Date: 20020605
Docket:
2001-1013-GST-G
BETWEEN:
R. MAXINE
COLLINS,
Appellant,
and
HER MAJESTY THE
QUEEN,
Respondent.
Reasonsfor
Judgment
Hershfield,
J.T.C.C.
[1]
On or about July 27, 2000, pursuant to section 261 of the
Excise Tax Act ("the ETA"), the Appellant
applied for a Goods and Services Tax ("GST") rebate in
the amount of $3.50.
[2]
The Minister of National Revenue ("the Minister")
denied the Appellant's claim for the rebate by Notice of
Assessment dated November 3, 2000 for the period of February
1, 2000 to June 30, 2000. This appeal under the General Procedure
was filed following an objection and Notice of Decision dated
January 23, 2001 confirming the assessment.
[3]
The GST rebate claim is in respect of a withdrawal fee of $25.00
charged to the Appellant for removing money from a Registered
Retirement Savings Plan ("RRSP"). The issue in this
appeal is whether such withdrawal fee was for a financial service
exempt from tax pursuant to Part VII of Schedule V to the
ETA or whether such service was excluded as a financial
service by paragraph (q) of the definition of "financial
service" set out in subsection 123(1) of the ETA and
thus subject to GST.
[4]
In brief, the Appellant's position is that the subject RRSP
was a self-directed plan (the "Plan") and was by
its terms a bare or simple trust ("bare trust") which
at common law is not a trust at all but rather creates a
relationship of principal and agent. The Appellant goes on to
advance the position that if a self-directed RRSP is not a trust,
then it is not an "investment plan" as defined in
subsection 149(5) of the ETA and if it is neither a
trust nor investment plan, then the exclusion set out in
paragraph (q) of the definition of a "financial
service" is not applicable with the end result that the
subject withdrawal fee is an exempt financial service.
[5]
The Respondent's position in brief is that: the Plan is a
trust either at common law or as that term or arrangement is used
in or referred to in the ETA, and thereby is expressly
excluded from being a "financial service"; the Plan is
an "investment plan" and thereby expressly excluded
from being a "financial service"; and, in any event the
subject withdrawal service is not an exempt "financial
service" under the ETA.
[6]
It would be helpful at the outset to set out the relevant
statutory provisions.
Under the
ETA:
123(1) "financial
service" means
(a) the exchange,
payment, issue, receipt or transfer of money, whether effected by
the exchange of currency, by crediting or debiting accounts or
otherwise,
(b) the operation or
maintenance of a savings, chequing, deposit, loan, charge or
other account,
(c) the lending or
borrowing of a financial instrument,
(d) the issue,
granting, allotment, acceptance, endorsement, renewal,
processing, variation, transfer of ownership or repayment of a
financial instrument,
(e) the provision,
variation, release or receipt of a guarantee, an acceptance or an
indemnity in respect of a financial instrument,
(f) the payment or
receipt of money as dividends (other than patronage dividends),
interest, principal, benefits or any similar payment or receipt
of money in respect of a financial instrument,
(f.1) the payment or
receipt of an amount in full or partial satisfaction of a claim
arising under an insurance policy,
(g) the making of any
advance, the granting of any credit or the lending of
money,
(h) the underwriting
of a financial instrument,
(i) any service
provided pursuant to the terms and conditions of any agreement
relating to payments of amounts for which a credit card voucher
or charge card voucher has been issued,
(j) the service of
investigating and recommending the compensation in satisfaction
of a claim where
(i) the claim is made under a marine insurance policy,
or
(ii) the claim is
made under an insurance policy that is not in the nature of
accident and sickness or life insurance and
(A) the service is
supplied by an insurer or by a person who is licensed under the
laws of a province to provide such a service, or
(B) the service is
supplied to an insurer or a group of insurers by a person who
would be required to be so licensed but for the fact that the
person is relieved from that requirement under the laws of a
province,
(j.l) the service of
providing an insurer or a person who supplies a service referred
to in paragraph (j) with an appraisal of the damage caused to
property, or in the case of a loss of property, the value of the
property, where the supplier of the appraisal inspects the
property, or in the case of a loss of the property, the
last-known place where the property was situated before the
loss,
(k) any supply deemed
by subsection 150(1) or section 158 to be a supply of a financial
