ground,70 while Major J stated that it was not.71 The Supreme Court of Canada's recent majority decision in Fraser did no t fully address the issue of whether agricultural workers could be considered an [*75] analogous ground, as substantive discrimination was not established.72 Justice Abella's dissent also did not address the question of analogous groun ds, but Rothstein J (with Charron J concurring) decided that agricultural workers are not a group protected under section 15.73 In the third dissenting opinion, Justice Deschamps argued for the expansion of analogous grounds under section 15. n 74 In sum, the case showed that it is plausible that TMWs (or a subgroup thereof) could make a successful claim under section 15 of the Charter, though this is far from certain. In any event, the recommendations in this paper help to address sub stantive equality concerns and are therefore consistent with Charter values.

III. THE AVAILABILITY OF DEPENDENT TAX CREDITS TO TEMPORARY MIGRANT WORKERS

This part analyzes the ability of TMWs to access dependent tax credits under current law. It concludes that in general the only credits available are the spouse or common law partners credit and the dependent adult credit. In the year that an individual enters or departs from Canada, other credits may also be available. Anomalies that create inequities among TMWs are revealed, and some minor recommendations are made that would correct these issues.

A. The Implications of Residency Status

Under the ITA, Canadian residents are taxed on their worldwide income,75 whereas non-residents are taxed in Canada on their Canadian-sourced income.76 As a result, TMWs resident in Canada will pay tax in Canada on all of the ir income, regardless of the location of the source, and TMWs not resident in Canada will pay taxes in Canada on their Canadian employment income.77 Whether a TMW will be resident in Canada depends on the circumstances. Longer-term worker s, such as those under the LCP who have a two year employment contract, will most likely be resident in Canada. Short-term workers, such as those under the SAWP who may work in Canada for less than a year, may not be resident in Canada.

[*76] There are two ways that an individual can be considered a Canadian resident under the ITA. Firstly, there is a common law test of residency, which the Canada Revenue Agency ("CRA") has summarized as "a matter of degree to w hich the person in mind and fact settles into or maintains or centralizes his ordinary mode of living with its accessories in social relations, interests and conveniences at or in the place in question."78 Subsection 250(3) of the ITA extends the meaning of resident to a person "ordinarily resident" in Canada. The CRA's summary of ordinary residence is "the place where the individual, in the settled routine of his or her life, regularly, normally or customarily lives."79 Secondly, individuals will be deemed resident if they "sojourn" in Canada for 183 days or more in the year.80 An individual who is physically present in Canada and does not have enough ties to establish residency will be considered to sojourn in Canada i f she or he makes "a temporary stay in the sense of establishing a temporary residence."81 This provision ensures that all but the shortest-term workers (approximately 6 months or less) will be resident in Canada.

Workers who sojourn more than 183 days will be taxed on their worldwide income for the entire year.82 However, workers who become resident under the common law test will be part-time residents in the year of entry and will be t axed on their worldwide income for the part of the year she or he is resident in Canada.83 The date of becoming resident in Canada is unlikely to be an issue for most TMWs: it will be the date they arrive in Canada with their temporary visa and work permit. TMWs resident under the common law test who leave Canada will be taxed in Canada only from January 1st to the date of becoming non-resident.84

Thus far, the discussion of residency has considered only the application of the ITA. However, bilateral tax treaties between Canada and the home country need to be considered where TMWs are simultaneously considered resident in C anada and the home country under domestic tax legislation. This may be the case for TMWs who have not severed ties with the home country or [*77] who remain citizens of that country (depending on the jurisdictional basis of that country). If Ca nada has a bilateral tax treaty with the home country, the treaty will set out tie-breaker rules for determining which state is able to treat the TMW as a resident.85 These rules are intended to reduce the instances of double taxation by both countries. In cases where the TMW maintains stronger ties to the home country, the tie-breaker rules may operate to deem the TMW resident in the home country, and not Canada, for tax purposes. This is more likely to be the case for shorter-t erm TMWs. Longer term workers, such as those in the LCP, may have severed most ties with their home countries as they plan on acquiring permanent residency status in Canada.

Personal tax credits operate to reduce taxes payable, and are generally calculated by multiplying the amount permitted in the credit by the lowest marginal rate of tax.86 The determination of a TMW's residence status for tax pu rposes can directly impact on what personal credits can be claimed. For example, all resident taxpayers are entitled to the "basic personal amount" (also referred to as the "personal exemption"),87 exempting the first $10,527 of the tempo rary migrant worker's income from tax.88 While tax credits are generally less available to non-residents, a non-resident can qualify for the personal exemption and other personal credits where all or substantially all of the non-resident pe rson's income for the year is included in the taxpayer's Canadian income tax return.89 So, where a non-resident TMW earns "all or substantially all" of his or her annual income from working in Canada, the credits will be available. "All or subst antially all" is interpreted by the CRA as 90%,90 although the courts have not always applied this precise interpretation of the standard.91

Where a TMW is resident in Canada for only part of the year, the personal exemption and other credits discussed below will be subject to prorating.92 The section separates the taxation year into the period that the individual w as resident in Canada and the period she or her was not resident. [*78] For the non-resident portion, the credits are available for the period of non-residency only if "all or substantially all" of the individual's income is earned in Canada. Th e credits, where available, may only be used against taxes otherwise owing for the period that the individual was non-resident. For most TMWs, this means that the credits will not be available or useable for the non-resident portion of the year be cause there would be no Canadian-source income and therefore no Canadian taxes payable. For the resident portion of the year, the CRA interprets the legislation to allow the taxpayer to claim the credits "based on the number of days [the taxpayer i s] a resident of Canada in the year."93 In other words, the credits will be pro-rated. Oddly, the credits will not be pro-rated for deemed residents or non-residents qualifying for personal tax credits.

The status of TMWs as non-citizens or temporary residents does not, in and of itself, restrict the availability of personal tax credits. However, the reality is that the requirements of the dependent tax credits often operate to p reclude their application to TMWs. The remainder of this part reveals the details of this problem and Part IV discusses how it can be resolved.

B. Examining the Availability of Dependent Tax Credits to TMWs

As already discussed in Part II, many TMWs migrate to Canada without their families. In fact, it is often very difficult for lower skilled TMWs to migrate with their spouse or common law partner, children, or other dependents. How ever, these workers often support family members in their home countries, and the ability to do so is usually a key motivating factor for working away from their home countries.

There are a number of dependent credits under Canada's ITA.94 The credits are generally made available to recognize the costs of supporting dependents, including children, spouses, parents, certain other family members, and dis abled relatives.95 These credits are summarized in Figure 1, along with recommendations that will be explained in this part and in Part IV.

[*79] Figure 1: Summary of the Dependent Tax Credits

Credit Key Requirements Amount in 2011
* Recommendations to Extend Credit Spouse or Requires taxpayer to $10,527 less the Modify the common law support the spouse or income of the cohabitation partner common law partner; no spouse/partner, for requirement for credit cohabitation a maximum tax common law requirement (except for savings of $1,579. partners of common law partner)
.) TMWs..
Equivalent One credit is available $10,527 less the Remove the
to Spouse where an unmarried income of the cohabitation Credit taxpayer resides with a dependent, for a requirement and wholly dependent maximum tax savings modify the relative at some point of $1,579 support
in the taxation year. requirement for

The relative must be a TMWs. minor, a parent or grandparent, or be mentally or physically infirm, and must reside in Canada unless s/he is a child of the taxpayer.

Caregiver Available where a Up to $4,282 No changes.

credit parent over 65 or (phased out between infirm dependent lives $15,624 and with the taxpayer at $18,906 of any time in the year; dependent's not available where income), for a equivalent to spouse maximum tax savings credit can be taken in of $642. respect of that person.

Dependent Available where an Up to $4,282 No changes.

adult credit infirm, dependent adult (phased out relative lives in beginning at Canada (except for the $6,076 of taxpayer's child or dependent's grandchild, in which income), for a case there is no maximum tax savings residency requirement). of $642.

Child Credit Available for each $2,131 per child, Remove the child who resides with for a maximum tax cohabitation the taxpayer and savings of $319 requirement and another parent per child add a support throughout the taxation requirement for year or where the TMWs.

taxpayer was eligible to take the equivalent to spouse credits in respect of that child.

* These amounts are then multiplied by 15%.

The details of the credits will be further discussed below. In the case of each credit, the basic requirements are outlined, and the ability of TMWs to meet those requirements is discussed. In most cases, the residency and cohabit ation requirements are identified as barriers to TMWs using the credits where they are separated from their families.

