Citation: 2010 TCC 611
Date: 20101130
Docket: 2009-1068(IT)I
BETWEEN:
DENIS A. HOTTE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Boyle J.
I. Facts
[1]
The appellant submits in
this informal appeal that the age restriction in the pension income‑splitting
provisions added to the Income Tax Act (the “Act”) in [2006]
contravene the equality and non‑discrimination provisions of the Canadian
Charter of Rights and Freedoms (the “Charter”). He also submits that
they are in conflict with the Canadian Human Rights Act.
[2]
In short, the pension
income‑splitting provisions in section 60.03 of the Act permit
income‑splitting amongst spouses of a portion of their pension income.
The amount eligible to be split under section 60.03 is defined by
reference to the definitions of “pension income”, “qualified pension income”
and “eligible pension income” in section 118 of the Act, which
deals with the general pension tax credit. In short, this is effectively
limited to a portion of:
i.
All of a spouse’s
“pension income” if the person is 65 years or older; and
ii.
Only the “qualified
pension income” if the person is younger than 65.
[3]
Qualified pension
income sources are defined as only a subset of pension income sources. Thus,
only some sources of a taxpayer’s pension income can be split with a spouse if
the taxpayer is under 65, whereas all sources of the same pension income could
be split if the taxpayer was 65 or older. (There is an exception to this
restriction for taxpayers who die before reaching 65 but that is not relevant
in this case.) One of the principal differences is that a person over 65 can
split his or her registered pension plan (“RPP”) income as well as his or her
pension income from “registered retirement savings plans” (“RRSPs”) and
“registered retirement income funds” (“RRIFs”), whereas a person under 65
cannot split his or her income‑sourced from an RRSP or RRIF.
[4]
The effect of this on
Mr. Hotte in 2007, who was not 65 years or older, is that he was
permitted to split his RPP income with his spouse but he did not qualify to
split his RRSP‑sourced income with her. This is the result under the
income‑splitting provisions of the Act even though his RRSP
withdrawals were converted into life annuities.
[5]
Specifically,
Mr. Hotte sought to split his pension income with his spouse in order to
more or less equalize their respective incomes and taxes payable for the year
and thereby reduce the aggregate taxes payable by them. By a reassessment, Mr. Hotte
was permitted to do this with respect to his 2007 RPP income. However, he was
not permitted to split his 2007 RRSP‑sourced annuity income with his
wife, even though the annuities were purchased upon his retirement with the
proceeds of his RRSP, because he was not yet 65 years old as required by the
pension income‑splitting provisions summarized above.
[6]
Mr. Hotte brought
two pre‑trial motions for an order requiring any judge under the age of
65 to be recused from hearing his case. The initial request was dismissed by
the judge hearing the original motion. A motion to reconsider was dismissed by
the Chief Justice of this Court.
II. Analysis
[7]
It is clear that the
Tax Court of Canada does not have jurisdiction to hear complaints brought
against the Crown under the Canadian Human Rights Act. Tax appeals are heard
by the Tax Court in accordance with the Tax Court of Canada Act and the Act
and other tax-related legislation. Human rights complaints are heard by the Human Rights Commission in
accordance with the Canadian Human Rights Act. While the Canadian Human Rights Act applies to the Crown, it cannot be enforced against
the Crown or anyone else in this Court. For that reason, Mr. Hotte’s before
appeal to this Court based on the Canadian Human Rights Act must be
dismissed.
[8]
The Court turns now to
Mr. Hotte’s Charter claim. All legislative distinctions based on
age or other enumerated or analogous grounds are not, for that reason alone,
discrimination prohibited by the Charter. As held by the Supreme Court of Canada in R. v. Kapp, 2008 SCC 41, [2008] 2
S.C.R. 483, a distinction in a law based upon an enumerated or analogous ground
is discrimination prohibited by the Charter when the distinction creates
a disadvantage by perpetuating group disadvantage and prejudice or imposing
disadvantage on the basis of stereotyping. As set out in Law v. Canada
(Minister of Employment and Immigration), [1999] 1 S.C.R. 497, at
p. 502:
. . . Frequently, where differential treatment is
based on one or more enumerated or analogous grounds, this will be sufficient
to found an infringement of s. 15(1) in the sense that it will be evident
on the basis of judicial notice and logical reasoning that the distinction is
discriminatory within the meaning of the provision.