service,
(l) the agreeing to
provide, or the arranging for, a service referred to in any of
paragraphs (a) to (i), or
(m) a prescribed
service,
but does not include
(n) the payment or
receipt of money as consideration for the supply of property
other than a financial instrument or of a service other than a
financial service,
(o) the payment or
receipt of money in settlement of a claim (other than a claim
under an insurance policy) under a warranty, guarantee or similar
arrangement in respect of property other than a financial
instrument or a service other than a financial
service,
(p) the service of
providing advice, other than a service included in this
definition because of paragraph (j) or (j.1),
(q) the provision, to
an investment plan (as defined in subsection 149(5)) or any
corporation, partnership or trust whose principal activity is the
investing of funds, of
(i) a management or administrative service, or
(ii) any other service (other than a prescribed
service),
if the supplier is a
person who provides management or administrative services to the
investment plan, corporation, partnership or trust,
(r) a professional
service provided by an accountant, actuary, lawyer or notary in
the course of a professional practice,
(r.1) the arranging
for the transfer of ownership of shares of a cooperative housing
corporation,
(s) any service the
supply of which is deemed under this Part to be a taxable supply,
or
(t) a prescribed
service;
149(5) In this
section, "investment plan" means
(a) a trust governed by
(i) a registered pension plan,
(ii) an employee's profit sharing plan,
(iii) a registered
supplementary unemployment benefit plan,
(iv) a
registered retirement savings plan,
(v) a deferred
profit sharing plan,
(vi) a
registered education savings plan,
(vii) a registered
retirement income fund,
(viii) an employee
benefit plan,
(ix) an
employee trust,
(x) a mutual
fund trust,
(xi) a pooled
fund trust,
(xii) a unit trust,
or
(xiii) a retirement
compensation arrangement,
as
each of those terms is defined for the purposes of the Income
Tax Act or the Income Tax Regulations;
(b) an investment
corporation, as that term is defined for the purposes of that
Act;
(c) a mortgage investment
corporation, as that term is defined for the purposes of that
Act;
(d) a mutual fund
corporation, as that term is defined for the purposes of that
Act;
(e) a non-resident owned
investment corporation, as that term is defined for the purposes
of that Act; and
(f) a corporation exempt
from tax under that Act by reason of paragraph 149(1)(o.1) or
(o.2) of that Act.
Under the Income
Tax Act (the"ITA"):
104(1) In this Act, a
reference to a trust or estate (in this subdivision referred to
as a "trust") shall, unless the context otherwise
requires, be read to include a reference to the Trustee,
executor, administrator, liquidator of the succession, heir or
other legal representative having ownership or control of the
trust property, but, except for the purposes of this subsection,
subsection (1.1) and paragraph (k) of the definition of
"disposition" in subsection 248(1), a trust is deemed
to not include an arrangement under which the trust can
reasonably be considered to act as agent for all the
beneficiaries under the trust with respect to all dealings with
all of the trust's property unless the trust is described in
any of paragraph (a) to (e.1) of the definition trust" in
subsection 108(1).
...
108(1) "trust"
includes an inter vivos trust and a testamentary trust but
in subsections 104(4), (5), (5.2), (12), (13.1), (13.2) (14) and
(15) and sections 105 to 107 does not include
(a) an amateur
athlete trust, an employee trust, a trust described in paragraph
149(1)(o.4) or a trust governed by a deferred profit sharing
plan, an employee benefit plan, an employees profit sharing plan,
a foreign retirement arrangement, a registered education savings
plan, a registered pension plan, a registered retirement income
fund, a registered retirement savings plan or a registered
supplementary unemployment benefit plan,
FACTS
[7]
The following facts are not in dispute:
(a)
the Plan was established (a self-directed RRSP) in February of
1995 and the Minister accepted it for registration for the
purposes of the ITA;
(b)
the Bank of Nova Scotia Trust Company ("the Trustee")
is the administrator and Trustee of the Plan;
(c)
on February 18, 2000 the Trustee levied a withdrawal fee in the
amount of $25.00 on the account maintained for the Plan and
collected GST in the amount of $1.75 in respect of such fee. On
June 29, 2000 the Bank levied a further withdrawal fee in the
amount of $25.00 on the account maintained for the Plan and again
collected GST in the amount of $1.75 in respect of such further
fee.