[*80] 1. The Spouse or Common Law Partner Credit

Paragraph 118(1)(a) of the ITA makes a tax credit (the "Spouse/ CLP Credit") available to an individual taxpayer who supports a spouse or common law partner at "at any time in the year." The taxpayer and the spouse or partner canno t be living separate and apart by reason of breakdown of the marriage or common law partnership.96 A taxpayer cannot claim the spouse or common law partner credit if she or he makes spousal support payments to that person.97 This is bec ause spousal support payments can be deducted under the ITA.98

In 2011, the dollar amount of this Spouse/CLP Credit was 15 per cent of $10,527 less the income of the spouse or common law partner. The credit currently operates to allow a supporting spouse to make use of a partner's unused pers onal exemption. The maximum amount of the credit was increased in 2007 to equal the same amount as the personal exemption.99 This was meant to eliminate the "marriage penalty" that had previously existed, thereby ensuring that single-ea rner families could use the same total personal credits as dual-earner families.100

There is nothing in the language of s. 118(1)(a) that requires the spouse or common law partner to reside in Canada or cohabit with the taxpayer.101 So long as the reason they are living separate and apart is not breakdown of t he marriage or common law partnership, a TMW should be able to use the credit for a dependant spouse or common law partner remaining in the worker's home country. However, this assumes that the following requirements are met: ( 1 ) the dependant person is the taxpayer's spouse or common law partner; (2) the temporary migrant worker "supports" the spouse or common law partner in the year; and (3) the spouse or common law partner does not have income exceeding $10,527. These requirements , as they would apply to a TMW, are discussed below. It should be noted that where the taxpayer is reassessed by the [*81] CRA on the basis that the credit is unavailable, the burden is on the taxpayer to show that the assessment is incorrect. n 102

The spouse or common law partner tax credit applies where the taxpayer is "married" and the dependent person is a "spouse". This means the marriage must be legally recognized in the province in which the taxpayer resides.103 Wh ere a TMW was married outside of Canada, proof of marriage may be difficult, especially if there is no legal documentation. Courts have been willing to look to other types of evidence as proof of the existence of the marriage.104 However, in at least one case the credit was denied where there was a complete lack of documentation and supporting testimony, though in this case, the taxpayer was found to be not credible and had not made arrangements to live with his purported spouse.105

The Spouse/CLP Credit also applies where the dependent is a common law partner. A "common law partner" of a taxpayer is defined in subsection 248(1) as a person "who cohabits at that time in a conjugal relationship with the taxpay er" where they have either cohabited continuously for more than one year, or where the person and the taxpayer are both parents of the same child. In the context of a resident TMW whose partner remains in his or her home country, the requirement that the person "cohabit at that time" will mean that they need to have cohabited at some point during the particular taxation year, which could only occur in the years of arrival or departure. Although the Modernization of Benefits and Obliga tions Act generally extended the meaning of spouse to include common law partnerships under the ITA, this is an example of a situation where those who are not legally married will not qualify for the same benefits.106

In order for the Spouse/CLP Credit to be available, the taxpayer must "support" the spouse or common law partner. The meaning of support has been developed through the case law and generally means support through the provision of the basic necessities of life.107 In Constantine v MNR, under a predecessor to paragraph 118(1)(a), the question was whether a taxpayer living in Canada could claim the spousal amount (then in the form of an exemption) with respec t to his wife living in Greece.108 In the taxation year in question [*82] (1953), the taxpayer sent $125 to his wife.109 Based primarily on the small amount of the payment, especially relative to the $1,000 exemption he was claiming, the Tax Appeal Board refused to find that the taxpayer supported his wife.110 A couple of years later in Buzsik v MNR, a similar issue came before the Board where a taxpayer living in Canada sent $275 to his wife in Hungary.111 Howe ver, in that case, the Board allowed the taxpayer to take the exemption on the grounds that he supported his wife by sending a "sum [that] was sufficient for her support in her native country."112 The evidence of the sufficiency of the amount to support a person in the spouse's home country distinguished the case from Constantine.113 Similar reasoning was applied to allow the exemption in Lee v MNR,114 Michael Majewski v MNR115 and to deny the exemption in Balas v MNR.116

Evidentiary issues can arise with respect to the amount of money sent to the spouse. This was the case in Ali et al v The Queen, where the amount of money actually sent became a question of fact.117 In Brobbey, th e Court made it clear that the onus is on the taxpayer to rebut the Minister's assumption that the taxpayer did not support his spouse.118 In that case, the taxpayer did provide various documentation supporting transfers of money to his spouse, including bank statements showing withdrawals and agreements with others travelling to the taxpayer's home country of Ghana showing that they agreed to give money to the taxpayer's wife. The Court stated that it would have allowed the taxpayer's appeal based on this evidence had it not been contradicted in the taxpayer's oral testimony that the bank withdrawals were used for purposes other than supporting his wife.

Unlike the eligible dependent credit under paragraph 118(1 )(b), there is no requirement that the spouse or common law partners be wholly dependent on the taxpayer.119 However, the case law would seem to require a TMW to demonstrate that enough money or goods were sent to the spouse to reasonably support a person in his or her home country. In some cases, this may not be [*83] possible on the low wages of TMWs, even taking into account the lower c osts of living in some other countries.

A third issue is the amount of the spouse's income. The reference to the spouse's "income" in paragraph 118(1)(a) must presumably refer to the income as calculated under the ITA. A TMW would therefore be required to determine the spouse's income under Canadian rules, and to provide proof of the relevant amounts in Canadian currency. In short, while evidentiary issues may arise, the Spouse/CLP Credit can be used by a TMW supporting a married spouse, but not a common law pa rtner living abroad.

2. The Equivalent to Spouse Credit

A credit known as the equivalent to spouse credit grants a credit equal to the same amount as the Spouse/CLP Credit to single taxpayers who support a dependent.120 This credit (also at times referred to as the "eligible depende nt credit") is available so long as, at any time in the taxation year in question the taxpayer (1) did not claim the Spouse/CLP Credit; (2) is unmarried or not in a common law partnership, or is neither living with nor supported by a spouse or c ommon law partner; and (3) maintains and lives in a "self-contained domestic establishment" in which the dependent person is supported. Furthermore, the dependent person must be (4) resident in Canada, unless she or he is the taxpayer's chi ld; (5) "wholly dependent for support" on the taxpayer or the taxpayer and other persons maintaining the domestic establishment and supporting the dependent; (6) related to the taxpayer; and (7) under the age of 18, a parent or grandparent, or de pendent because of mental or physical infirmity. The credit can only be claimed in respect of one eligible dependent. As with the case of the Spouse/CLP Credit, the maximum credit amount, which is 15% of $10,527 in 2011, is reduced by the amount of the dependent's income. The amount of the credit was increased to equal the personal exemption in 2007. Thus, a single taxpayer who supports another person now has the same tax relief as a married taxpayer who supports a spouse.

Resident TMWs qualify for the credit if they live with the dependent "any time in the year".121 Where the TMW has arrived in or departed from Canada during the calendar year, and lived with the dependent before coming to or aft er leaving Canada, the credit may be available for a child (since the child does not have to meet the residency requirement). A potential problem exists for part-time residents since section 118.91 is triggered. While the section is generall y interpreted to mean that the credit is pro-rated, a closer examination raises an issue about whether the taxpayer can qualify for the credit at all. The [*84] section permits "only . . . such [part] of the deductions . . . as can reasonably be c onsidered wholly applicable to the period or periods in the year throughout which the individual is resident in Canada, computed as though that period or those periods were the whole taxation year."122 It is possible that this operates to modif y the requirements so that cohabitation must occur during the period of residency. Presumably, the cohabitation requirement is in place as evidence of dependency, and a choice was made that cohabitation at any point in the year is a pro xy for support throughout the year. If continuous cohabitation is not required the location of cohabitation would seem irrelevant. Therefore, a more sensible interpretation is that it does not matter when in the year cohabitation occurs, but the credit will be pro-rated for part time residents. Oddly, for TMWs who are sojourners deemed residents, or non-residents permitted to use personal tax credits, section 118.91 is not triggered, and therefore the full credit may be available in the years of arrival or departure.

