Citation: 2009TCC609
Date: 20091209
Docket: 2009-561(IT)I
BETWEEN:
DEBBIE REZLER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
___________________________________________________________________
Appearances:
|
For the Appellant:
|
Steven Bromberg
|
|
Counsel for the Respondent:
|
Antonia Paraherakis
|
___________________________________________________________________
REASONS FOR JUDGMENT
(Delivered orally from the bench on November 5, 2009,
in Montreal, Quebec)
Miller J.
[1] This is an informal procedure case dealing
with excess RRSP contributions. The facts are straightforward. The Appellant,
Mrs. Rezler, on advice of her investment counsellor, made RRSP contributions of
$14,000 and $15,000 for the 2003 and 2004 taxation years, respectively. The
2004 contribution was made in early 2005; $12,272 of the $14,000 was disallowed
for deduction in 2003 and all of the $15,000 contribution was disallowed for
deduction in 2004. Mrs. Rezler was notified by assessment of this result.
She attempted to deduct the $15,000 payment in 2005, given that it was made in
the first 60 days of 2005.
[2] The appeals officer testified that the
assessments would indicate the taxpayer’s RRSP status, including showing excess
contributions and the possibility of a Part X.I excess tax. It was not, however,
until 2007 that the Government wrote to the Appellant, seeking the filing of
the T1-OVP form for the payment of tax on excess contributions. The Appellant
responded by seeking a tax deduction waiver, (T3012-A) for both the $12,272 contribution
for 2003 and the $15,000 contribution for 2005. As the latter payment of
$15,000 was made within the time period stipulated in the Act, the Government
approved the tax deduction waiver for the $15,000, but not for the $12,272.
[3] The Minister of National Revenue asked the
Appellant to submit the Part X.I forms along with payment of the excess tax,
which is a 1% per month tax on the excess contributions. The Minister assessed
the Appellant pursuant to Part X.I tax on February 27, 2008, also assessing
late filing penalties and interest.
[4] The relevant provisions are section
146(8.2) and Part X.I of the Income Tax Act. I will not go into detail
of these sections, but simply, I confirm that they provide for a 1% per month
tax on excess RRSP contributions. They also provide that the taxpayer can
withdraw the excess contribution without tax, if the taxpayer does so within 1
year after the year of assessment.
[5] I am satisfied that Mrs. Rezler did make
excess contributions of $12,272 and $15,000. There is no dispute regarding the excess
contributions. I am also satisfied that the Government properly allowed the 2005
tax deduction waiver, and properly disallowed the 2003 tax deduction waiver as
it was made out of time.
[6] The issue before me is whether the Part X.I
tax on excess contributions, the 1% per month, plus the late filing penalty and
interest have been correctly assessed.
[7] The Appellant has one argument, that is that
she is being taken advantage of and treated unfairly, because the Government
did not make it clear until years after the tax arose, that there was a 1% per
month tax on excess contributions, assessing in 2008 for the 2003 to 2006
taxation years.
[8] While I can sympathize with the taxpayer,
and indeed agree that it is difficult for a taxpayer to know and appreciate all
aspects of our very complicated tax legislation, it does not justify
non-compliance with those laws. In Canada, we have a
self-assessment system. This does put an onus on the taxpayer to keep records,
complete forms, and submit returns and taxes on a timely basis. I acknowledge
the Part X.I tax on excess contributions may not be a well-known tax at every
taxpayer's fingertips. However, it is the law. There is no requirement on the Government
to spell it out in detail for the taxpayer. The Government does provide a
summary of the taxpayer's RRSP status, and Mrs. Rezler would have known on a
timely basis that her deductions for her RRSP contributions were disallowed.
She sought professional advice to make the contributions, but she did not seek
advice as to why it was not allowed. A review of her annual assessments should
have alerted her to a problem with these payments. Her agent, her husband, Mr.
Bromberg, suggested the Government should have spelled out for Mrs. Rezler that
she could be facing this 1% per month penalty. That, however, is not the Government’s
responsibility.
[9] Mr. Bromberg, the Appellant has not been taken advantage of
nor treated unfairly, although I can appreciate why you might think she has
been: this is simply applying legislation, albeit complicated legislation. It
is regrettable the Government did not assess more quickly, though there is no
onus on it to do so. But it is equally regrettable that Mrs. Rezler did not
also enquire into the ramifications of a disallowed deduction. If I were to
allow this appeal, it would be effectively writing the tax on excess
contributions out of the Act. I cannot do that. It is unfortunately a
harsh lesson learned that in a self-assessment system, there is a
responsibility on the taxpayer to determine tax owed, including such taxes as
the Part X.I tax. I must dismiss Mrs. Rezler’s appeal.
Signed at Ottawa, Canada, this 9th day of December,
2009.
"Campbell J. Miller"
CITATION: 2009TCC609
COURT FILE NO.: 20079-561(IT)I
STYLE OF CAUSE: DEBBIE REZLER and
HER
MAJESTY THE QUEEN
PLACE OF HEARING: Montreal, Quebec
DATE OF HEARING: November 5, 2009
REASONS FOR JUDGMENT
BY: The Honourable Justice Campbell J. Miller
DATE OF JUDGMENT: November 10, 2009
APPEARANCES:
|
For the Appellant:
|
Steven
Bromberg
|
|
Counsel for the Respondent:
|
Antonia Paraherakis
|
COUNSEL OF RECORD:
For the Appellant: n/a
Name:
Firm:
For the
Respondent: John H. Sims, Q.C.
Deputy
Attorney General of Canada
Ottawa,
Canada
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