Citation: 2011 TCC 485
Date: 20111018
Docket: 2010-1844(OAS)
BETWEEN:
RAYMOND DUPUIS,
Appellant,
and
MINISTER OF HUMAN RESOURCES
AND SKILLS DEVELOPMENT,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Tardif J.
[1]
Mr. Dupuis, the
Appellant, is appealing from a decision of the Minister of Human Resources and
Skills Development (the “Minister”) concerning the determination of the monthly
Guaranteed Income Supplement (the “Supplement”) under the Old Age Security
Act (“OASA”).
[2]
Mr. Dupuis did not
attend the hearing, but he was represented by his daughter Sylvie Dupuis. Team
leader in a department of Revenu Québec, Ms. Dupuis was remarkably well
prepared, and the quality of her submissions is noteworthy. Indeed, her
expertise allowed her to obtain several observations from the various
stakeholders.
[3]
One of the difficulties
of the case is that it concerns more than one statute; the decision under
appeal must essentially be assessed on the basis of the relevant statute.
[4]
The Supplement is
calculated from the person’s income, as defined at section 2 of the OASA,
that is, by taking into consideration the person’s income according to the Income
Tax Act (“ITA”) after the application of certain deductions described at
section 2 of the OASA.
[5]
The appellant is
challenging the inclusion of a monthly indemnity for permanent physical disability
he receives from the Commission de la Santé et de la Sécurité du travail du
Québec (“CSST”) in his income under section 2 of the OASA.
History of the amount and the evolution of work accident
legislation
[6]
The appellant had a
work accident in 1976.
He was compensated and returned to work after a short while.
[7]
Following his return to
work, it became clear that the work accident had injured him permanently,
having led to a permanent partial disability.
[8]
In 1979, following a
medical assessment, the Appellant became the recipient of a monthly payment
under section 38 the Workers’ Compensation Act, which reads as
follows:
38. (2) In the case of
permanent partial disability, the worker is entitled, for life, to a payment
provided for in subsection 1 according to the degree of his or her disability.
[9]
It must be noted that
the monthly payment was established before the coming into force of the Act
respecting industrial accidents and occupational diseases (“AIAOD”), which replaced
the WCA
in 1985, and sections 83 to 91 of which enable workers having sustained a
permanent bodily injury to claim a lump sum from the CSST.
[10]
When the AIAOD came
into force, the CSST gave the Appellant the option of continuing to receive a
monthly amount or receiving a lump sum in settlement of the remaining amount.
[11]
After having weighed
the two options, the Appellant decided to continue receiving the monthly
payments, as this seemed more advantageous to him.
[12]
Since 2007, the Canada
Revenue Agency (the “CRA”) has required a T5007 statement for the monthly
payments received by the Appellant to make it easier to include this amount in
the Appellant’s income, as confirmed in an email dated 2007‑05‑07
from Daniel Beaudoin of the CRA to Jacques Pelletier of the CSST, filed in
evidence by the Appellant on September 14, 2011.
Issues
[13]
The issues are as
follows:
a. Is
the payment for bodily injury received monthly by the Appellant from the CSST
part of the Appellant’s income under the ITA?
b. In
the event of an affirmative answer to the first question, does the OASA provide
for a deduction that would make it possible to subtract that payment from his
income for the purpose of calculating the Supplement?
Analysis of the legislation
Definition of income under the Old Age
Security Act
[14]
The amount of the
Supplement under the OASA is calculated according to the pensioner’s monthly
income:
12. (1) The amount of the supplement
that may be paid to a pensioner for any month in the payment quarter commencing
on April 1, 2005 is . . . minus one dollar for each full two dollars
of the pensioner’s monthly base income.