A number of taxpayers have attempted to use the eligible dependent credit for dependents in their home country.123 In every case, the taxpayer was unsuccessful because of a failure to meet the clear cohabitation requirement. Ho wever, courts have also pointed out that this result can be inequitable and contrary to public policy. For example, in Chaya v R, Justice Sarchuk of the Tax Court agreed that the law was unfair, but stated that he had no choice but to fo llow it:

This is not the first case that I have had before me in the 20 years that I have been on the bench where I look at a section and I look at particular facts and I feel uncomfortable, I feel uncomfortable. But because of the facts a nd because of the legislation, I have no alternative but to rule in accordance with, in this case, the legislation.124

The result was confirmed at the Federal Court of Appeal, where the Court stated: "[i]t is not open to the Court to make exceptions to statutory provisions on the grounds of fairness or equity. If the applicant considers the law un fair, his remedy is with Parliament, not with the Court."125 In Jankowska-Kamac v R, [*85] Justice Hersh questioned the policy rationale that lead to the cohabitation requirement:

The Appellant has argued that the provisions of the Act should be read in harmony with immigration realities. We are, after all, an enlightened nation whose past, present and future growth is dependent on enlightened immigration p ractices and enlightened taxation provisions should not penalize families in the process of immigrating. If the policy of the equivalent to spouse credit is to permit a single mother to claim the credit in respect of a wholly dependent child w ho is actually supported by that parent and who is unequivocally dependent on that parent in virtually every meaningful way, then a temporary immigration barrier should not create a technical hurdle for permitting that credit to the supporting p arent. The argument, from a policy point of view, has merit.126

The courts have thus raised equity and fairness arguments. Why should immigration status affect the availability of the credits where there is clearly a relationship of dependency? While the reason for the cohabitation requirement has been questioned, the reality is that it operates to preclude the use of the eligible dependent credit by TMWs supporting dependents abroad, except, perhaps, in the years of arrival and departure.

3. The Caregiver Credit

Where the eligible dependent credit is unavailable, paragraph 118(1)(c.1) grants a caregiver credit to a taxpayer who lives with a dependent adult relative at any time in the year.127 While it is referred to as the "caregiver c redit", this credit was created in order to "provide additional tax assistance to providers of in-home care for elderly or infirm relatives."128 It is notable that no actual care is required to qualify for the credit; rather, co-residency a nd low-income are taken as a proxy for caregiving. Qualifying relationships include the child or grandchild of the taxpayer; and the parent, grandparent, brother, sister, aunt, uncle, niece, or nephew of the taxpayer, or of the taxpayer's spouse or common law partner. There is a requirement that the care recipient reside in [*86] Canada unless she or he is the taxpayer's child or grandchild. The dependent must be either 65 years or over in the case of a parent or grandparent, or must b e dependent on the taxpayer because of mental or physical infirmity. The maximum amount of the credit is 15% of $4, 282, and this is phased out where the dependent's income is between $14,624 and $18,906.129 Since there is a requirement that the taxpayer and the adult dependent ordinarily reside in the same home at some point in the year, like the eligible dependent credit, this credit should be available to TMWs supporting dependents abroad in the years that they arrive in and leave Canada. This could only be the case for children and grandchildren of the worker, as there is a residency requirement for other dependents.

4. The Dependent Adult Credit

Where the caregiver credit and eligible dependent credits are unavailable, a taxpayer may qualify for a credit under section 118(l)(d) for each adult who is dependent on the taxpayer because of mental or physical disability.130 The CRA explains the dependency requirement as follows: "if the individual has actually supplied necessary maintenance, or the necessities of life, to the person on a regular and consistent basis."131 There is no co-habitation requirement for t his credit. The dependent adult can be a child or grandchild of the taxpayer or of the taxpayer's spouse or common law partner, regardless of whether she or he resides in Canada. Also, a resident parent, grandparent, brother, sister, uncle, aunt, niece, or nephew of the taxpayer or of the taxpayer's spouse or common law partner would qualify.132 In 2011, the maximum amount of the credit was 15% of $4,282, and this amount is phased out beginning at $6,076 of the dependent's income.133

It would be possible for TMWs to use the dependent adult credit where supporting a dependent adult in his or her home country, but only if the adult is a child or grandchild. For other qualifying relationships, there is a requirem ent of residency in Canada that would not be met. [*87] 5. The Child Credit

The child credit was introduced in the 2007 Budget to provide "more support for families to recognize that raising children involves additional expenses."134 The child credit is set out under section 118(1)(b.1) and allows a ta xpayer a credit of 15% of $2,131 (in 2011) for each child who is under the age of 18 at the end of the taxation year. The credit is available where the taxpayer and another parent ordinarily reside with the child throughout the taxation year. Alt ernatively, it is available where the taxpayer qualified to take the eligible dependent credit in respect of the child or would have qualified if the taxpayer had not chosen to take the eligible dependent credit for a different dependent. So this m eans that where the child does not live with both parents, a parent who can take an eligible dependent credit in respect of a child, can also take the child credit for that same child. Also, where there are multiple children for whom the taxpayer could take the eligible dependent credit if it were not limited to one dependent, the taxpayer can take the child credit for each of those qualifying children. However, only one parent can take the child credit for a particular child.135 A pe rson cannot claim the credit where she or he is required to make child support payments in respect of a child to a current or former spouse or common law partner from whom he or she has lived apart for the entire year.136

Since this credit is only available where both parents ordinarily reside with the child throughout the year, or where the eligible dependent credit was available in respect of the child, it will not usually be available to a resid ent TMW who is separated from his or her family. However, following from the above discussion of the eligible dependent credit, a single TMW may be able to claim a pro-rated credit in the years of departure and arrival. The difference in treatme nt between married and single TMWs is peculiar, and deserves consideration. There is no good reason to distinguish between married and single workers in this form, and therefore this is surely an unintentional effect of the legislation.

C. Modest Changes to Improve Equity among Temporary Migrant Workers

The analysis above reveals that TMWs separated from their families in their home countries can qualify for the Spouse/CLP Credit if legally married, but not in a common law relationship due to the requirement for co-habitation. [* 88] In the case of other dependent tax credits, they will be available in very limited situations. The next section argues for the removal of the cohabitation requirements to extend the availability of credits. In addition to removing the inequit y as between TMWs and other taxpayers, the extension of the credits will improve the inequity between a TMW who supports a spouse and a TMW who supports a child. If those recommendations in Part IV are not followed, it is apparent there are some an omalies being created by the current system that could be corrected through alternative and even more modest changes.

There are three instances of inequity among TMWs that could be resolved relatively easily. Firstly, the eligible dependent credit and the child tax credit are likely pro-rated for part time residents, but not for non-residents mee ting the "all or substantially all" test in section 118.94, nor for sojourners deemed resident. This inequity could be corrected by allowing a full credit for part-time residents who earn "all or substantially all" of their income in Canada. Secon dly, the definition of common law partner has the effect that a TMW who must leave a common law partner behind in his or her home country is unable to use the Spouse/CLP Credit. This should be remedied by amending section 118(1)(a) to allo w taxpayers who were in a common law relationship prior to arriving in Canada to be deemed in a common law relationship for the purposes of the credit. This should not apply if they are living separate and apart due to breakdown of their conjugal relationship, if either partner is in a common law or spousal relationship with another person, nor if the partner resides outside of Canada. Thirdly, it is inequitable that the child credit could potentially be taken by a single TMW in the year o f arrival or departure in Canada, but not a married TMW. This should be corrected so that married and single workers are treated the same by making the child credit available to taxpayers where the eligible dependent tax credit would have been available had the taxpayer been single.

These relatively small changes would make the credits more equitable among TMWs, but that is just one step in solving the tax inequities temporary workers experience. A more significant problem is the more general lack of dependen t credits available to TMWs forced to leave their families, as compared to Canadian citizens living with their dependents. The next part discusses ways this inequity can be reduced.

[*89] IV. EXTENDING THE AVAILABILITY OF DEPENDENT TAX CREDITS TO TEMPORARY MIGRANT WORKERS

This section examines the possibility of removing the cohabitation and residency requirements for TMW taxpayers so that they do not suffer an inequitable tax disadvantage due to being separated from their families. After the purpo ses of the cohabitation and residency requirements are briefly explored, the discussion turns to a theoretical debate of whether to classify the credits as tax expenditures or part of the normative tax base. The paper proceeds on the assumpt ion that credits are classified as tax expenditures. Aside from the caregiver credit, it is concluded that the policy goals of the other dependent credits would be better met if the cohabitation and residency requirements were modified to increase their availability to TMWs. Other considerations also support the extension of the credits, but it is acknowledged that there is less assurance of dependency if the cohabitation and residency requirements were simply removed for TMWs. T herefore, the conclusion is that the credits should be extended in a disciplined manner by limiting the extension to situations where TMWs can show that they support a child.

