Docket: 2011-1578(IT)G
BETWEEN:
DEBORAH MAASS-HOWARD,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Appeal
heard on August 20, 2012, at Montreal, Quebec.
Before: The Honourable Justice
Robert J. Hogan
Appearances:
|
For the Appellant:
|
The
Appellant herself
|
|
Counsel for the Respondent:
|
Valerie Messore
|
____________________________________________________________________
JUDGMENT
The appeal from the assessment made under the Income Tax
Act for the appellant’s 2009 taxation year is dismissed, without costs, in
accordance with the attached reasons for judgment.
Signed at Ottawa, Canada, this 25th day of October 2012.
"Robert J. Hogan"
Citation: 2012 TCC 307
Date: 20121025
Docket: 2011-1578(IT)G
BETWEEN:
DEBORAH MAASS-HOWARD,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Hogan J.
[1]
The appellant, Deborah
Maass-Howard, is appealing from an assessment issued for her 2009 taxation
year.
[2]
The issue is whether
the Minister of National Revenue (the “Minister”) erred when he included in the
appellant’s income for her 2009 taxation year the amount of $105,000 withdrawn
by the appellant from her registered retirement savings plan (“RRSP”).
[3]
At the outset of the
hearing, counsel for the respondent accepted certain of the appellant’s factual
allegations. The respondent admits that the appellant withdrew the funds from
her RRSP to pay for back surgery performed outside of Canada. The respondent acknowledges that this was the only source of funds available to the
appellant to pay for the operation. The respondent also accepted, for the
purpose of the hearing, that the Canadian health system failed the appellant as
she was unable to find a qualified surgeon to perform the surgery in Quebec, her province of residence.
[4]
Notwithstanding these
admissions, the circumstances leading up to the appellant’s decision to
withdraw funds from her RRSP merit further comment because they illustrate the
hardships faced by the appellant.
[5]
The evidence shows that
the appellant suffered a herniated disk in 2006. She consulted a number of
doctors to obtain treatment for her back. After a series of fruitless
consultations, she was referred to a pain clinic. The doctors there prescribed
pain killers. The neurosurgeon and orthopaedic surgeon who evaluated the
appellant’s condition both concluded that she was not a candidate for surgery.
The appellant’s condition rapidly deteriorated with the herniation of two
additional disks. The appellant suffered from loss of mobility and chronic
pain. Unable to find adequate treatment in Canada, she turned to a highly
regarded former Canadian surgeon practising in Switzerland. This initiative was
taken for the purpose of obtaining a second opinion on whether the appellant
could benefit from disk fusion and replacement surgery.
[6]
The Swiss doctor, who
confirmed that the appellant would benefit from surgery, communicated with a
former colleague practising back surgery in Quebec, with the hope of convincing
him to perform the operation. For reasons which are unclear, he refused,
leaving the appellant with no option but to have the surgery performed in Switzerland at her own expense.
[7]
Prior to withdrawing
the funds from her RRSP, the appellant applied for a mortgage loan on her
residence. She had equity in the house but the bank turned her down. She and
her father, a retired banker, contacted the financial institution that administered
her self-directed RRSP to inquire whether there was a way for the appellant to
withdraw funds from her RRSP on a tax-deferred basis, she was told this could
not be done.
[8]
A similar inquiry was
made by phone to the Canada Revenue Agency (the “CRA”). Again, the answer was
negative. The appellant also consulted CRA publications on self-administered
RRSPs but found no mention of any arrangement whereby she could withdraw the
funds on a tax-deferred basis. Indeed, she found nothing on that subject.
[9]
Much later, after the
funds had been withdrawn, the appellant discovered that she could have
withdrawn the funds she needed as a mortgage loan from her self-directed RRSP.
The appellant asserts that she would have selected this option had she known
that it was available to her. The Court has no reason to disbelieve her.
[10]
It is clear that, under
paragraph 56(1)(h) and subsection 146(1) of the Income Tax Act
(the “ITA”), that the appellant is required to include the funds withdrawn from
her RRSP in the calculation of her income for her 2009 taxation year. In fact,
her accountant did declare the amount received as income in her 2009 tax return
in recognition of the fact that it was taxable. It is also clear that the
amount which must be included should also include the taxes withheld at source
by the plan administrator.
[11]
The appellant asked the
Court to consider whether relief is available to her under paragraph 60(1)(l)
of the ITA.
[12]
The appellant notes
that under that provision the Minister may allow a deduction for amounts paid into
an RRSP within such longer period than 60 days after the end of the year for
which a taxpayer is seeking a deduction as is acceptable to the Minister. The
provision is highly complex. Unfortunately, the appellant is not eligible for
relief thereunder. The provision allows, in certain limited circumstances, for
tax-free rollovers in respect of amounts received by a person from, for
example, the RRSP of a deceased spouse, provided that the funds are transferred
to a RRSP established by the taxpayer within the time prescribed. The provision
does not allow the deduction of the amount withdrawn by the appellant from her
own RRSP, assuming that it was to be re-contributed at a later date with the
Minister’s consent.
[13]
The appellant asks the
Court to relieve her of her tax obligation on the grounds of equity. She withdrew
the funds to pay for medical services that should have been covered under Canada’s health plan. In so doing, she saved Canadian taxpayers the cost of her treatment,
which was greater than the income tax on her RRSP withdrawal.
[14]
It is well established that
the courts do not have the power to make exceptions to the application of the
law on the grounds of fairness, equity or undue hardship. I cannot vacate an
assessment if it was made in conformity with the law. The law obliges me to
dismiss the appeal although I do so with reluctance in light of the circumstances
of the appellant’s case.
[15]
I have also examined
whether the appellant received full tax relief for the medical expenses that
she paid. I conclude, on the basis of the evidence presented at the hearing,
that she did.
[16]
The appeal is dismissed
without costs.
Signed at Ottawa, Canada, this 25th day of October 2012.
"Robert J. Hogan"
CITATION: 2012 TCC 307
COURT FILE NO.: 2011-1578(IT)G
STYLE OF CAUSE: DEBORAH MAASS-HOWARD v. HER MAJESTY THE QUEEN
PLACE OF HEARING: Montreal, Quebec
DATE OF HEARING: August 20, 2012
REASONS FOR JUDGMENT BY: The
Honourable Justice Robert J. Hogan
DATE OF JUDGMENT: October 25th,2012.
APPEARANCES:
|
For the
Appellant:
|
The Appellant herself
|
|
Counsel for the
Respondent:
|
Valerie Messore
|
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the
Respondent: Myles J. Kirvan
Deputy
Attorney General of Canada
Ottawa,
Canada
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