[15]
For the purposes of the
OASA, the word “income” is defined at section 2 of the Act as being the
pensioner’s income under the ITA, after some adjustments enumerated at
paragraphs (a) to (e) have been made:
“income” of a
person for a calendar year means the person’s income for the year, computed in
accordance with the Income Tax Act, except that
(a) there shall be deducted from
the person’s income from office or employment for the year
(i) a single amount in respect of all
offices and employments of that person equal to
(A) for the purpose of determining benefits
payable in respect of any month before July 2008, the lesser of $500 and one
fifth of the person’s income from office or employment for the year, or
(B) for the purpose of determining benefits
payable in respect of any month after June 2008, the lesser of $3,500 and the
person’s income from office or employment for the year,
(ii) the amount of employee’s premiums paid by
the person during the year under the Employment Insurance Act, and
(iii) the amount of employee’s contributions
made by the person during the year under the Canada Pension Plan or a
provincial pension plan as defined in section 3 of that Act,
(b) there shall be deducted
from the person’s self-employment earnings for the year
(i) the amount of contributions made in
respect of those self-employed earnings by the person during the year under the
Canada Pension Plan or a provincial pension plan as defined in section 3
of that Act, and
(ii) the amount of premium paid by the
person during the year under Part VII.1 of the Employment Insurance Act,
(c) there shall be deducted from
the person’s income for the year, to the extent that those amounts have been
included in computing that income,
(i) the amount of any benefit under this Act and
any similar payment under a law of a provincial legislature,
(ii) the amount of any death benefit under the Canada
Pension Plan or a provincial pension plan as defined in section 3 of that
Act, and
(iii) the amount of any social assistance
payment made on the basis of a means, a needs or an income test by a registered
charity as defined in subsection 248(1) of the Income Tax Act or under a
program provided for by an Act of Parliament or a provincial legislature that
is neither a program prescribed under the Income Tax Act nor a program
under which the amounts referred to in subparagraph (i) are paid,
(d) there shall be deducted
from the person’s income for the year three times the amount, if any, by which
(i) the total of any amounts that may be
deducted under section 121 of the Income Tax Act in computing the person’s
tax payable for the year
exceeds
(ii) the person’s “tax for the year otherwise payable under this Part” (within the meaning assigned by
subsection 126(7) of the Income Tax Act for the purposes of paragraph
126(1)(b) of that Act) for the year, and;
(e) there shall be deducted from the person’s
income for the year any amount included under paragraph 56(1)(q.1) or
subsection 56(6) of the Income Tax Act and there shall be included in
the person’s income for the year any amount that may be deducted under
paragraph 60(y) or (z) of that Act.
[16]
The OASA does not refer
to paragraph 56(1)(v) of the ITA, the legal basis for including the
permanent partial disability payment the Appellant receives from the CSST. Given
that Parliament did not provide for a deduction under the OASA, the ITA’s
treatment of the payment determines whether or not it is included in the income
to be considered in the calculation of the OASA Supplement.
Income under the Income Tax Act
Income versus taxable income
[17]
The ITA does not define
the word “income”, but includes provisions specifying the amounts to be
included or excluded for the purpose of calculating a taxpayer’s income and
taxable income.
[18]
The ITA calculates the
annual amount of tax payable by a taxpayer in three steps:
A. by listing the amounts to be included
in the computation of the taxpayer’s income in Division B of Part I of the ITA
(practitioners also refer to this as net income or income for tax purposes, in
contrast to accounting income);
B. by permitting the income deductions
provided at Division C of Part I of the ITA to compute the taxpayer’s
taxable income from his or her income; and
C. in Division E of Part I, by
providing the tax rates applicable to the amounts that constitute taxable
income.
[19]
The amount at issue in
this appeal, the amount to which section 2 of the OASA is referring, is
the taxpayer’s income computed under Division B of Part I of the ITA (Step
A, above). That is, the amount of income after income from all sources has been
added, but before the deductions to compute the taxable income have been
included.
[20]
The late Professor
Pierre Dussault, later a judge of this Court, had the following to say about
income in his treatise L’impôt sur le revenu au Canada [Income Tax in
Canada]:
[translation]
Division B of
Part I of the Income Tax Act, which is devoted to how to compute
income, does not contain a definition of this term. At the most, the Act
indicates here that income is determined by determining, among other things,
the total of all amounts each of which is the taxpayer’s income from each
office, employment, business and property. The Act therefore leaves open the
question of criteria for determining income.
Computing
income
[21]
The general provision
for computing a taxpayer’s income is section 3 of the ITA, of which
paragraph (a) reads as follows:
3. The income of a taxpayer for a
taxation year for the purposes of this Part is the taxpayer’s income for the
year determined by the following rules:
(a) determine the total of all amounts each of which is the
taxpayer’s income for the year (other than a taxable capital gain from the
disposition of a property) from a source inside or outside Canada, including,
without restricting the generality of the foregoing, the taxpayer’s income for
the year from each office, employment, business and property,
[22]
This list of amounts,
which has a very broad scope, has been narrowly construed by the courts. I
quote again from the book L’impôt sur le revenu au Canada:
[translation]
. . . at
paragraph 3(a) of the ITA the general provision (also referred to
as an omnibus clause) according to which income includes income from all
sources. The Canadian courts, imitating the courts of other jurisdictions, have
traditionally given this provision a very narrow scope, preferring to adopt a
restrictive interpretation of the concept of income.
