Citation: 2010 TCC 5
Date: 20100107
Docket: 2009-1264(OAS)
BETWEEN:
GEORGE D. MOSKAL,
Appellant,
and
THE MINISTER OF HUMAN RESOURCES AND
SOCIAL DEVELOPMENT,
Respondent.
REASONS FOR JUDGMENT
Woods J.
[1] The
appellant, George Moskal, has appealed in respect of his entitlement to a guaranteed income supplement (GIS), which is
provided for under Part II of the Old Age Security Act (the “OAS Act”).
The GIS is intended to provide additional financial assistance to old age
security pension recipients with modest incomes. The period at issue is from
July 2008 to June 2009 (the “Payment Period”).
[2] Mr. Moskal filed an appeal with a review tribunal
(“Review Tribunal”) pursuant to subsection 28(1) of the OAS Act after
receiving a number of inconsistent statements as to his entitlement from
government officials.
[3] After the hearing, I reviewed the history of the
relevant legislation to try to understand the reason for the difficulty in
determining the GIS. As it turns out, new legislation came into force on the
very first day of the Payment Period. This may have led to some of the
confusion. Unfortunately for Mr. Moskal, he would have succeeded in his appeal
in its entirety if the old legislation had continued to apply.
[4] According
to the reply, the Minister’s
determination that is under appeal is that Mr. Moskal is entitled to receive
monthly GIS for the Payment Period as follows: $1.62 for the months of July,
August and September of 2008 and $10.90 for the remaining months in the Payment
Period.
[5] Under subsection 28(2), the Review Tribunal is required
to refer questions of income and sources of income to the Tax Court of Canada.
A reference to this Court was made with respect to Mr. Moskal’s appeal. The
Review Tribunal informed the Court that Mr. Moskal’s appeal related to a
determination of income under s. 2 of the OAS Act, and that the appeal was
being referred on that ground.
[6] The legislative provisions that are relevant to this
appeal are reproduced in an appendix.
Preliminary matters
[7] There are a couple of preliminary matters.
[8] The first concerns a similar appeal filed by Mr.
Moskal’s spouse, which was not included in the reference. At the opening of the
hearing, counsel for the respondent explained that Mrs. Moskal’s appeal was at an
earlier procedural stage and therefore a reference to this Court was therefore
premature. Counsel also stated that, to the extent that the issues were common
in both appeals, the decision in this appeal would be applied in determining
Mrs. Moskal’s GIS entitlement.
[9] The second concerns a minor concession by the
respondent. In the reply, the respondent conceded that the calculation of
income failed to take into account a deduction for carrying charges in the
amount of $265.
Issue
[10] The question to be decided is whether income received
by Mr. Moskal in 2007 or 2008 should be used for the purposes of computing the
GIS for the Payment Period.
[11] Mr.
Moskal was led to believe that his GIS for
the Payment Period would be determined using either his 2007 income or his
estimated 2008 income, at his option. Mr. Moskal preferred to use 2008 income
as it was significantly lower and would entitle him to greater GIS benefits.
[12] The respondent acknowledges that there are two
possible methods, at the appellant’s option. However, the respondent submits
that the option to use 2008 estimated income applies only to certain types of
income. Other sources of income must be determined using 2007 income, it is
submitted.
Applicable test for
determination of income
[13] The starting point for the calculation of the GIS is
section 12 of the OAS Act. It provides that the GIS is to be computed
based on income for a “base calendar year,” which is defined in section 10 as
follows:
“base calendar
year” means the last calendar year ending before the current payment period.
[14] In Mr. Moskal’s case, the base calendar year for the
Payment Period is the 2007 calendar year. Subject to any overriding provisions,
then, the GIS for the Payment Period should be calculated using 2007 income.
[15] Special rules are provided in section 14 of the OAS
Act for situations in which a person suffers a loss or reduction in income.
This provision is reproduced in its entirety in the appendix.
[16] The respondent acknowledges that Mr. Moskal is
entitled to relief under this provision. Counsel submits that the appropriate
relief is provided by paragraph 14(6)(a) because Mr. Moskal’s pension
income was reduced in 2007 as a result of a cessation of employment insurance
benefits in that year.