A. Reasons for the Cohabitation and Residency Requirements

In order to evaluate the equity of the credit provisions, it is useful to discuss the possible reasons for the residency and cohabitation requirements. To review, there is a cohabitation requirement to meet the definition of commo n law partner, but not a spouse; the eligible dependent credit and the caregiver credit have cohabitation requirements to be met at some point in the year; the child credit has a cohabitation requirement to be met throughout the year; the depend ent adult credit has a residency requirement for dependents other than the taxpayer's child or grandchild; and the eligible dependent credit has a residency requirement for dependents other than the taxpayer's child. These cohabitation and residen cy requirements are the primary barriers to TMWs claiming dependent tax credits where they support family members in their home countries.

It is difficult to believe that there is a good policy reason for the variation in the details of the cohabitation and residency requirements in the various dependent tax credits. However, in general, there are likely sound reason s for introducing cohabitation and residency requirements. In the case of the definition of a common law spouse, the cohabitation requirement is imposed to ensure that the relationship is equivalent to a spousal relationship (presumably in terms of conjugality). For the other credits, the cohabitation [*90] requirement serves as an additional assurance that there is a supporting relationship. In the case of the caregiver credit, the cohabitation requirement actually ensures the presence o f the type of support to be recognized, which involves more than just economic support. The residency requirements in the dependent adult and eligible dependent credits serve to prevent abuse, as it is more difficult for the CRA to verify the r ecipients of funds sent abroad and it is less likely that taxpayers support someone who lives outside of the country. Perhaps the reason for the lack of a residency requirement for children and grandchildren is the increased likelihood that a taxpayer would support that person despite living in another country, since there will usually be a greater recognition of responsibility for one's children and grandchildren.

B. How to Evaluate the Dependent Tax Credits

Analysis of tax provisions can be divided into two categories according to whether the provision is necessary to properly determine a taxpayer's "income," or whether the provision is a spending program (referred to as a "tax expen diture").137 Whether or not the dependent tax credits are part of the normative tax base or tax expenditures depends on one's view of the definition of "income." The most widely-accepted definition of income is referred to as the Haig-Simons d efinition, which defines income as changes in wealth, plus consumption.138 Another very similar understanding of income is that it should be based on one's ability to pay, in which case the question is whether the expenditures associated with t he credits reduces one's discretionary economic power.139 Henry Simons (one of the two primary contributors to the Haig-Simons definition of income) supports the view that the cost of providing for minor dependents is not properly deducti ble from income because it represents consumption.140 On the other hand, Borris Bittker famously quipped that "no [*91] one but a tax theorist . . . could fail to see the difference" between the cost of supporting a child and the cost of maint aining a yacht.141 There are a number of respected sources that support the view that the cost of providing for minor children is not discretionary and is therefore properly deductible. The Carter Commission Report of 1966142 and the 1969 Wh ite Paper,143 both very important reports in the history of Canadian tax policy, view family responsibilities as affecting one's ability to pay. Robin Broadway and Harry Kitchen clearly view the expenses of raising children as non-discretionary .144 F. Barry Gorman explains why the expenditures of supporting children should be taken into account in defining the normative tax base: "[w]hereas the decision to marry and have children may be discretionary, the requirement to support eithe r or both is not."145

To view the cost of supporting minor children as non-discretionary recognizes the legal and moral responsibility owed to one's children. However, it is argued here that the dependent credits should nonetheless be analyzed as tax e xpenditures. First, aside from the child credit, other credits allow claims for dependents other than children; the cost of supporting relatives other than children is more likely incurred as a result of a choice and therefore discretio nary. Second, credits are applied after the stage of determining the taxpayer's income, and typically they are viewed as tax expenditures. The dependent tax credits are reported in Canada's tax expenditure budget,146 which reports th e cost of spending programs implemented through the ITA. So, it [*92] appears that the government views these credits as spending programs, though it is conceded that this is not entirely certain as the tax expenditure budget tends to be ov er-inclusive. Finally, a well-known competing view defines tax expenditures as components of the tax system that could be effectively implemented outside of the realm of taxation.147 All of the dependent tax credits could easily be structure d as separately- administered government programs. Therefore, the dependent tax credits are analyzed as tax expenditures in this paper. While some of the literature supports a contrary conclusion, the distinction for the most part, is not particul arly important in a practical sense in this context. Here, the considerations reviewed below including equity, administrative compliance, costs, and equality are equally relevant under both tax policy and tax expenditure analysis.

C. Meeting the Policy Goals Equitably

The remainder of this paper analyzes the extension of the dependent tax credits to TMWs by removing the cohabitation and residency requirements. It was already stated that the purpose of the dependent credits is to recognize the c osts of supporting dependents. However, what is the objective underlying this statement? The tax system does not recognize all costs - why recognize these particular costs? Strangely, there is little discussion on the purpose or goal of t he dependent tax credits in Canada. As it was concluded that the credits are likely tax expenditures, they must be justified for a reason separate from establishing the normative tax base. One purpose could be to encourage or reward familial relat ionships and procreation as a valuable contribution to our society. Another purpose could be to assist the dependent, including through encouraging private support of family members in need. A third purpose may be to redistribute income to sup porting individuals in recognition of costs that are part of a moral responsibility. This last goal is most consistent with the policy statements for the credits (other than the caregiver credit), is more likely to be achieved than the se cond goal,148 and is more politically acceptable than the first goal. For these reasons, this third goal is the strongest foundation for the credits. If the purpose of the credit is to assist the taxpayer where there is a moral responsibility, the location of the dependents should not be relevant. This conclusion is also consistent with the lack of residency and cohabitation requirement for married persons claiming the Spouse/CLP Credit.

[*93] The caregiver credit is a special case as serves to recognize only a particular type of support that comes with living with a dependent. This is clear from government statements,149 and from the fact that the dependent a dult credit is set up as an alternative credit where the taxpayer and dependent do not reside together. The cohabitation requirement should not be removed for the caregiver credit because cohabitation is part of the relationship intended to be t argeted. In fact, one objective of the credit was to recognize the unpaid work of caregivers in the household.150 Also, removing the requirement for TMWs would create inequities with respect to Canadian citizens and permanent residents, many of whom do not live with adult dependents in need of care. The remaining analysis therefore considers the extension of the other dependent credits: the eligible dependent, dependent adult, and child credits.

All policies should strive to meet their goals in an equitable manner, and equity is widely recognized as a key attribute of a good tax system.151 Would more equitable results be achieved if the dependent credits were extended to TMWs who support dependents in other countries? Consider the example of a single, 30 year old woman, Alma, working in Canada under the LCP who financially supports two children in her home country. Assuming Alma works in Ontario, she shoul d be paid at least $10.25 per hour, which, assuming a 40 hour work week, would amount to an annual salary of approximately $21,320.152 Her federal income tax payable (using 2011 rates) would be $1,619.153 Compare Alma's situation to Sue, who is in the exact same position except that she lives with her children in Ontario. Her ability to use the eligible dependent credit and child credits would reduce her federal taxes payable to [*94] nil.154 These tax savings as compared to Alma's taxes payable are significant, and would result in a meaningful change in her economic circumstances.

While this example, on its face, indicates that Alma should be permitted to take the same credits as Sue, one must consider whether Alma receives tax credits from her home country and if tax treaty rules operate to deem her reside nt of her home country rather than in Canada. The problem of experiencing a "double benefit" from tax credits in both countries is unlikely to occur because in order for a non-resident to qualify for tax credits in Canada, section 118.94 require s all or substantially all of the taxpayer's annual income to be earned from working in Canada. Because of the operation of tax treaties, it is unlikely that there will be meaningful amounts of income earned in the home country against whi ch any available home country credits could be used.155 Therefore, Alma is unlikely to be able to use tax credits from her home country that need to be taken into account.

One other consideration is whether the costs to Alma of supporting her children in another country are different than Sue's costs of supporting her children in Canada. On the other hand, this same problem exists for two people who both reside with their children in Canada. Consider a third taxpayer, Mary, who is also single and supports two children, but who lives in Vancouver and has a much higher cost of living. Sue and Mary are both afforded an identical credit. The expe nses associated with dependents vary not only by regional costs of living, but also according to the particular needs of the dependents, and the surrounding circumstances, such as living arrangements. From an equity perspective, discrepancies in costs of living call for a system that recognizes the actual costs of supporting the dependents. However, a workable way to address this concern is difficult to imagine. Therefore, if the credit is extended to TMWs, it is proposed that the amount of the credit not be modified.