[8]
A document entitled "Declaration of Trust Scotia Group
Retirement Savings Plan" (the "Deed") was tendered
as an exhibit and attested to by the Appellant as setting out
terms identical or substantially similar to the Declaration of
Trust contained with an application executed by the Appellant
when her self-directed RRSP was established.
[9]
The provisions of the Deed that were referred to at the hearing
or that might have relevance to the issue in this case are as
follows:
1.
THE TRUSTEE
The Bank of Nova Scotia
Trust Company (the "Trustee") by this Declaration of
Trust as it may be amended from time to time declares itself to
be the Trustee of the Scotia Group Retirement Savings Plan (the
"Plan") for the registered owner (the
"Annuitant") upon acceptance of a completed Scotia
Group Retirement Savings Plan Application (the
"Application") from the Annuitant.
2.
REGISTRATION
The Trustee will apply for
registration of the Plan with the relevant taxation authorities
pursuant to the Income Tax Act (Canada) and any applicable income
tax legislation in the province indicated in the Annuitant's
address in the Application (herein collectively called the
"Applicable Tax Legislation").
3.
CONTRIBUTIONS AND INVESTMENTS
Contributions made by the
Annuitant or the Annuitant's spouse to the Plan in such
minimum or maximum amounts permitted by Applicable Tax
Legislation and by the Trustee, and the income earned thereon,
will be held in trust by the Trustee for the purpose of providing
a retirement income to the Annuitant or to be dealt with in
accordance with section 11. ...
The Trustee will, on the
written or oral directions of the Annuitant, invest the property
of the Plan, provided that the Trustee may in its sole discretion
decline to make any particular investment for any reason
including, without limitation, if the proposed investment and
related documentation do not comply with the Trustee's
administrative requirements, which may be modified from time to
time. ... The Trustee may require the Annuitant to provide such
documentation in respect of any investment or proposed investment
as the Trustee in its sole discretion deems necessary in the
circumstances. ... Until the Plan is terminated as provided
herein, the Trustee's sole obligation relating to investments
of the Plan will be confined to:
(i)
executing the directions of the Annuitant with respect to the
investment and reinvestment of monies contributed by the
Annuitant or the Annuitant's spouse and of the proceeds of
any sales of such investments or reinvestments and any income
earned thereon; and
(ii)
maintaining legal ownership and possession of the investments
which from time to time form part of the property of the Plan or
maintaining such investments in bearer form or in the name of a
nominee or in such other name as the Trustee may
determine.
.
. .
Without restricting the
generality of the foregoing, it will be the sole responsibility
of the Annuitant to choose the investments of the Plan, to
determine whether any such investment is or remains a qualified
investment or constitutes foreign property within the meaning of
Applicable Tax Legislation and to determine whether any
investment should be purchased, sold or retained by the Trustee
as part of the Plan. Neither the Trustee nor the
Employer/Association will be liable to the Annuitant
if:
(i)
such investments result in additional taxes or penalties imposed
by Applicable Tax Legislation, or
(ii)
such investments produce losses of any nature whatsoever for the
Plan,
whether or not the Trustee
or Employer/Association has communicated to the Annuitant any
information the Trustee or Employer/Association may have
received, or any judgment the Trustee or Employer/Association may
have formed, with respect to the foregoing at any particular
time.
.
. .
4.