[23]
In the current appeal,
the Court does not have to interpret whether the permanent partial disability
amount the Appellant receives from the CSST is covered by the generality of
paragraph 3(a) of the ITA; as the Respondent has pointed out, the
ITA includes a specific provision at paragraph 56(1)(v) that deals
with “compensation received under an employees’ or workers’ compensation law of
. . . a province”, such as the WCA or the AIAOD, “in respect of an
injury, a disability or death”.
[24]
Paragraph 56(1)(v)
of the ITA provides that compensation received under legislation such as the
AIAOD and, previously, the WCA must be included in the computation of income:
56. (1) Without restricting the generality
of section 3, there shall be included in computing the income of a taxpayer
for a taxation year,
(v) compensation received under an
employees’ or workers’ compensation law of Canada or a province in
respect of an injury, a disability or death;
[25]
For the purpose of computing
a taxpayer’s taxable income, the amounts included under paragraph 56(1)(v)
are deducted by operation of subparagraph 110(1)(f)(ii), which
reads as follows:
110. (1) For the purpose of computing the
taxable income of a taxpayer for a taxation year, there may be deducted such of
the following amounts as are applicable:
(f) any social assistance payment made on the basis of a
means, needs or income test and included because of clause 56(1)(a)(i)(A)
or paragraph 56(1)(u) in computing the taxpayer’s income for the year or
any amount that is
. . .
(ii) compensation received under an employees’ or workers’
compensation law of Canada or a province in respect of an injury, disability or
death, except any such compensation received by a person as the employer or
former employer of the person in respect of whose injury, disability or death
the compensation was paid,
[26]
The combined effect of
paragraph 56(1)(v) of Division B of Part I and
subparagraph 110(1)(f)(ii) of Division C of Part I of the
ITA means that “compensation received under an employees’ or workers’
compensation law of . . . a province in respect of an injury, a
disability or death” is not included in the computation of taxable income, but
is included when computing income (or net income).
[27]
As mentioned at
paragraph 18, Parliament chose the amount of income under Division B
of Part I, that is, the income before deductions, as the base amount for
calculating income under section 2 of the OASA.
Income
and permanent partial disability amount
[28]
In a similar case,
Justice Lamarre Proulx explained the legislation as follows:
13 Paragraph
56(1)(v) of the Income Tax Act reads as follows:
(1) Without restricting the generality of
section 3, there shall be included in computing the income of a taxpayer for a
taxation year,
. . .
(v) compensation received under an
employees’ or workers’ compensation law of Canada or a province in respect of
an injury, a disability or death;
14 It
should be noted that in computing the taxable income, the same amounts are
deducted under subparagraph 110(1)(f)(ii) of the Income Tax Act.
15 However,
the Old Age Security Act refers to income and not to taxable income. The
amounts received by the appellant from the CSST and the WSIB must be included
in computing his income for the purposes of his income tax return for the base
year.
16 It
is not whether or not the T5007 form is received which determines the amount of
a person’s income for a calendar year, but the provisions of the Income Tax
Act to which the Act refers.
[29]
The Appellant maintains
that the nature of the amount he receives is not an income but compensation for
a permanent disability. However, within the meaning of the ITA, an amount is
being paid—an indemnity, under the WCA—a workers’ compensation law of the
province of Quebec: the criteria of paragraph 56(1)(v) are
therefore all met.
[30]
In the treatise
referred to earlier, Professor Dussault wrote the following about the scope of
section 56:
[translation]
The 1972 reform resulted in a substantial expansion of the tax base
. . . One example in that regard is section 56 of the ITA, which
provides for income to include certain amounts that are not income in the
literal sense of the term, such as private and public transfer payments for
example.
The word “compensation”
[31]
The Appellant raises
the argument that the word “compensation” does not include the payment he
receives.