If the credits are extended to TMWs separated from their families, it is necessary to consider equity issues with respect to other taxpayers. Some Canadians and permanent residents support dependents who do not meet the cohabitati on or residency requirements under the dependent credits. For parents who live apart from their children or spouses due to marital or common law breakdown, this is not a great concern because there is a deduction-inclusion system for spousal supp ort. Further, child support payments should, at least in theory, take into account the availability of the child credit to the custodial [*95] parent. This equity issue is, however, relevant when analyzing the dependent adult credit, and is tak en into account in the recommendations below. Aside from the dependent adult credit, a case can be made for limiting the special treatment to TMWs. First, in many cases, the TMWs are not permitted to bring their dependents to Canada, and therefor e the lack of cohabitation is not an indication of a lack of dependency. Second, providing for dependents is often the reason for working abroad in the first place. Again, this increases the likelihood of dependency. Third, this is a group that contains many vulnerable, disadvantaged, and low income persons. So, while equity with other taxpayers needs to be considered, it should also be kept in mind that there are valid reasons for limiting the extension to TMWs.

D. Other Considerations In Favour of Extension: Substantive Equality & Responsibility to Non-Residents

All public policy, including tax laws, should be assessed in terms of their impact on equality.156 While it is possible that policies that reinforce or create inequality may be justified in some cases, equality is always a very important consideration. The disadvantages suffered by TMWs makes them a group that should be afforded special attention. An analysis of whether section 15 of the Charter is breached due to the non-availability of the tax credits to TMWs separated from their families is beyond the scope of this paper. However, even without this analysis, it can be stated that taking positive steps to better achieve substantive equality is consistent with values set out in Canada's Charter. Further, human rights arguments can be used to support the extension of the policies. The extension of rights to TMWs based on grounds of equality is consistent with the direction taken by the Canadian government, which has r ecently introduced a number of policies designed to ensure that TMWs are not disadvantaged.

There are advantages to using dependent tax credits to meet the objective of substantive equality. So long as the worker fills out the TD1 form indicating that he or she is entitled to the appropriate dependent tax credits, the in come tax withholdings should be appropriately reduced.157 The dependent credits would therefore operate to effectively increase the cash in the workers' pockets after each pay period. Also, offering this relief in the form of a tax [*96 ] credit does not require employer cooperation in the same way as raising labour standards. Finally, because it is part of an existing administrative structure, the credit is unlikely to entail large administrative costs as compared to a separate p rogram outside of the tax system.

An issue exists with respect to Canada's obligation to provide dependent tax credits to non-residents. It is usual for bilateral tax treaties to provide that personal tax benefits do not need to be extended to non-residents.158 If there is no treaty obligation to extend the credits to non-residents, the argument can be made that section 118.94 is overly generous in that it permits some non-residents to claim dependent tax credits. It may follow that there is no reason to further extend the availability of dependent tax credits to non-resident TMWs. However, there are strong counter-arguments to this position. As Ruth Mason has observed, the argument for the source country (i.e., Canada, in this case) to provide personal tax benefits is stronger where the non-resident earns all of her or his income in that country because the taxpayer is more likely to be a member of the source country's national community.159 Mason also identifies the potential fo r double denial of benefits where the source country does not extend personal tax benefits to non-residents and there is insufficient income in the residence country to utilize tax credits made available in that country.160 One of the options Mason identifies to address this double denial is for source countries to make personal tax benefits available to non-residents.161 This appears to the be approach taken by Canada under section 118.94, which makes personal credits available to non-residents where virtually all of their income is earned in Canada (making it unlikely that credits will be useable in the country of residence). The recommendations made in this paper to extend the dependent tax credits are therefore not li mited to residents of Canada as there are good policy reasons for permitting non-residents to access the same credits as residents where permitted under section 118.94.

Extending the dependent tax credits has the potential to benefit dependents in other countries, who may become the ultimate recipients of the money. Pro-remittance policies have been promoted as one way in which industrialized cou ntries can meet their moral obligation to assist the developing world.162 Of particular interest here is the recent literature in the United States proposing tax relief for remittances sent to developing countries.163 Remittances [*97] are more likely to be sent back to poorer countries.164 However, not all TMWs are from developing countries, and some remittances will be sent to countries as well off as Canada. Further, the dependent tax credits do not measure actual remittances s ent, and not all TMWs will send remittances. While the credits could, in theory, be set up to require remittances to benefit the dependant family member, this would create a large administrative burden on the CRA, who would have to verify the fund s were sent and used to the benefit of the dependent. Further, a TMW may provide for dependents in less direct ways,165 and so remittances are not necessarily the best way to ensure dependency. Assisting developing countries through facilitati ng remittances cannot be the sole reason for extending dependent tax credits to TMWs; however, it should be given some weight.

E. Preventing Abuse

All considerations up to this point have strongly supported the extension of the eligible dependent credit, the dependent adult credit, and the child credit to TMWs supporting dependents abroad. However, two important and related considerations remain: the potential for abuse and the assurance of dependency. If there was a significant risk of TMWs taking the credits without truly supporting the dependent or without meeting the other requirements, the integrity of the tax system would be brought into question.

By allowing the credit where the dependents reside abroad and apart from the taxpayer, it will be more difficult for the CRA to ascertain (1) the existence of the dependent; (2) a qualifying relationship between the taxpayer and d ependent (for example, parent/child); and (3) the dependent's income. However, finding the appropriate proof is the problem of the TMW, who bears the burden of proving these requirements upon reassessment. It should be noted that the problem of "fabricating" dependents exists even for dependents residing within Canada, as the current tax forms do not require social insurance numbers for dependents in most cases. Lessons learned from the United States suggest there could be serious pot ential for abuse.166 If Canada were to require [*98] identification numbers for dependents, an ITIN-type system could be introduced for non-residents.

The greater concern is that eliminating the cohabitation requirement will provide less assurance of a supporting relationship. However, there are several reasons in favour of extending the credits nonetheless. There is an absence of both a cohabitation requirement and residency requirement in the case of the Spouse/CLP and the dependent adult credit (for children). In the case of children, there is likely a greater moral, and often legal, responsibility to support o ne's child, and so it is very likely that there will be support of one's minor child even where there is no cohabitation. In fact, in the case of TMWs, this is often the very reason for working abroad. The data on remittances shows that migrants and immigrants with children and spouses abroad often support them through sending remittances.167 Carefully choosing the support requirements and limiting the dependents who qualify for the extended credits could greatly reduce situations of credits being used where there is no dependency. Information could be sent to TMWs, encouraging them to keep appropriate records of payments sent.168 Also, because the stakes of making misrepresentations on their tax returns are so high for the many TMWs who intend to try to stay in Canada or work in Canada in other years, this may help to somewhat discourage abuse of the system.

F. A Proposal for the Careful Extension of the Dependent Tax Credits

This section provides the details of the proposed extension of the eligible dependent tax credit, the child credit, and the dependent adult credit. The introduction and modification of cohabitation and residency requirements are c onsidered, and in the process equity considerations are balanced against the need to protect the integrity of the tax system through ensuring there is, in fact, dependency.

The eligible dependent credit currently requires that the dependent is wholly dependent for support on the taxpayer and others living in and maintaining the domestic establishment. How should this requirement be modified to accomm odate TMWs who do not live with the dependent? If the requirement was varied so that it could be met if the dependent was supported by the TMW (living in Canada) along with others living with the dependent in the home country, this would make the c redit overly broad as the TMW could [*99] potentially contribute very little to the dependent's household. It is more reasonable to establish a requirement that the TMW "supports" the dependent, as is required under the Spouse/CLP Credit. This term has been interpreted by the courts in the context of dependents living abroad,169 though given the vagueness of the term it would be preferable to build in a definition of support that takes the case law into account. For example, suppo rt could be defined as actually providing a reasonable standard of living to the dependent. In the case of the child credit, the same requirement of support could be added as an additional requirement where there is no cohabitation. This woul d help to ensure a supporting relationship.