[9]
Age is at times a
ground that is considered differently under the Charter than other
enumerated or analogous grounds. Absent an early death, all Canadians will at
some point in their lives be 16, 18 and 65. Age distinctions are often used by
Parliament to regulate and structure our lives and society.
[10]
In Gosselin v. Québec
(Attorney General), 2002 SCC 84, [2002] 4 S.C.R. 429, the Chief Justice of
the Supreme Court of Canada wrote:
31 Many of the enumerated grounds
correspond to historically disadvantaged groups. For example, it is clear that
members of particular racial or religious groups should not be excluded from
receiving public benefits on account of their race or religion. However, unlike
race, religion, or gender, age is not strongly associated with discrimination
and arbitrary denial of privilege. This does not mean that examples of age
discrimination do not exist. But age based distinctions are a common and
necessary way of ordering our society. They do not automatically evoke a
context of pre‑existing disadvantage suggesting discrimination and
marginalization under this first contextual factor, in the way that other
enumerated or analogous grounds might.
32 To expand on the earlier example, a
sign on a courthouse door proclaiming “Men Only” evokes an entire history of
discrimination against a historically disadvantaged class; a sign on a barroom
door that reads “No Minors” fails to similarly offend. The fact that “[e]ach
individual of any age has personally experienced all earlier ages and expects
to experience the later ages” (P. W. Hogg, Constitutional Law of Canada (loose-leaf
ed.), vol. 2, at p. 52‑54) operates against the arbitrary
marginalization of people in a particular age group. Again, this does not mean
that age is a “lesser” ground for s. 15 purposes. However, pre‑existing
disadvantage and historic patterns of discrimination against a particular group
do form part of the contextual evaluation of whether a distinction is discriminatory,
as called for in Law. Concerns about age‑based discrimination
typically relate to discrimination against people of advanced age who are
presumed to lack abilities that they may in fact possess. Young people do not
have a similar history of being undervalued. This is by no means dispositive of
the discrimination issue, but it may be relevant, as it was in Law.
[11]
In Kapp itself, age-based
distinctions in the Canada Pension Plan were in issue; they were held not
to be discrimination prohibited by the Charter.
[12]
The same age‑based
restrictions apply under the Act to the pension income tax credit as are
set out in the pension income‑splitting provisions. This Court has
previously decided that such restrictions do not constitute discrimination
prohibited under the Charter: see Kennedy v. The Queen,
[2001] 4 C.T.C. 2192. This Court has also held that age‑based
distinctions in the personal tax credit and the dependents tax credit are not
in violation of the Charter: see Tiberio et al. v. M.N.R., 91 DTC 17.
While Kennedy pre‑dated the Supreme Court of Canada’s decision in Kapp,
which set out and refined the analytical approach to be followed in Charter‑based
discrimination determinations, it followed the Supreme Court’s previously propounded
analytical approach in Law. In Kapp, the Supreme Court of Canada
said that the analysis described in Law is in substance the same as that
in Kapp. I am satisfied that this Court’s decision in Kennedy
remains good law and should be followed and applied in this case.
[13]
In Cheberiak v. The
Queen, 2002 DTC 1342, this Court again considered the pension
income tax credit in the case of a person younger than 65. This Court followed Kennedy.
At paragraph 19, Hershfield J. wrote:
With respect to the Charter argument raised by the Appellant I note
that this was considered in Kennedy. Bowie, J. rejected the Charter
argument in that case and I endorse his reasoning which adopted the
reasoning in the Supreme Court decision in Law v. Canada, [1999] 1
S.C.R. 497. To invalidate legislation that differentiates individuals (or
groups) on the basis of age (or marital status), it must be shown that the
differential treatment withholds the benefit from the claimant in a way that
reflects a presumed stereotypical characteristic of that group or person or
that has the effect of perpetuating or promoting the view that the person or
group is less capable or less worthy of the benefit or less worthy of
recognition or of less value as a human being or as a member of Canadian
Society than the person or group benefited. Judge Bowie found that the object
of the provisions of the Income Tax Act in question is to ameliorate in
some small degree the lot of persons 65 and over and those who have lost a spouse
who contributed to the family income. As did the Supreme Court in Law, Bowie, J. found that such ameliorating
legislative provisions did not violate the human dignity of more advantaged
individuals (or that of the persons not receiving the benefit). I agree with
Judge Bowie’s conclusions in respect of this ground for appeal. Accordingly the
Charter argument fails in my view.