WITHDRAWALS
The Annuitant may, by
written direction at any time before the purchase of a retirement
income pursuant to section 6, request the Trustee to distribute
to the Annuitant, subject to any required withholding in respect
of taxes or other charges, all or part of the property of the
Plan. In no event will any such payment exceed the value of the
Plan immediately before the time of payment.
.
. .
9.
STATEMENTS AND RECEIPTS
The Trustee will maintain
an account for the Annuitant and will forward to the Annuitant at
least quarterly statements of the Plan showing the contributions
to the Plan made by the Annuitant or the Annuitant's spouse,
the income credited to the Plan, the debits for the purchase of
investments, a description of the investments and credits for the
sale of those investments. By March 31st in each year, or by such
other date as may be permitted by Applicable Tax Legislation, the
Trustee will forward to the Annuitant a receipt for income tax
purposes of the contributions to the Plan by the Annuitant or the
Annuitant's spouse in respect of the immediately preceding
taxation year. It is the Annuitant's sole responsibility to
ensure that the deductions in respect of contributions claimed by
the Annuitant or the Annuitant's spouse, respectively, on his
or her income tax return do not exceed the permitted deduction
under Applicable Tax Legislation.
.
. .
11.
TRANSFER TO A REGISTERED RETIREMENT SAVINGS
PLAN OR REGISTERED RETIREMENT INCOME FUND
Subject to reasonable
notice in writing to the Trustee or to the Agent on the
Trustee's behalf from the Annuitant at any time before the
provision of a retirement income pursuant to section 6, the
Trustee will amend the Plan to be in accordance with Applicable
Tax Legislation to permit the transfer of the property of the
Plan, subject to the deduction of any fee to which it may be
entitled and taxes which may be required to be withheld, to an
issuer of another registered retirement savings plan or plans or
to a registered pension fund or plan or to a carrier of a
registered retirement income fund or funds as is designated in
such notice. Upon such transfer, the Trustee will have no
liability to the Annuitant hereunder with respect to the property
of the Plan so transferred or with respect to the property of the
Plan so transferred or with respect to any other obligations
relating thereto.
.
. .
13.
TRUSTEE'S FEES AND DISBURSEMENTS
The Trustee will be
entitled to compensation for its services and reimbursement of
disbursements hereunder in accordance with the fee schedule
provided to the Annuitant or Employer/Association, as it may from
time to time be amended. Notice of amendments to such schedule
will be given to the Annuitant or Employer/Association, as it may
from time to time be amended. Notice of amendments to such
schedule will be given to the Annuitant or Employer/Association,
as applicable and will take effect no earlier than 60 days from
the date of such notice. All fees and reimbursement of
disbursements provided for hereunder may be charged against and
deducted from the assets of the Plan at such time or times during
each year as the Trustee may, in its absolute discretion,
determine.
14.
TRUSTEE'S POWER TO LIQUIDATE PROPERTY
The Trustee may retain in
cash such portion of the property of the Plan as it in its sole
discretion determines is advisable for the administration of the
Plan. Without limiting the generality of the foregoing, the
Trustee may liquidate investments of the Plan to provide for
payment of taxes required to be withheld, payment of its fees and
reimbursement of disbursements and payment of other reasonable
charges, or may debit any account of the Annuitant with the Agent
for such purposes notwithstanding that such account may thereby
become overdrawn. If the Annuitant fails to direct the Trustee as
to which investments of the Plan to liquidate, the Trustee may
sell such investments of the Plan as it in its sole discretion
determines is appropriate. If the Trustee is required to exercise
such discretion, it may make an additional charge against the
Plan.
.
. .
19.
NO ADVANTAGE
No
advantage that is conditional in any way on the existence of the
Plan may be extended to the Annuitant or any person with whom the
Annuitant was not dealing at arm's length, unless the
advantages are permitted under Applicable Tax
Legislation.
.
. .
APPELLANT'S
POSITION
[10]
The Appellant puts particular emphasis on the portion of
paragraph 3 of the Deed that prescribes the Trustee's sole
obligation relating to investments of the Plan as confined to
executing the directions of the annuitant and maintaining legal
ownership and possession of the property and the Plan. The
Appellant might also rely on paragraph 4 of the Deed which
permits withdrawals from the Plan at the discretion of the
annuitant although that paragraph does not expressly provide that
the Trustee is required to comply with that direction.
