Docket: 2013-395(IT)I
BETWEEN:
SARAH TAYLOR,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Appeal
heard on March 10, 2014 at Hamilton, Ontario
By: The Honourable
Justice Judith Woods
Appearances:
|
Agent for the Appellant:
|
Len
Coughlan
|
|
Counsel for the Respondent:
|
Gregory B. King
|
____________________________________________________________________
JUDGMENT
It is ordered that the
appeal with respect to an assessment made under the Income Tax Act for
the 2011 taxation year is dismissed. The parties shall bear their own costs.
Signed at Toronto, Ontario this 1st day of April 2014.
“J.M. Woods”
Citation: 2014 TCC 102
Date: 20140401
Docket: 2013-395(IT)I
BETWEEN:
SARAH TAYLOR,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Woods J.
[1]
Sarah Taylor withdrew funds from a
registered retirement savings plan (RRSP) in 2011. She submits that the
withdrawals qualify for the pension credit that is provided for in subsection
118(3) of the Income Tax Act.
[2]
Ms. Taylor began withdrawing funds
from an RRSP when her spouse died in 2008. According to the terms of the RRSP,
Ms. Taylor was permitted total discretion with respect to the timing and
amounts of withdrawals.
[3]
In order to minimize withdrawal
fees, Ms. Taylor decided to withdraw funds only once a year. In the relevant
taxation year, however, she withdrew funds a second time in order to make an
unusual tax payment. The two withdrawals in 2011 are in the amounts of $12,500
and $6,250.
[4]
The accountant for Ms. Taylor, Len
Coughlan, submits that the RRSP withdrawals qualify for the pension credit
starting in 2011 when Ms. Taylor reached the age of 65.
Discussion
[5]
The question to be decided in this
appeal is whether the RRSP withdrawals are “annuity payments” as required by
the definition of “pension income” in subsection 118(7) of the Act, at
clause (a)(ii).
[6]
In the Act, the term
“annuity” has been ascribed the following inclusive meaning pursuant to subsection
248(1):
“annuity” includes an amount payable on a periodic basis
whether payable at intervals longer or shorter than a year and whether payable
under a contract, will or trust or otherwise;
[7]
The Crown submits that the
payments to Ms. Taylor do not satisfy this definition because the RRSP does not
require payments on a periodic basis.
[8]
Mr. Coughlan, on the other hand,
submits that the payments are payable on a periodic basis because they are
payable on a recurring basis at the direction of Ms. Taylor.
[9]
In my view, the position of the
Crown is the correct one. Withdrawals made by Ms. Taylor from her RRSP are not
annuity payments because they are not obligated to be made on a recurring
basis. Under the terms of the plan, it is possible for Ms. Taylor to require
that the fund be paid out in one lump sum.
[10]
Both the ordinary meaning of the
term “annuity,” and the specific meaning described in the Act, require
that the RRSP fund be paid out at intervals.
[11]
In this regard, the Canadian
Oxford Dictionary (2004 ed.) defines “annuity” as follows:
1 a yearly
grant or allowance. 2 an investment of money entitling the investor to a
series of equal annual sums. 3 a sum payable for a particular year.
[12]
The additional meaning of
“annuity” for purposes of the Act simply requires that an amount be
payable on a periodic basis whether at intervals longer or shorter than a year.
[13]
The phrase “payable on a periodic
basis” has been interpreted as a payment obligation that recurs at intervals: Tossell
v The Queen and Peterson, 2005 FCA 223, at para. 31. Although this decision
concerned the meaning of this phrase in the context of provisions dealing with child
support, it should have the same meaning in this context.
[14]
The RRSP at issue in this appeal
required payments to be made to Ms. Taylor at her discretion. There was no
obligation to make payments on a recurring basis and Ms. Taylor could have
directed that the entire RRSP fund be paid out to her in one lump sum.
[15]
Mr. Coughlan submits that there
should be a generous interpretation of the term “annuity” in this context which
provides tax relief for pensioners. He also submits that the definition of
“annuity” in the Act is broad enough to apply where the RRSP
administrator is obligated by the holder to make recurring payments. As I
understand it, Mr. Coughlan submits that the term “otherwise” in the phrase
“whether payable under a contract, will or trust or otherwise” is broad enough
to encompass a direction by the RRSP holder.
[16]
I cannot agree with this
interpretation. If Parliament had intended that periodic RRSP withdrawals made
at the discretion of the holder qualify for the pension credit, it would have said
so directly. The purpose of the legislation is not as broad as Mr. Coughlan
suggests.
[17]
I have sympathy for Ms. Taylor’s circumstances.
However, I conclude that the withdrawals that she made are not annuity
payments, and that they do not qualify for the pension credit. The appeal will
be dismissed.
Signed at Toronto, Ontario this 1st day of April 2014.
“J.M. Woods”
CITATION: 2014 TCC 102
COURT FILE NO.: 2013-395(IT)I
STYLE OF CAUSE: SARAH TAYLOR AND HER MAJESTY THE QUEEN
PLACE OF HEARING: Hamilton, Ontario
DATE OF HEARING: March 10, 2014
REASONS FOR JUDGMENT BY: The
Honourable Justice J.M. Woods
DATE OF JUDGMENT: April 1, 2014
APPEARANCES:
|
Agent for the
Appellant:
|
Len Coughlan
|
|
Counsel for the
Respondent:
|
Gregory B. King
|
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the
Respondent: William F. Pentney
Deputy
Attorney General of Canada
Ottawa, Ontario
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