[17] Paragraph 14(6)(a) sets out a formula for the
computation of income. For the Payment Period, it requires 2007 income to be
used for certain types of income and 2008 income to be used for other types.
[18] The respondent suggests that paragraph 14(6)(a)
permits an alternative method for computing income for purposes of section 12.
On its face, paragraph 14(6)(a) does not clearly override the
requirement to use income for the base calendar year, but the respondent’s
position is favourable to Mr. Moskal and therefore I will accept it.
[19] At the hearing neither party mentioned the other
special rules in section 14, and generally the evidence was not detailed enough
for me to determine whether any of these rules apply. Based on the limited
evidence before me, I have no reason to believe that any other part of section
14 would provide a better result to Mr. Moskal than that provided by paragraph
14(6)(a).
[20] Accordingly, I would conclude that for purposes of
determining the GIS for the Payment Period, income should be determined in
accordance with the formula set out in paragraph 14(6)(a). For ease of
reference, the relevant parts are reproduced below.
(6) If, in the circumstances
described in paragraph (a)
or (b),
a person who is an applicant, or is an applicant’s spouse or common-law partner
who has filed a statement as described in paragraph 15(2)(a), suffers a loss of income
due to a termination of or reduction in pension income, the person may, not
later than the end of the payment period that is immediately after the current
payment period, in addition to making the statement of income required by
subsection (1) in the case of the applicant or in addition to filing a
statement as described in paragraph 15(2)(a) in the case of the applicant’s
spouse or common-law partner,
(a) if the loss is suffered in the
last calendar year ending before the payment period, file a statement of the
person’s estimated income for the calendar year ending in the current payment
period, which income shall be calculated as the total of
(i) any pension income
received by the person in that calendar year,
(ii) the income from any
office or employment or any business for that calendar year, and
(iii) the person’s income for the base calendar year calculated
as though, for that year, the person had no income from any office or
employment or any business and no pension income; [..] (Emphasis
added)
[21] As mentioned above, the relevant legislation was
amended effective on the first day of the Payment Period. Although it is not
directly relevant to the appeal, the former provision is reproduced below.
(6) Where, in the circumstances
described in paragraphs (a)
and (b),
a person who is an applicant, or who is an applicant’s spouse or common-law
partner who has filed a statement as described in paragraph 15(2)(a), suffers
a loss of income due to termination or reduction of pension income, the
person may, not later than the end of the current payment period, in addition
to making the statement of income required by subsection (1) in the case of the
applicant or in addition to filing a statement as described in paragraph 15(2)(a) in the case
of the applicant’s spouse or common-law partner,
(a) where
the loss is suffered in the last calendar year ending before the payment period,
file a statement of the person’s estimated income for the calendar year ending
in the current payment period, in which case the person’s income for that
calendar year is deemed to be the person’s income for the base calendar year;
[…] (Emphasis added.)
[22] It is unfortunate for Mr. Moskal that the above
provision does not apply to the Payment Period because it would permit him to
compute income based on the 2008 calendar year.
Specific income sources
[23] In applying the relevant formula in s. 14(6)(a)
to the Payment Period, the applicable year in respect of different types of income
are:
(a) pension
income, as defined, is to be determined for 2008,
(b) income from an office, employment or business is to be
determined for 2008, and
(c) other
types of income are to be determined for 2007.
[24] After this test was explained to Mr. Moskal at the
hearing, he submitted that his appeal should succeed in any event because he
was seeking to use 2008 income for pension and business income.
[25] The respondent disagrees. It is the position of the respondent
that the types of income that are in dispute are income from property and not
pension or business income. This income should be computed for 2007, it is
submitted.
[26] Two items of income are in dispute: (1) a lump sum
received under a life insurance policy in 2007, and (2) music royalties which
were greater in 2007 than 2008.
[27] The life insurance receipt is an amount of $15,804.59
that was received in 2007 from Desjardins Financial Security Life Assurance
Company (“Desjardins”). This amount was a lump sum paid on the maturity of a
life insurance policy.