[11]
The Appellant also placed emphasis on paragraph 14 of the Deed
which permitted the Trustee to collect fees from accounts of the
Appellant outside of the Plan indicating the services were
performed for her account, as principal, and not for the account
of the Plan. If the services were for her account, then the
exclusion in paragraph (q) of the definition of a
"financial service" cannot apply.
[12]
The Appellant had the following fairly extensive list of
authorities to help support her position that the trust in
question was a bare trust and that such trusts were mere agency
relationships that could not be regarded as trusts for the
purposes of the ETA:
Trident Holdings Ltd. v.
Danard Investments Ltd. et al. Court of Appeal, Howland
C.J.O., Morden and Tarnopolsky JJ.A. April 8,
1988.
Agents/Near Agents (GST and
PST Issues), Symposium Paper presented at 1996 commodity Tax
Symposium in Ottawa, prepared by Dalton Albrecht of McMillan
Binch.
Characterizing
Relationships - Joint Venture, Partnership, Agency and
trust, Symposium Paper presented at 2000 Commodity Tax Symposium
in Ottawa, prepared by Donald N. Cherniawsky and Blair
Nixon of Felesky Flynn.
Ontario Tax Bulletin LTT
- 9 - 2000 - Conveyances Involving Trusts Land
Transfer Tax Act.
Interpretation Revenu
Quebec TVQ, 16-23 - Bare Trusts.
GST/HST Technical
Information Bulletin B-068 - Bare Trusts.
GST/HST Policy Number P-015
- Treatment of Bare Trusts Under The Excise Tax
Act.
Goods and Services Tax
Registration Form - GST 5E (90/04) & GST 1
(92/02).
GST/HST Policy Number
P-171R - Distinguishing Between A Joint Venture And A
Partnership For The Purposes of Section 273 Joint Venture
Election.
DeMond v. Her Majesty the
Queen, C.T.C. 2007, 99 DTC
893.
The Character of the Bare
Trust in Canadian Tax Legislation - W.D. Goodman in D.W.
Waters, Equity, Fiduciaries and Trusts (Toronto, Carswell)
1993.
Gestion Alain St-Pierre
Inc. v. Her Majesty the Queen - T.C.C.
Docket 2000-498 (GST) 1.
[13]
The gist of these authorities is that where a trustee is
conferred no power or discretion and is effectively required to
do the bidding of the beneficiary, the predominant nature of the
relationship is one of agency. The acts of the trustee are not
acts of the trust but are acts of an agent acting for the
beneficiary as principal. There is a trust only in the sense that
legal ownership of the trust property is with the trust but that
ownership is under the control and direction of the beneficiary
who can cause it to be turned over at his or her discretion. The
trustee has no active role except as agent. That the trustee has
purely administrative duties would not be sufficient to warrant a
finding that the trustee has an active role in the management of
the assets of the trust. Based on these principles, focusing on
the provisions of the Deed on which the Appellant puts emphasis
does suggest that the fundamental nature of the subject
arrangement, the Plan, is a bare trust and that the subject fees
were for services performed for the account of the Appellant
personally. That is, based on these principles, the
Appellant asserts, at law, no services were provided to a
"trust" or to an "investment
plan".
[14]
The Appellant asserts then that paragraph (q) of the definition
of a "financial service" in excluding services to
"trusts" does not exclude services to a trust
arrangement the predominant nature of which establishes an agency
relationship. Further, she asserts that in excluding services to
"investment plans", paragraph (q) does not exclude
services to bare trusts that are governed by a registered plan
since by definition an "investment plan" must be a
"trust" and a bare trust is not a trust for the
purposes of that definition.