Where the dependent is a child, as would be the case for the child credit and could be the case for the eligible dependent credit, there is a possibility that there is another parent outside of Canada who supports the dependent.170 To address this, the total of the eligible dependent credit and child credits could be reduced to the extent that the income of each parent living with the child or children exceeds $10,527 (representing the amount needed by the other parent to support him or herself). For example, if a TMW in Canada supports two children living with their other parent in another country. If the other parent earns $12,527, the total child credits that can be taken in respect of those children is red uced by $2,000 from $4,262 to $2,262. The assumption, here is that the other parent needed $10,527 to support him or herself, and therefore had $2,000 of remaining to support the children. To facilitate with the administration of this provision, the onus would be on the TMW to provide proof of income of the other parent.

In the case of the dependent adult credit, there is already a dependency requirement, but the question is whether the residency requirement for dependents other than children and grandchildren should be removed so that TMWs who su pport other dependents abroad could use the credit. Similarly, for the eligible dependent credit, there is a question about whether the residency requirement should be removed for dependents other than children of the taxpayer. The recommenda tion here is that it should not. The remittance literature shows that there is less assurance of support for relatives other than children and spouses. Another concern is that extending the credit results in significant equity concerns as compared to Canadian citizens or permanent residents who support extended family members who are not resident in [*100] Canada. The argument of lack of choice is not nearly as strong as it is with immediate relatives. There would be a limited ability (and perhaps desire) to bring extended family members to Canada, even for Canadian citizens and permanent residents; therefore, it is not recommended that the residency requirements be removed.

V. INVOLUNTARY SEPARATION: REMOVING THE PENALTY

TMWs are a vulnerable group in our society, and, despite some recent efforts to treat them more fairly, they still experience many disadvantages as compared to Canadian citizens and permanent residents. One disadvantage is that th ey cannot qualify for tax credits for dependents living in their home countries. In the case of low skilled workers, this family separation is seldom by choice. The lack of recognition of this supporting relationship raises serious equity and equal ity concerns, and it is therefore argued that the dependent tax credits should be extended to TMWs who support dependents living outside of Canada. However, the removal of the barriers to claiming the credits could result in TMWs taking the credits where there was no true relationship of dependency, thereby reducing the integrity of the tax system. The extension of the credits to TMWs also can create concerns about equity as compared to other Canadian taxpayers who often live apart from the ir dependents other than minor children. These concerns lead to a conclusion that the caregiver credit and dependent adult credit should not be changed to be made more broadly available to TMWs. However, it is recommended that the eligible depe ndent credit and the child credit be extended to TMWs living apart from their children by removing the cohabitation requirements and adding or modifying the support requirement in the legislation.

Even if these recommendations for broader reform are not followed, the more modest proposals in Part III should be considered to increase the equity among TMWs. First, the credits should not be pro-rated for part-time residents wh o earn "all or substantially all" of their income in Canada. Secondly, the Spouse/CLP Credit should be amended to apply where a common law partner is supported in another country. Thirdly, the child credit should be available to TMWs who are mar ried or in a common law partnership and would have been able to use the credit had they been single. Following all of the recommendations in this paper to allow TMWs better access to dependent tax credits can help to remove one of the i ll-effects of forced separation from their families and could make a meaningful difference to their economic circumstances.

FOOTNOTES :

[f]rom this, it would seem to follow that money spent on children should have no more relevance to parental ability to pay income tax than money spent on vacations or sports cars. This view cannot be dismissed summarily. Certainly , many parents choose to have children, and derive at least as much pleasure from expenditures on their children as they would from equal expenditures on trips or cars.

1 Tamara Larre, LLB (Saskatchewan), LLM (Osgoode Hall), is an Assistant Professor at the University of Saskatchewan, College of Law. I would like to thank the external reviewers, those who attended my presentation of this paper a t the 2011 Law and Society Conference, the participants at the 2011 Washburn Law Colloquium, and Kim Brooks for their helpful comments. I would also like to thank Laura Zlotkin and the editors of the journal for their editing work. Any errors or omissions are my own.

2 See e.g. Manolo Abella, "Policies and Best Practices for Management of Temporary Migration" (Paper delivered at the International Symposium on International Migration & Development, 28-30 June 2006).

3 "Canada - Foreign workers present on December 1st by province or territory and urban area, 2006-2010" Preliminary tables-Permanent and temporary residents, 2010, online: Citizenship and Immigration Canada .

4 Delphine Nakache & Paula J Kinoshita, "The Canadian Temporary Foreign Worker Program: Do Short-Term Economic Needs Prevail over Human Rights Concerns?" IRPP Study No 5 at 4 (May 2010), online: Institute for Research on P ublic Policy .

5 Ibid at 4-5.

6 Citizenship and Immigration Canada, Canada Facts and Figures: Immigration Overview Permanent and Temporary Residents 2009 (Ottawa: Minister of Public Works and Government Services Canada, 2010) at 77 [CIC, Facts and F igures].

7 See e.g. Regulations Amending the Immigration and Refugee Protection Regulations (Temporary Foreign Workers), (2009) C Gaz I, Vol 143, No 41.

8 RSC 1985, c 1 (5th Supp) [ITA].

9 Francine J Lipman, "The Taxation of Undocumented Immigrants: Separate, Unequal, and Without Representation" (2006) 9 Harv Latino L Rev 1.

10 Ibid at 33-48.

11 House of Commons, Standing Committee on Citizenship and Immigration, Temporary Foreign Workers and Non-Status Workers (May 2009) at 2 (Chair: David Tilson) [Tilson].

12 See Howard F Chang, "Migration as International Trade: The Economic Gains from the Liberalized Movement of Labor" (1998) 3 UCLA J Int'l L & Foreign Aff 371 at 371-77.

13 Kamaal R Zaidi, "Harmonizing Trade Liberalization and Migration Policy Through Shared Responsibility: A Comparison of the Impact of Bilateral Trade Agreements and the GATS in Germany and Canada" (2010) 37 Syracuse J Int'l Law & Com 267 at 270.

14 SC 2001, c 27.

15 SOR/ 2002-227 [IRP Regs].

16 Ibid, ss 7, 8.

17 Ibid, s 203

18 Tilson, supra note 11 at 4-5.

19 Nakache & Kinoshita, supra note 4; since the Low Skilled Pilot Project began in 2002, entries of low skilled workers have grown from 24.6% of temporary workers in 2001 to 32.8% in 2009, primarily due to growth in the "e lemental and labourers" category (CIC, Facts and Figures, supra note 6 at 78).

20 IRP Regs, supra note 15 at s 112

21 Sabaa A Khan, "From Labour of Love to Decent Work: Protecting the Human Rights of Migrant Caregivers in Canada" (2009) 24 CJLS 23 at 29.

22 IRP Regs, supra note 15, s 110.

23 See Nakache & Kinoshita, supra note 4 (for an explanation for the process by which TMWs can apply for permanent residency at 32-33).

24 CIC, Facts and Figures, supra note 6 at 72.

25 Ibid

26 Nakache & Kinoshita, supra note 4 at 6.

27 CIC, Facts and Figures, supra note 6 at 77.

28 Ibid.

29 Tilson, supra note 11.

30 Ibid at 55-61.

31 See e.g. Regulations Amending the Immigration and Refugee Protection Regulations (Temporary Foreign Workers), SOR/ 2010-172 (sanctions were imposed on employers where the working conditions they provided were not substan tially the same as those set out under the job offer), Regulations Amending the Immigration and Refugee Protection Regulations, SOR/ 2010-78 (making it easier for workers under the LCP to meet the requirements to apply for permanent re sidency) [ Amending the IRP Regulations].

32 Nakache & Kinoshita, supra note 6 at 33.

33 Ibid

34 Harsha Walia, "Transient Servitude: Migrant Labour in Canada and the Apartheid of Citizenship" (2010) 52 Race and Class 71 at 76-77; Swarna Ukwatta, "Sri Lankan Female Domestic Workers Overseas: Mothering Their Children From a Distance" (2010) 27 Journal of Population Research 107.

35 Tilson, supra note 11 at 15.

36 See e.g. Ezra Rosser, "Immigrant Remittances" (2008) 41 Conn L Rev at 6-12.

37 Statistics Canada, Remittance Behaviours Among Recent Immigrants in Canada (Ottawa: Minister of Industry, 2008) at 17 (René Houle & Grant Schellenberg eds) [Houle & Schellenberg].

38 Ibid.

39 Ibid at 18 (the countries with the highest percentage of immigrants remitting were the Philippines and Haiti, at approximately 60%, while the lowest percentages were found in the industrialized countries of France, the United Kingdom, and South Korea).