[28] Mr. Moskal suggests that the Desjardins payment constitutes
2007 pension income which should be excluded from the income computation.
[29] The items of income that qualify as “pension income”
for purposes of this test are set out in section 14 of the Regulations to the OAS
Act. The regulation is reproduced in the appendix.
[30] Although the term “pension income,” as defined by the
regulation, is broader than its ordinary meaning, the definition is not broad
enough to apply to the Desjardins payment in my view.
[31] Mr. Moskal submits that the payment should qualify as
pension income because he intended to use the lump sum amount as a source of
retirement income.
[32] The problem that I have with this argument is that the
expanded definition of “pension income” does not encompass all types of retirement
income. I agree with counsel for the respondent that the Desjardins payment is
not pension income, as defined.
[33] I conclude, then, that the lump sum amount received
from Desjardins in 2007 should be included in computing income for purposes of
the GIS computation.
[34] The second item in dispute is an amount of $11,704.51
that consists of music royalties received by Mr. Moskal from SOCAN. The source
of the royalties was music produced by Mr. Moskal and others in connection with
a successful television series, Body Moves (an exercise program). This source
of income dropped significantly in 2008 and it is to Mr. Moskal’s advantage to
use the 2008 amount.
[35] Mr. Moskal suggests that the royalties are business
income and therefore the 2008 royalties should be used. I agree with this.
[36] The royalties for the Body Moves music, which was
produced prior to 2007, was the only compensation that Mr. Moskal received for
his participation in this project. Mr. Moskal explained in his testimony that
the producer of the series could not afford to pay the musicians and therefore
they agreed to produce the music solely in return for royalties that would be paid
by television stations which broadcast the series.
[37] The royalties clearly constitute business income in my
view. The production of this music was not an activity in the nature of a hobby
for Mr. Moskal.
[38] Counsel for the respondent submits that the royalties are
not business income because the business activity had ceased when the royalties
were received.
[39] I disagree with this submission. A source of income
does not change over time. It is the work and effort that Mr. Moskal put into
earning the income that characterizes the source of the royalties as business
income.
Conclusion
[40] In summary, I conclude as follows:
(a) for the purpose of determining
the GIS for the Payment Period, income should be determined in accordance with
paragraph 14(6)(a) of the OAS Act;
(b) carrying charges in the amount
of $265 should be allowed as a deduction in computing income,
(c) the lump sum insurance proceeds
received in 2007 should be included in computing income, and
(d) the SOCAN royalties received in
2008 should be included in computing income.
[41] The appeal will be allowed on this basis. Each party
should bear their own costs.
Signed at Toronto, Ontario this
7th day of January 2010.
“J. M. Woods”
Appendix
Old Age Security Act
Excerpt from section 2
“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
[…]
Section 14
14. (1) Every person by whom an application for a supplement in
respect of a current payment period is made shall, in the application, make a
statement of the person’s income for the base calendar year.
(1.01) The Minister may waive the requirement to make a statement
of income under subsection (1) if that information has been made available to
the Minister under this Act and, in that case, the statement is deemed to have
been made for the purposes of this Part.
(1.1) Where the requirement for an
application for payment of a supplement for any month has been waived under
subsection 11(4), the Minister may, on the basis of the information available
to the Minister,
(a) estimate
the applicant’s income for the base calendar year; and
(b) in the case of an applicant who
is a person described in subsection 15(2), estimate the income of the
applicant’s spouse or common-law partner for the base calendar year.
(1.2) Where a person’s income for a base
calendar year has been estimated under subsection (1.1), the Minister may
require that the person make a statement to the Minister of their income for
any month in that year.