RESPONDENT'S
POSITION
[15]
The Respondent asserts that the Trustee has significant powers
and responsibilities and can take action without direction from
the annuitant. The Trustee's function is more than to simply
hold legal title to property for conveyance to the beneficiary at
the beneficiary's demand. Accordingly, the Respondent asserts
that the trust is not a bare trust in that the Trustee provides
services to the Plan for the account of the Plan and not as a
mere agent for the account of the annuitant. Accordingly, the
appeal should fail on the basis that the Plan was both a trust
and a financial plan and as such paragraph (q) of the definition
of "financial service" in subsection 123(1) applies to
exclude the subject service from being a financial service exempt
from GST.
[16]
The Respondent puts emphasis on that part of paragraph 3 of
the Deed that provides that the Trustee may, in its sole
discretion, decline to make any investment it is directed to make
for any reason including administrative requirements which can be
modified (unilaterally it seems) at any time. The Trustee can
also require documentation acceptable to it before making an
investment. Paragraph 9 of the Deed sets out active duties
that the Respondent asserts go beyond the normal duties of an
agent. Paragraph 13 gives the Trustee absolute discretion in
respect of the payment of fees and paragraph 14 gives sole
discretion to the trustee to retain cash for administrative
requirements and such discretion includes discretion to the
Trustee to liquidate investments of the Plan.
[17]
I also point out that the first duty of the Trustee pursuant to
paragraph 2 of the Deed was to register the Plan. That was
an active role and, while responsibility for determining whether
an investment is a qualified investment or whether it constitutes
foreign property, falls on the annuitant under paragraph 3,
paragraph 19 suggests that, in compliance with the
provisions of the ITA, there is a category of direction
that would not be followed by the Trustee if it effected an
advantage to a non-arm's length person. Presumably the
Trustee is free to make this determination.
[18]
The Respondent asserts that subsection 149(5) of the ETA
includes the Plan as an investment plan if the Plan is a trust
under the ITA. That the Plan is a trust under the
ITA has not been put in issue by the Appellant.
[19]
The Respondent also argues that paragraph (q) of the definition
of "financial service" in subsection 123(1)of the
ETA lists both services to trusts and services to
investment plans. By excluding both an "investment
plan" and a "trust" the Respondent argues that it
is clear that Parliament distinguished between the two on the
premise that an investment plan need not be an active trust but
rather it need only to be a "trust governed by a registered
retirement savings plan" which includes a bare trust
governed by an RRSP.
[20]
The Respondent also argues that the Trustee is engaged in a
commercial activity when it performs its accounting and ongoing
duties and is thereby rendering a taxable supply that is not
exempt from GST as determined in C.I. Mutual Funds Inc. v.
Canada.
The Respondent asserts that the fee in the case at bar was not
simply for the transfer of money from one account to another but
was a payment for the service by the Trustee of selling some
assets of the Plan, withholding taxes and sending the proceeds to
the annuitant. That is, even if the services by the Trustee were
services to the Appellant, they were not services that
were exempt services.
ANALYSIS
[21]
The ETA does not define "trust", however
subsection 149(5) of the ETA does define
"investment plan" to include a trust that is governed
by a registered retirement savings plan. There is no dispute that
the subject self-directed plan is a registered retirement savings
plan. The Appellant argues that although it is a registered
retirement savings plan it is not a registered retirement savings
plan that is referred to in subsection 149(5) since only
registered retirement savings plans that are "trusts"
are plans referred to in that subsection. The Appellant argues
that even if a registered retirement savings plan is a trust for
the purposes of the ITA, it is not thereby a trust for the
purposes of the ETA. The Appellant argues that the
qualification "for the purposes of the Income Tax
Act" used in subsection 149(5) of the ETA
attaches to the definitions of the plans themselves but not to
the definition of "trust" as used at the outset of
subsection 149(5).
[22]
I cannot agree with
the Appellant on this issue. Regardless that the Plan may be a
bare trust and thereby may, arguably, not be a trust as that term
is used in paragraph (q), it is an "investment
plan" as defined in subsection 149(5) of the ETA. An
"investment plan" is "a trust governed by ...
a registered retirement savings plan ... as each of
those terms is defined for the purposes of the Income Tax
Act or the Income Tax Regulations". The
Appellant's position that this must be taken on its face to
mean "real (active) trusts (as defined at common law)
governed by a registered plan that is a registered plan as
defined for the purposes of the ITA", is not tenable.