[14]
The Court was not presented
with any evidence by Mr. Hotte, nor is it otherwise apparent to the Court,
that people drawing retirement income or making withdrawals from RRSPs or RRIFs
before they are 65 years of age are a disadvantaged class. Nor did Mr. Hotte
introduce any evidence or advance any persuasive argument as to how a financial
benefit extended to persons 65 or older disadvantaged or reflected prejudicial
stereotyping of persons younger than 65.
[15]
The Minister of Finance
sent Mr. Hotte a letter responding to his complaint regarding this age‑based
distinction in the pension income‑splitting rules as they apply to his
RRSP‑sourced income. The Minister’s response included the following
explanation for the differing treatments of those under 65 from 65 or older:
The purpose of the age-65 requirement for RRSP annuity and RRIF
income is to target the Pension Income Credit (upon which eligibility for
pension income splitting is based) to retired individuals. Individuals have
much greater personal control over the timing of withdrawals under RRSPs and
RRIFs compared to RPPs. Without the age‑65 eligibility rule, many
individuals who are not retired could gain significant tax advantages well
before they attain age 65 by arranging to withdraw money each year as RRSP annuity
or RRIF income while still saving for retirement. Individuals in receipt of RPP
income, on the other hand, generally have little control over the timing of
their pension payments — they usually only receive such payments when they are
retired.
[16]
This indicated
Parliament had a reason for choosing the particular age‑based distinction
in the pension income‑splitting provisions. The choice of age 65 as the
threshold was a policy choice open to Parliament to make and they have made it.
The age chosen does relate to the object and intended of scope of the provisions.
It is not for this Court to judge whether Parliament could have done better. As
explained by Laforest J. of the Supreme Court of Canada, in Andrew v. The
Law Society of British Columbia, [1989] 1 S.C.R. 143:
Much economic and social policy‑making is simply beyond the
institutional competence of the courts: their role is to protect against
incursions on fundamental values, not to second guess policy decisions.
In Gosselin the Supreme Court wrote:
55 I add two comments. Perfect correspondence between a
benefit program and the actual needs and circumstances of the claimant group is
not required to find that a challenged provision does not violate the Canadian
Charter. The situation of those who, for whatever reason, may have been
incapable of participating in the programs attracts sympathy. Yet the inability
of a given social program to meet the needs of each and every individual does not
permit us to conclude that the program failed to correspond to the actual needs
and circumstances of the affected group. As Iacobucci J. noted in Law, supra,
at para. 105, we should not demand “that legislation must always correspond
perfectly with social reality in order to comply with s. 15(1) of the Charter”.
Crafting a social assistance plan to meet the needs of young adults is a
complex problem, for which there is no perfect solution. No matter what
measures the government adopts, there will always be some individuals for whom
a different set of measures might have been preferable. The fact that some
people may fall through a program’s cracks does not show that the law fails to
consider the overall needs and circumstances of the group of individuals
affected, or that distinctions contained in the law amount to discrimination in
the substantive sense intended by s. 15(1).
. . .
57 A final objection is that the selection of 30 years of age
as a cut‑off failed to correspond to the actual situation of young adults
requiring social assistance. However, all age‑based legislative
distinctions have an element of this literal kind of “arbitrariness”. That does
not invalidate them. Provided that the age chosen is reasonably related to the
legislative goal, the fact that some might prefer a different age — perhaps 29
for some, 31 for others — does not indicate a lack of sufficient correlation
between the distinction and actual needs and circumstances. Here, moreover,
there is no evidence that a different cut‑off age would have been
preferable to the one selected.
[17]
In short, no novel
issue is raised in Mr. Hotte’s appeal. These issues have been decided by
this Court previously in the context of pension and other age‑based tax
credits. There is no reason to reject this Court's doctrine with regard to the
newer income‑splitting provisions.
[18]
For these reasons, the
appeal is dismissed.
Signed at Ottawa, Canada,
this 30th day of November 2010.
"Patrick Boyle"
Translation certified true
On this 30th day of November 2010
François Brunet, Revisor
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