Paquette v. MNR, 90 DTC 1474, [1990] 2 CTC 2016 (TCC)

Lamarre Proulx, T.C.J.:—The appellant is appealing from the tax assessment by the respondent Minister of National Revenue for the 1986 taxation year.

The point at issue is whether the appellant had to pay instalments pursuant to subsection 156(1) of the Income Tax Act (the Act) for 1986 as of March 31 or commencing on September 30.

Subsection 156(1) reads as follows:

Subject to section 156.1, every individual, other than one to whom subsection 153(2) or section 155 applies, shall pay to the Receiver General

(a) on or before March 31, June 30, September 30 and December 31, respectively, in each taxation year, an amount equal to 1/4 of

(i) the amount estimated by the individual to be the tax payable under this Part by him for the year computed without reference to sections 127.2 and 127.3, or

(ii) his instalment base for the immediately preceding taxation year, and

(b) on or before April 30 in the next year, the remainder of his tax as estimated under section 151.

According to the evidence on September 3, 1986 the appellant sold a 48-unit apartment building. The appellant was in a situation because of this sale where subsection 153(2) no longer applied to him, that is, less than 75 per cent of his income was the subject of source deductions. Subsection 153(2) reads as follows:

Where amounts have been deducted or withheld under this section from the remuneration or other payments received by an individual in a taxation year, if the aggregate of the remuneration and other payments from which such amounts have been deducted or withheld and which he had received in the year is equal to or greater than 3/4 of his income for the year, he shall, on or before April 30 in the next year, pay to the Receiver General the remainder of his tax for the year as estimated under section 151.

Under subsection 161(2), if the instalments are not paid on the dates prescribed by the Act the taxpayer must pay interest on these amounts from the date on which they are due. It is this interest which concerns the taxpayer, since he agrees to the amount of tax payable for 1986.

The evidence disclosed that if it were not for the real estate transaction on September 3, 1986, 75 per cent of the appellant's income would have been the subject of source deductions and the appellant would not have had to pay instalments. He did not have to pay any in the previous year. The appellant accordingly argued that on March 15 and June 15, 1986 it was not possible for him to perform the duty imposed by subsection 156(1) of the Act.

In the circumstances of this appeal, I have to conclude that on March 15 and June 15, 1986 the appellant could not have known that he was an individual other than one to whom subsection 153(2) of the Act applies.

In statutory interpretation the Courts take account of certain presumptions of the legislative intent. One of these is known under the following Latin maxims, "lex non cogit ad impossibilia" or “lex non intend it aliquid impos- sibile", which means that legislation must be interpreted so as not to require the impossible. See as to this PA. Côté, The Interpretation of Legislation in Canada, 1982, pp. 354 et seq., and I quote in particular from page 359:

The courts assume that Parliament did not intend mandatory compliance with an enactment where, for all practical purposes, this is impossible: lex non cogit ad impossibilia is a principle of simple common sense and equity.

In order to avoid absurd consequences, it is even permissible to depart from plain words: this is the only case where the classic canon of literal interpretation permits avoidance of a provision whose meaning seems obvious:

. . . the literal meaning should not be departed from except in the case of ambiguity or absurdity.

I consider that it was impossible for the appellant to know that subsection 156(1) would apply to him before the real estate transaction of September 3 took place. I am further of the view that subsection 156(1) does not expressly provide that the legislator intends to require the impossible of anyone. I therefore conclude that until the time the real estate transaction occurred the appellant was not covered by subsection 156(1), and that the payment of instalments therefore cannot and should not be made until September 30, 1986.

The precedents cited by counsel for the respondent are as follows:

Steer v. M.N.R., [1985] 2 C.T.C. 2265 ; 85 D.T.C. 598.

Parker v. M.N.R., [1985] 1 C.T.C. 2129; 85 D.T.C. 143.

Culham v. M.N.R., [1985] 1 C.T.C. 2227; 85 D.T.C. 165.

Zannetos v. M.N.R., [1986] 2 C.T.C. 2182; 86 D.T.C. 1643.

Only the decision in Steer relates to the facts of the subject case. According to that decision, I should dismiss the appellant's appeal. I have already explained in Bernier v. M.N.R., dated May 26, 1989, [1990] 1 C.T.C. 2535; 90 D.T.C. 1220, the circumstances in which I feel bound by a decision by another judge of this Court. With all due respect, the presumption that the legislator did not by his legislation intend to require anyone to do the impossible was not considered and then rejected, and as this is an aspect which in my opinion is important in determining the subject appeal, I do not feel bound by the decision in Steer.

I allow the appeal with costs in so far as subsection 156(1) became applicable to the taxpayer commencing on September 3, 1986, and refer the assessment back to the Minister for reconsideration and reassessment accordingly.

Appeal allowed.