As a matter of statutory construction, I concur with the
Respondent. Registered plans that are real (active) trusts are
included in paragraph (q) by reference to services to
"trusts". That investment plans are separately listed
in that paragraph must be taken to mean that investment plans
include arrangements that are bare trusts provided they are
governed by an RRSP (or other plan referred to in subsection
149(5)). Otherwise mentioning both investment plans and trusts
would be redundant.
[23]
In my view a proper reading of subsection 149(5) of the
ETA is that it defines "investment plan" to
include an arrangement that is for the purposes of the ITA
a trust governed by a registered retirement savings plan. Whether
the arrangement is a trust so governed must be determined in
accordance with the terms of the ITA. Under that Act the
term "trust" includes a trust, even a bare trust,
registered as an RRSP pursuant to that Act. Subsection 104(1) of
the ITA provides that a trust includes a trustee having
ownership or control of trust property but excludes agency type
trusts unless the trust is described in any of paragraphs
(a) to (e.1) of the definition of "trust" in subsection
108(1) of the ITA. Paragraph 108(1)(a) of the
ITA expressly includes RRSPs.
[24]
Accordingly, the subject Plan is an "investment plan",
as defined in subsection 123(1) of the ETA, to which
management and administration services have been provided. Such
services are excluded from the definition of a "financial
service" by paragraph (q) of that definition and are a
commercial activity subject to tax under the ETA. The
subject service falls within the scope of the Trustee's
administrative services and the appeal fails for that
reason.
[25]
Lest the Appellant believes this should not be the end of the
matter, I will direct some brief comments to two other issues
raised in this appeal.
[26]
Firstly, there is the question as to whether the subject service
in this case was a financial service at all. That is,
even if the
subject service was not excluded by paragraph (q) of the
definition of "financial service" that does not make it
a financial service. The Appellant took the position that if the
service was not excluded under paragraph (q) then she did not
have to identify the subject service as one of the services
included in paragraphs (a) to (m) of the definition of
"financial services" in subsection 123(1) of the
ETA.
[27]
The definition of
"financial service" does not support this position. The
Appellant had an onus of proof to establish that the subject
service was one included in the exhaustive list of services
expressly set out in paragraphs (a) to (m) to be financial
services. The subject service had to fall within the included
list before it could be excluded by paragraph (q). Of that there
seems to be no doubt. That the Trustee of the Plan imposes an
administrative fee for a withdrawal is not in and by itself
sufficient to create a necessary inference that the fee is for a
financial service such as, for example, one or more of the
services set out in either of paragraphs (a) or (l). If the
service is one included in any such paragraph it might be
excluded by paragraph (q), otherwise, if not so included,
recourse to paragraph (q) to exclude it is not necessary;
the service is not a financial service regardless of the
application of that exclusionary paragraph.
[28]
That the Appellant
would not or could not address this point could, in itself,
result in the failure of the Appellant to succeed in this appeal.
I do not take the Respondent's admission that the Trustee
performed management, administrative and other services to the
Plan as an admission that the subject withdrawal fee was for an
administrative service included in the list of services defined
to be financial services. No evidence was brought as to what the
service fee was actually for. The Respondent argued that the fee,
although a "withdrawal" fee, included a fee for
liquidating an investment in the Plan, withholding taxes,
accounting for GST as well as transferring funds from one account
to another (the latter likely falling within paragraph (a) of the
definition "financial service"). The Appellant did not
rebut this position. She did not argue or urge a finding that the
fee was simply for transferring funds or debiting an account.
While such finding seems possible (even likely) on the face of
it, the Appellant had a burden here which she simply chose to
ignore.
[29]
Secondly and lastly, there is the question of whether the Plan is
a bare trust and thereby not a trust. Given that I regard any
comments on this question of "when is a trust not a
trust?" as obiter dicta, I will deal with it
summarily.