(2) If in a current payment period a
person who is an applicant, or is an applicant’s spouse or common-law partner
who has filed a statement as described in paragraph 15(2)(a), ceases to hold an office or
employment or ceases to carry on a business, that person may, not later than
the end of the second payment period after the current payment period, in
addition to making the statement of income required by subsection (1) in the
case of the applicant or in addition to filing a statement as described in
paragraph 15(2)(a)
in the case of the applicant’s spouse or common-law partner, file a statement
of the person’s estimated income for the calendar year in which the person
ceased to hold that office or employment or ceased to carry on that business,
which income shall be calculated as the total of
(a) any pension income received by
the person in that part of that calendar year that is after the month in which
the person ceases to hold that office or employment or to carry on that
business, divided by the number of months in that part of that calendar year
and multiplied by 12,
(b) the income from any office or
employment or any business for that calendar year other than income from the
office, employment or business that has ceased, and
(c) the person’s income for the
base calendar year calculated as though, for that year, the person had no
income from any office or employment or any business and no pension income.
(3) Despite subsection (2), if in the
last month of a calendar year that ends in the current payment period a person
who is an applicant, or is an applicant’s spouse or common-law partner who has
filed a statement as described in paragraph 15(2)(a), ceases to hold an office or
employment or ceases to carry on a business, the person may, not later than the
end of the second payment period after the current payment period, in addition
to making the statement of income required by subsection (1) in the case of the
applicant or in addition to filing a statement as described in paragraph 15(2)(a) in the case
of the applicant’s spouse or common-law partner, file a statement of the
person’s estimated income for the calendar year that is immediately after the
month in which the person ceased to hold that office or employment or ceased to
carry on that business, which income shall be calculated as the total of
(a) any pension
income received by the person in that calendar year,
(b) the income from any office or
employment or any business for that calendar year other than income from the
office, employment or business that has ceased, and
(c) the person’s income for the
base calendar year calculated as though, for that year, the person had no
income from any office or employment or any business and no pension income.
(4) If in a current payment period a
person who is an applicant, or is an applicant’s spouse or common-law partner
who has filed a statement as described in paragraph 15(2)(a), suffers a loss of income due
to termination of or reduction in pension income, the person may, not later
than the end of the second payment period after the current payment period, in
addition to making the statement of income required by subsection (1) in the
case of the applicant or in addition to filing a statement as described in
paragraph 15(2)(a)
in the case of the applicant’s spouse or common-law partner, file a statement
of the person’s estimated income for the calendar year in which the loss is
suffered, which income shall be calculated as the total of
(a) any pension income received by
the person in that part of that calendar year that is after the month
immediately before the month in which the loss is suffered, divided by the
number of months in that part of that calendar year and multiplied by 12,
(b) the income from any office or
employment or any business for that calendar year, and
(c) the person’s income for the
base calendar year calculated as though, for that year, the person had no
income from any office or employment or any business and no pension income.
(5) If, in the circumstances described
in paragraphs (a)
and (b),
a person who is an applicant, or is an applicant’s spouse or common-law partner
who has filed a statement as described in paragraph 15(2)(a), ceases to hold an office or
employment or ceases to carry on a business, the person may, not later than the
end of the payment period that is immediately after the current payment period,
in addition to making the statement of income required by subsection (1) in the
case of the applicant or in addition to filing a statement as described in
paragraph 15(2)(a)
in the case of the applicant’s spouse or common-law partner,
(a) if the person ceases to hold that office or
employment or to carry on that business in the last calendar year ending before
the payment period, file a statement of the person’s estimated income for the
calendar year ending in the current payment period, which income shall be
calculated as the total of
(i) any pension
income received by the person in that calendar year,
(ii) the income
from any office or employment or any business for that calendar year, other
than income from the office, employment or business that has ceased, and
(iii) the
person’s income for the base calendar year calculated as though, for that year,
the person had no income from any office or employment or any business and no
pension income; and
(b) if the person ceases to hold
that office or employment or to carry on that business in a month that is
before the payment period and after the last calendar year ending before the
payment period, file a statement of the person’s estimated income for the
calendar year ending in the current payment period, which income shall be
calculated as the total of
(i) any pension
income received by the person in that part of that calendar year that is after
the month in which the person ceases to hold that office or employment or to
carry on that business, divided by the number of months in that part of that
calendar year and multiplied by 12,
(ii) the income
from any office or employment or any business for that calendar year, other
than income from the office, employment or business that has ceased, and
(iii) the
person’s income for the base calendar year calculated as though, for that year,
the person had no income from any office or employment or any business and no
pension income.