[32]
According to the
principles of statutory interpretation, “the words of an Act are to be read in
their entire context and in their grammatical and ordinary sense harmoniously
with the scheme of the Act, the object of the Act, and the intention of
Parliament”.
[33]
The ITA establishes a
taxpayer’s income as well as his or her taxable income and tax payable. The
inclusions at paragraph 56(1)(v) do not have any tax consequences
for taxpayers, as the amounts in question are excluded under
subparagraph 110(1)(f)(ii). The amounts contemplated at
paragraph 56(1)(v) therefore only come into play in the allocation
of social benefits calculated on the basis of an individual’s income, such as
the Supplement under the OASA.
Lump-sum versus monthly payment
[34]
The appellant raises
the argument that the ITA treats his monthly payment differently from the lump
sums payable under the AIAOD, even though the two amounts are of the same
nature. The respondent, on the other hand, argues that paragraph 56(1)(v)
applies to both amounts, regardless of how they are paid.
[35]
It is beyond the scope
of this appeal to judge the nature of the lump-sum payments. However, the
wording of paragraph 56(1)(v) is broad enough to include both lump
sums and monthly payments.
[36]
That said,
paragraph 56(1)(v) has been in its current form since 1994, and the
CRA has been asking the CSST to provide a T5007 only since 2007. This raises
the suspicion that Parliament intended this provision to have a more limited
scope.
[37]
Similarly, the fact
that the CSST provides statement T5007 for monthly payments but not for lump
sum payments leads to confusion. An example of this confusion has occurred in
this appeal, where the administrator at the reconsideration level explained the
decision by whether or not there was a T5007 statement.
Exclusion under paragraph 81(1)(q)
does not apply in this case
[38]
The Appellant refers to
paragraph 81(1)(q) of the ITA, which specifies the amounts that
should not be included in the taxpayer’s income (net income). This provision excludes
“an amount paid to an individual as an indemnity under a prescribed provision
of the law of a province”.
[39]
Unfortunately, the
amount described at paragraph 81(1)(q) must be prescribed by law,
and section 6501 of the Income Tax Regulations, C.R.C., c. 945,
which applies in this area, does not mention CSST indemnities.
Clarifications regarding the jurisdiction of the Tax
Court of Canada
[40]
The facts that have led
Mr. Dupuis before this Court make me very sympathetic to his appeal. The
Appellant expressed his frustration in his letter to request a reconsideration
before appealing to this Court, as follows:
[translation]
Since 2007,
the supplement I receive from the CSST has been calculated as income. I have
been receiving this indemnity for at least 30 years, and it increases every
year according to the consumer price index.
I find
this way of calculating to be unfair: it is as if part of this indemnity, which,
I was told, could not be touched, is being taken away from me.
This is
not a wage replacement indemnity for an indeterminate period. In that case, I
would understand the amount being counted as income.
For me,
this indemnity is a gift from the CSST to offer people moral support in
accepting a permanent disability following an accident. Someone taking away
part of that gift is illogical.
[41]
However, the Court’s
duty is to consider only the law; its judgments or assessments cannot in any
manner be founded on needs-, sympathy- or necessity-based arguments. The Court’s
decision must consider only the provisions that apply. Justice
Rothstein described this aspect of the Court’s jurisdiction as follows:
[4]
The applicant says that the law is unfair and he asks the Court to make an
exception for him. However the Court does not have that power. The Court must
take the statute as it finds it. It is not open to the Court to make exceptions
to statutory provisions on the grounds of fairness or equity. If the applicant
considers the law unfair, his remedy is with Parliament, not with the Court.
[42]
The only remedy for the
Appellant’s situation would be a parliamentary amendment to the OASA, adding a deduction
to the definition of income at section 2 of the ITA, as is already the
case for the other amounts described at paragraphs (a) to (e)
of the definition of income at section 2 of the OASA.
[43]
This Court cannot usurp
the role of Parliament on the pretext of an injustice or unfairness. The Court’s
only jurisdiction in this matter is essentially to determine whether the
decision under appeal was made in accordance with the Act. It if was, the decision
must be confirmed given that it complies with the relevant statutory
provisions.
[44]
I must therefore
dismiss the appeal since the decision under appeal is indeed entirely well
founded in law.
Signed at Ottawa,
Canada, this 18th day of October 2011.
“Alain Tardif”
on this 30th day of November
2011.
Johanna Kratz, Translator
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