40 Ibid at 28 (average amounts remitted were lowest among immigrants from the Caribbean and Guyana ($1,500), and Eastern Europe ($1,900)).

41 Ibid at 20.

42 Ibid at 21.

43 Ibid.

44 Ibid citing Clare Stanwix & John Connell, "To the islands: The remittances of Fijians in Sydney" ( 1995) 4 Asian Pac Migr J 69.

45 Ibid at 19.

46 Ibid at 20,

47 See e.g. The World Bank, Global Economic Prospects: Economic Implications of Remittances and Migration 2006 (Washington, DC: The International Bank for Reconstruction and Development/The World Bank, 2006) at 97; Sergio Diaz- Briquets & Jorge P21erez-Lopez, "Refugee Remittances: Conceptual Issues and the Cuban and Nicaraguan Experiences" (1997) 31:2 Int'l Migration Rev 411.

48 Houle & Schellenberg, supra note 37 at 11.

49 See Stanwix & Connell, supra note 44; Leah K Vanwey, "Altruistic and Contractual Remittances Between Male and Female Migrants and Households in Rural Thailand" (2004) 41:4 Demography 739; Edward Funkhouser, "Remittances From I nternational Migration: A Comparison of El Salvador and Nicaragua" (1995) 77:1 The Review of Economics and Statistics 137 at 141; Cecilia Menjivar et al, "Remittance Behavior Among Salvadoran and Filipino Immigrants in Los Angeles" (1998) 32:1 Int'l Migration Rev 97.

50 Walia, supra note 34 at 72; see also Kerry Preibisch, "Pick-Your-Own Labor: Migrant Workers and Flexibility in Canadian Agriculture International" (2010) 44 Int'l Migration Rev 404 (in which it is argued that "access to migrant workers allows agri-food firms to implement a particular range of employment practices than what would be possible with a completely domestic workforce" at 406).

51 Kahn, supra note 21 at 23.

52 See Amending the IRP Regulations, supra note 31.

53 Tanya Basok & Emily Carasco, "Advancing the Rights of Non-Citizens in Canada: A Human Rights Approach to Migrant Rights" (2010) 32 Hum Rts Q 342 at 357-358.

54 Walia, supra note 34 at 72-73.

55 Basok & Carasco, supra note 53 at 344.

56 Ibid.

57 See Nakache & Kinoshita, supra note 4 at 8.

58 Walia, supra note 34 at 76.

59 Part I of the Constitution Act, 1982, being Schedule B to the Canada Act 1982 (UK), 1982, c 11 [Charter].

60 Basok & Carasco, supra note 53 at 350-351.

61 Ibid at 347-48 (see also a description of the development of the ILO treaties).

62 Ibid at 351-352.

63 Khan, supra note 21 at 40.

64 Basok & Carasco, supra note 53 at 344.

65 Additional literature on point includes: Daiva K Stasiulis & Abigail B Bakan, Negotiating Citizenship: Migrant Women in Canada and the Global System (Toronto, University of Toronto Press, 2005); Audrey Macklin, "Foreign Domestic Worker: Surrogate Housewife or Mail Order Servant?" (1992) 37:3 McGill LJ 681; Judy Fudge, "Global Care Chains, Employment Agencies, and the Conundrum of Jurisdiction: Decent Work for Domestic Workers in Canada" (2011)23:1 CJWL 23 5.

66 Law v Canada (Minister of Employment and Immigration), [1999] 1 SCR 497, 170 DLR (4th) 1 at 531-32 [Law cited to SCR].

67 2001 SCC 94, [2001] 3 SCR 1016 [Dunmore].

68 2011 SCC 20, [2011] SCJ No 20 [Fraser].

69 Supra note 67 (this resulted in a remedy of declaring the offending legislation prohibiting unionization unconstitutional at 207).

70 Ibid at para 170.

71 Ibid at para 215.

72 Fraser, supra note 68. The Court's reasoning was that the offending legislation was found not to be unconstitutional.

73 Ibid at para 295.

74 Ibid at para 319.

75 ITA, supra note 8, s 3.

76 Ibid, s 2(3).

77 See e.g. Canada-US Tax Convention Act, SC 1984, c 20, art XV [Canada-US Tax Convention Act]. This is generally the case, although bi-lateral tax treaties can limit the circumstances where the source state can imp ose tax on employment income earned by a non-resident.

78 Canada Revenue Agency, Interpretation Bulletin IT-221R3, "Determination of an Individual Residence Status" (21 December 2001) at para 2 [IT-221R3].

79 Ibid.

80 ITA, supra note 8, s 250(1)(a).

81 IT-221R3, supra note 78 at para 21.

82 ITA, supra note 8, s 3(a), 250(1)(a).

83 Ibid, s 114.

84 IT-221R3, supra note 78 (this assumes the worker does not earn Canadian sourced income after ceasing to be resident. Also, if the resident has not severed all ties to Canada, for example, by leaving personal property or family members in Canada, there may be some issue about whether that worker has become non-resident).

85 See e.g. Canada-US Tax Convention Act, supra note 77, art IV.

86 15% in 2011.

87 Under ITA, supra note 8, ss 118 (1)(a)-(c).

88 This credit, like the others discussed in the paper, reduces taxes payable by this dollar amount multiplied by the lowest marginal rate of tax of 15% in 2011, resulting in a tax savings of $1,579.

89 ITA, supra note 8, s 118.94.

90 Canada Revenue Agency, T4068, Non-Residents and the Income Tax (2010) online: Canadian Revenue Agency: .

91 See e.g. Watts v R2004 TCC 535 (Informal Procedure), the Tax Court of Canada decided this threshold had been met where the percentage of income earned in Canada ranged from 76 to 81% of the individual's income for the three years in question.

92 ITA, supra note 8, s 118.91.

93 Canada Revenue Agency, T4055, Newcomers to Canada (2010) online: Canadian Revenue Agency at 19.

94 Two important income supports, the Canada Child Tax Benefit and Child Disability Benefit, are not included in this analysis. While eligibility for these amounts may depend on the applicant's income as calculated under the ITA, the benefits are much further removed from the tax system than tax credits. For example, applications for the benefits and payment of the benefits are made outside of the tax system. While an analysis of the availability of these programs to TMWs would be a worthwhile endeavour, it is beyond the scope of this paper.

95 The concept of support as discussed here does not include child care costs to enable the taxpayer to work, as these costs are permitted as a deduction.

96 For in the years where the taxpayer and his or her spouse or common law partner were separated for part of the year, the taxpayer can still claim the credit so long as she or he supported the spouse or partner during the part of the year in which they were not separated. If they were separated at the end of the year, the income earned by the spouse or partner while they were separated does not operate to reduce the amount of the Spouse/CLP Credit.

97 ITA, supra note 8, s 118(5). In order for the credit to be unavailable, the taxpayer must have taken a deduction for the payments or they must have been separated for the entire year.

98 Ibid, s 60(b).

99 House of Commons, Department of Finance Canada, The Budget Plan 2007 (March 2007) at 393 [The Budget Plan 2007].

100 Ibid at 25.

101 See Canada Revenue Agency, Interpretation Bulletin IT-513R, "Personal Tax Credits" (24 February 1998) at para 35 [IT-513R].

102 Johnston v Minister of National Revenue, [1948] SCR 486, 3 DTC 1182[Johnston cited to SCR].

103 Ahmed v R, [2000] 3 CTC 2517 (TCC) (Informal Procedure) [Ahmed].

104 Lee v MNR(1956), 56 DTC 321 [Lee].

105 Ahmed, supra note 103.

106 SC 2000, c 12.

107 Brobbey v R, 2010 TCC 536, 2010 DTC 1368 (Informal Procedure) at para 6 [Brobbey].

108 (1953), 53 DTC 213, [Constantine].

109 The equivalent of $1,054 in 2011.

110 Constantine, supra note 108 at paras 3-4.

111 (1955), 55 DTC 165 [Buzsik].

112 Ibid at para 2; see also IT-513R, supra note 101 at para 35.

113 Buszik, supra note 111 at para 3.

114 Lee, supra note 104.

115 (1960), 60 DTC 78 [Majewski].

116 (1965), 65 DTC 700 [Balas].

117 2008 DTC 6446, [2001] 2 CTC 2655 (TCC) (Informal Procedure); see also Majewski, supra note 115.