[30]
I have already listed the Appellant's authorities on the
question and the difficulties of the question are considered at
length in those authorities. They include the Minister's
own views on the question which admit to a practise in the
administration of the ETA that would treat a bare trust as
a mere agent and not as a trust.
Having considered these authorities, I acknowledge that but for
the reference to "investment plan" in paragraph (q) of
the definition of "financial service" and the manner in
which subsection 149(5) defines "investment plan",
there would be a reasonable argument in this case that the
subject service might properly be regarded as a service provided
to the Appellant - not as a service to a trust. Still, even
limiting the veto power the Trustee has on investments in the
Plan to investments in respect of which it has not received
requested/required documentation or information or about which it
may have concerns as to benefiting a non arm's length party
(a limitation one might read in to reconcile contradictory
provisions in the Deed), such discretionary powers go beyond a
mere agency. The power to liquidate and hold as much cash as the
Trustee feels necessary also goes beyond mere agency. The
exercise of these discretionary powers would be subject to a
trustee's equitable obligation to account but this is not
the same as an agent's accountability which is based in
contract not equity.
[31]
The Trustee under the terms of the Deed is not there to simply
obey the instructions of the annuitant. The Trustee has a
fiduciary roll with some autonomy as Trustee. While the Trustee
is to follow asset management directions, the Appellant has no
assurance of total control over the assets in the Plan. These
"trust" aspects of the Deed override the agency aspects
in considering, for GST purposes, whether the Plan was a trust.
Other considerations such as the Trustee having the right to go
beyond trust assets to cover its fees and expenses are not
compelling.
[32]
Important as well is the Trustee's obligation under
paragraph 2 of the Deed to have the Plan registered. While that
is not an ongoing duty (and while pursuant to paragraph 19 of the
Deed, Plan amendments to accommodate certain transfers are at the
behest of the Appellant), it was a critical aspect of the
relationship of the parties that required an active trustee at
the outset and, as evidenced in paragraph 25 of the Deed, an
active trustee with sufficient independence from the annuitant to
ensure compliance with the ITA was required throughout the
life of the Plan.
The Appellant needed that active relationship, bargained for it
and cannot denounce it. She could accept nothing less than a
"trust governed by an RRSP" and to read the Deed as
giving her less in the hope of stirring, to her advantage, the
muddy water around this whole question of bare trusts cannot
prevail.
[33]
The appeal is dismissed with costs to the Respondent.
Signed at Ottawa, Canada, this 5th day of June
2002.
"J.E. Hershfield"
J.T.C.C.
COURT FILE
NO.:
2001-1013(GST)G
STYLE OF
CAUSE:
R. Maxine Collins and
Her Majesty the Queen
PLACE OF
HEARING:
Vancouver, British Columbia
DATE OF
HEARING:
February 21, 2002
REASONS FOR JUDGMENT
BY: The Honourable Judge J.E.
Hershfield
DATE OF
JUDGMENT:
June 5, 2002
APPEARANCES:
For the
Appellant:
The Appellant herself
Counsel for the
Respondent:
Patricia Babcock, Jasmine Sidhu
COUNSEL OF RECORD:
For the
Appellant:
Name:
Firm:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2001-1013(GST)G
BETWEEN:
R. MAXINE COLLINS,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on February 21, 2002 at Vancouver
British Columbia, by
The Honourable Judge J.E.
Hershfield
Appearances
For the
Appellant:
The Appellant herself
Counsel for the Respondent:
Patricia A. Babcock
Jasmine Sidhu
JUDGMENT
The appeal from the assessment made under Part IX of the
Excise Tax Act, for the period February 1, 2000 to June
30, 2000, notice of which is dated November 3, 2000 and bears
number 002-920-976-123-700-01, is dismissed, with costs to the
Respondent, for the reasons set out in the attached Reasons for
Judgment.
Signed at Ottawa, Canada,
this 5th day of June 2002.
J.T.C.C.
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