(6) If, in the circumstances described
in paragraph (a)
or (b),
a person who is an applicant, or is an applicant’s spouse or common-law partner
who has filed a statement as described in paragraph 15(2)(a), suffers a loss of income due
to a termination of or reduction in pension income, the person may, not later
than the end of the payment period that is immediately after the current
payment period, in addition to making the statement of income required by
subsection (1) in the case of the applicant or in addition to filing a
statement as described in paragraph 15(2)(a) in the case of the applicant’s
spouse or common-law partner,
(a) if the loss is suffered in the
last calendar year ending before the payment period, file a statement of the
person’s estimated income for the calendar year ending in the current payment
period, which income shall be calculated as the total of
(i) any pension
income received by the person in that calendar year,
(ii) the income
from any office or employment or any business for that calendar year, and
(iii) the
person’s income for the base calendar year calculated as though, for that year,
the person had no income from any office or employment or any business and no
pension income; and
(b) if the loss is suffered in a
month that is before the payment period and after the last calendar year ending
before the payment period, file a statement of the person’s estimated income
for the calendar year ending in the current payment period, which income shall
be calculated as the total of
(i) any pension
income received by the person in that part of that calendar year that is after
the month immediately before the month in which the loss is suffered, divided
by the number of months in that part of that calendar year and multiplied by
12,
(ii) the income
from any office or employment or any business for that calendar year, and
(iii) the
person’s income for the base calendar year calculated as though, for that year,
the person had no income from any office or employment or any business and no
pension income.
(7) Where under subsection (2), (3) or
(4) a statement of estimated income is filed by an applicant or an applicant’s
spouse or common-law partner, no supplement calculated on the basis of that
statement may be paid to the applicant for any month in the current payment
period before
(a) the month immediately following
the month shown in the statement as the month in which the applicant or the
applicant’s spouse or common-law partner, as the case may be, ceased to hold
the office or employment or ceased to carry on the business, or
(b) the month shown in the
statement as the month in which the applicant or the applicant’s spouse or
common-law partner, as the case may be, suffered the loss of income due to
termination or reduction of pension income,
whichever
is applicable.
Section 28
28. (1) A person who makes a request under subsection 27.1(1)
and who is dissatisfied with the decision of the Minister in respect of the
request, or, subject to the regulations, any person on their behalf, may appeal
the decision to a Review Tribunal under subsection 82(1) of the Canada
Pension Plan.
(2) Where, on an appeal to a Review
Tribunal, it is a ground of the appeal that the decision made by the Minister
as to the income or income from a particular source or sources of an applicant
or beneficiary or of the spouse or common-law partner of the applicant or
beneficiary was incorrectly made, the appeal on that ground shall, in
accordance with the regulations, be referred for decision to the Tax Court of
Canada, whose decision, subject only to variation by that Court in accordance
with any decision on an appeal under the Tax Court of Canada Act
relevant to the appeal to the Review Tribunal, is final and binding for all
purposes of the appeal to the Review Tribunal except in accordance with the Federal
Courts Act.
Regulation section 14
14. For the
purposes of section 14 of the Act, “pension income” means the aggregate of
amounts received as
(a) annuity payments;
(b) alimony and maintenance
payments;
(c) employment insurance
benefits;
(d) disability benefits deriving
from a private insurance plan;
(e) any benefit, other than a death benefit, under
the Canada Pension Plan or a provincial pension plan as defined in the Canada
Pension Plan;
(f) superannuation or pension payments, other than
a benefit received pursuant to the Act or any similar payment received pursuant
to a law of a provincial legislature;
(g) compensation under a federal or provincial
employee’s or worker’s compensation law in respect of an injury, disability or
death;
(h) income assistance benefits under an agreement
referred to in subsection 33(1) of the Department of Human Resources
Development Act by reason of a permanent reduction in the work force as
described in that subsection; and
(i) income assistance benefits under the Plant
Workers’ Adjustment Program, the Fisheries Early Retirement Program or the
Northern Cod Adjustment and Recovery Program by reason of a permanent reduction
in the work force.
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