118 Brobbey, supra note 106 at para 6.

119 Buzsik, supra note 111; Lee, supra note 104; Constantine, supra note 108 (interpreting a predecessor to s 118(1)(b)).

120 ITA, supra note 8, s 118(1)(b).

121 Ibid.

122 Ibid, s 118.91.

123 Baltazar v Canada, [1995] 1 CTC 2877, [1995] TCJ No 67; Jankowska-Kamac v R, [2001] 3 CTC 2084, [2001] TCJ No 281 [Jankowska-Kamac]; Pascual v R, 2008 TCC 41, [2008] 5 CTC 2029; Chaya v R, 2004 FCA 327, 2004 DTC 6676, aff'g , 2003 TCC 688, 2003 DTC 1555 [Chaya (FCA)].

124 Chaya v Canada, 2003 TCC 688, 2003 DTC 1555, supra note 123 at para 5 [Chaya TCC].

125 Chaya (FCA), supra note 123 at para 4.

126 Jankowska-Kamac, supra note 123 at para 14.

127 ITA, supra note 8, s 118(4)(c) (the dependent must meet the definition of "care recipient" set out at para (1)(c.1) of s 118).

128 House of Commons, Department of Finance Canada, The Budget Plan 1998 (February 1998) at 111-113 [The Budget Plan 1998].

129 Canada Revenue Agency, "2011 Personal Tax Credits Return", online: Canada Revenue Agency < www.cra-arc.gc.ca/formspubs/frms/tdl/2011/td1/td1-11e.pdf>.

130 IT-513R, supra note 101 at para 23. The amount is reduced where the dependent earns more than $6,076.

131 Ibid at para 26.

132 ITA, supra note 8, s 118(6).

133 Also, to eliminate the unfairness that would result where the taxpayer qualifies for the eligible dependent credit under s 118(1)(b) and would have otherwise qualified for the dependent adult credit under s 118(1)(d) or the c aregiver credit under s 118(1)(c.1), s 118(1)(e) provides for an additional credit to make up for the additional amount that would have been available under the dependent adult or caregiver credits.

134 The Budget Plan 2007, supra note 99 at 227.

135 IT A, supra note 8, s 118(4)(b).

136 Ibid, s 118(5).

137 See Stanley S Surrey & Paul R McDaniel, "The Tax Expenditure Concept: Current Developments and Emerging Issues" (1979), 20:2 BCL Rev 225; this is the case according to one understanding of the definition of a tax expenditure.

138 Henry C Simons, Personal Income Taxation (Chicago: The University of Chicago Press, 1938) at 50.

139 Canada, Report of the Royal Commission on Taxation, vol 2 (Ottawa: The Queen's Printer and Controller of Stationary, 1966) at 10-13 [Carter Commission Report, vol 2]; Canada, The Royal Commission on Taxation, vo l 3 (Ottawa: The Queen's Printer and Controller of Stationary, 1966) at 5-6 [Carter Commission Report, vol 3]. See also Peter W Hogg, Joanne E Magee & Jinyan Li, Principles of Canadian Income Tax Law, 6th ed (Toronto: Thomson C anada, 2010) at 44; David G Duff, "Disability and the Income Tax" (2000) 45 McGill LJ 797; Ontario Fair Tax Commission, Fair Taxation in a Changing World (Toronto: University of Toronto Press, 1993) at 9-10.

140 Simons, supra note 137 at 140; see also Lawrence Zelenak, "Children and the Income Tax" (1994) 49 Tax L Rev 349 at 359, where Zelenak explains this position,

141 Boris 1 Bittker, "Federal Income Taxation and the Family" (1975) 27 Stan L Rev 1389 at 1448.

142 Carter Commission Report, vol 3, supra note 139 at 14.

143 Canada, Minister of Finance, Proposals for Tax Reform 1969 (Ottawa: Minister of Finance, 1969) at 8-9.

144 Robin Boadway & Harry Kitchen, Canadian Tax Policy, 3d ed (Toronto: Canadian Tax Foundation, 1999) at 174.

145 Barry Gorman, Canadian Income Taxation Policy and Practice, 2d ed (Toronto: Carswell, 2001) at 169; See also Zelenak, supra note 140 (for a discussion of similar additional arguments in favour of viewing expense s of supporting children as something other than consumption, at 359-61).

146 Canada, Department of Finance Canada, Tax Expenditures and Evaluations 2010, (Ottawa: Department of Finance Canada, 2010) at 29.

147 Victor Thuronyi, "Tax Expenditures: A Reassessment" (1998) 1988 Duke LJ 1155.

148 See e.g. Zelenek, supra note 140 at 360 where Zelenek argues, "the child welfare argument fails because of the very weak link between any child tax allowance granted to the parent and the welfare of the child."

149 The Budget Plan 1998, supra note 128.

150 See Lisa Philipps, "Taxing the Market Citizen: Fiscal Policy and Inequality in an Age of Privatization" (2000) 63 Law & Contemp Probs 111 at 128-129.

151 Although the terms "horizontal equity" and "vertical equity" are used to evaluate tax provisions in a specific sense, the concept of equity is relevant to all policy analysis, see, e.g. Tim Edgar, Daniel Sandler & Arthur Cock field, eds, Materials on Canadian Income Tax, 14th ed (Toronto: Carswell, 2010) at 67: "[o]ne of the most fundamental axioms of social justice is that people in the same circumstances be treated the same").

152 See Human Resources and Skills Development Canada, "Temporary Foreign Relief Program: Regional Wages, Working Conditions, and Advertisement Requirements for the Live-In Caregiver Program (LCP)," online: Human Resources and Sk ills Development Canada, < w.rhdcc-hrsdc.gc.ca/eng/workplaceskills/foreign_workers/advertReq/wageadreq.sht

153 The tax is payable at 15% federally on $21,320 of income less the $10,527 personal exemption.

154 The $2,131 child credit is multiplied by 15%, and can be taken for each of the two children. One eligible dependent credit could be taken in the amount of $10,527 multiplied by 15%.

155 See OECD Committee on Fiscal Affairs, Model Tax Convention on Income and on Capital, Articles 23A-23B [OECD]; the potential for "double denial" of benefits where the source country does not permit the non-resident to a ccess personal tax credits, is noted in Ruth Mason, "Tax Expenditures and Global Labor Mobility" (2009) 84 NYUL Rev 1540 at 1603-08.

156 See e.g. Claire FL Young, "(In)visible Inequalities: Women, Tax and Poverty" (1995) 27:1 Ottawa L Rev 99.

157 Under the SAWP, a government worker from the worker's home country, (referred to as a "liaison officer") is charged with assisting the worker with filling out a TD1 form, which ensures that the appropriate amount of income ta xes are withheld by the employer, see Canada Revenue Agency, Report RC 4004, Seasonal Agricultural Workers Program (Ottawa: Canada Revenue Agency, 2011).

158 See OECD, supra note 155, art 24.

159 See Mason, supra note 155 at 1593.

160 See Mason, supra note 155 and accompanying text.

161 Ibid. at 1607.

162 See Rosser, supra note 36 at 7.

163 See Christian Barry and Gerhard Overland, "Why Remittances to Poor Countries Should Not be Taxed" (2010) 42 NYUJ Int'l L & Pol 1181.

164 See Part II-B, above, for more on this topic.

165 For example, the TMW may make general contributions to the household in the form of money or in kind contributions such as clothing. Or, the TMW may own property such as a house and continue to allow the dependent and other f amily members to live in it rent-free.

166 See George K Yin et al, "Improving the Delivery of Benefits to the Working Poor: Proposals to Reform the Earned Income Tax Credit Program" (1994) 11 Am J Tax Pol'y 225 at 248, where George K Yin et al, in reporting on the Ame rican experience with tax fraud pertaining to dependents, noted that: "In the Tax Reform Act of 1986, Congress required taxpayers to provide Social Security numbers for any dependent over the age of five. As a result of the change, there were repo rtedly seven million fewer dependents claimed in 1987 than expected, representing roughly a 10 percent decline." [footnotes omitted]

167 See Part II-B, above.

168 IT-513R, supra note 101 at paras 35-38. The CRA provides a list of the types of documentation that should be kept.

169 See Part III-B1, above.

170 While it may be the case that another relative also provides for the support of a dependent, it is not proposed that this be taken into account for a couple of reasons. Firstly, support by other family members is not accounte d for Canadian residents claiming this credit. Secondly, it would be administratively difficult to determine which other family members supported the dependent, especially where numerous family members live in the same household as the dependent .

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