Citation: 2009 TCC 459
Date: 20090915
Docket: 2008-3585(IT)I
BETWEEN:
MARIO GRONDIN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Favreau J.
[1]
The
appellant is appealing from reassessments dated March 26, 2008, and
April 7, 2008, concerning the 2005 and 2006 taxation years. In the
assessment dated April 7, 2008, the Minister of National Revenue (the Minister)
disallowed the deduction claimed for the repayment of employment insurance
benefits of $11,575 and allowed a non-capital loss deduction of $7,533. In the assessment dated March 26, 2008, the Minister
disallowed a deduction claimed for repaying employment insurance benefits of
$1,650.
[2]
The
assessment dated April 7, 2008, also applied to the 2004 taxation year for
which no tax was payable. The appellant sought an adjustment for the 2004 taxation
year, but the respondent maintains that the appellant cannot appeal from the
reassessment for 2004 because it had a nil balance.
[3]
The
underlying facts of this case are as follows:
(a) Following
a work accident in 1999, the appellant received employment insurance benefits
during the 2002 and 2003 taxation years;
(b) Following
a 2004 decision by the Commission de la santé et de la sécurité du travail
(CSST), the appellant received worker's compensation benefits in the amount of
$107,135 in 2004.
(c) Following
that decision, in 2004 the appellant repaid $20,078 of the employment insurance
benefits received in 2002 and 2003;
(d) As a
result of that repayment, a $20,078 deduction was allowed to the appellant for
the 2004 taxation year;
(e) As the
appellant's total income for 2004 was $118,021, the entire $20,078 deduction
could be applied;
(f) In
addition to the $20,078 deduction, in 2004 the appellant was entitled to deduct
the amount he had received in worker's compensation benefits, namely $107,135;
(g) Of this
$107,135, $97,943 was used to bring the appellant's income for the 2004
taxation year down to zero;
(h) From the
unused remainder of that $107,135 deduction, namely $9,192, the Minister
subtracted the farm loss amount claimed by the appellant in 2004, namely,
$1,659, and carried forward to the 2005 taxation year a non-capital loss of
$7,533;
(i) The
Minister allowed no deductions to the appellant for the 2006 taxation year
although the appellant had claimed a $1,650 deduction for the repayment of
employment insurance benefits.
[4]
The
appellant is claiming that he is suffering a financial loss on the ground that
the repayment of his employment insurance benefits is deductible in computing
his income for 2004 rather than 2002 and 2003, that is, the years during which
the appellant had received employment insurance benefits.
[5]
First, the
appellant's right of appeal for 2004 should be examined. Unfortunately
for the appellant, it is well settled that there is no right of appeal from a
nil assessment or from an assessment of a nil amount: see for example Interior
Savings Credit Union v. Canada, 2007 FCA 15 (Federal Court of Appeal); Okalta
Oils Limited v. M.N.R., 55 DTC 1176 (Supreme Court of Canada); and Faucher
v. Canada, 94 DTC 1575 (Tax Court of Canada). For this reason, the appellant's appeal concerning the 2004
taxation year must be dismissed.
[6]
To
determine whether the Minister correctly modified the claimed deduction of
$11,575 to become a non-capital loss deduction of $7,533 for the 2005 taxation
year and correctly disallowed the deduction of $1,650 claimed for the 2006
taxation year, the provisions of the Income Tax Act, R.S.C. 1985, c. 1
(5th Supp.), as amended (the Act) concerning repayment of employment insurance
benefits should be considered.
[7]
Paragraph
60(n) of the Act provides that a taxpayer can deduct an amount paid in
the year as a repayment of employment insurance benefits. Paragraph 60(n)
reads as follows:
60. Other deductions – There may be deducted in computing a
taxpayer’s income for a taxation year such of the following amounts as are
applicable
. . .
(n) Repayment of pension or benefits – any amount paid by the taxpayer in the
year as a repayment (otherwise than because of Part VII of the Unemployment
Insurance Act, chapter U-1 of the Revised Statutes of Canada, 1985, or of
Part VII of the Employment Insurance Act) of any of the following
amounts to the extent that the amount was included in computing the taxpayer’s
income, and not deducted in computing the taxpayer’s taxable income, for
the year or for a preceding taxation year, namely,
. . .
(iv) a benefit described in subparagraph 56(1)(a)(iv),
. . .
[8]
The benefit
described in subparagraph 56(1)(a)(iv) of the Act is a benefit paid
under the Employment Insurance Act. Subparagraph 56(1)(a)(iv)
of the Act stipulates the following:
56(1) Amounts to include in income for year – Without restricting the generality of section 3, there shall be
included in computing the income of a taxpayer for a taxation year,
(a) Pension benefits, unemployment insurance benefits, etc. – any amount received by the taxpayer in the year as, on account or
in lieu of payment of, or in satisfaction of,
. . .
(iv) a benefit under the Unemployment
Insurance Act, other than a payment relating to a course or program
designed to facilitate the re-entry into the labour force of a claimant under
that Act, or a benefit under Part I, VIII or VIII.1 of the Employment
Insurance Act,
[9]
For
clarity, it should be noted that the repayment of benefits under Part VII
of the Employment Insurance Act is also deductible in computing a
taxpayer's income under paragraph 60(v.1) of the Act, which sets out
that
(v.1) UI and EI benefit repayment
– any benefit repayment payable by the taxpayer under Part VII of the Unemployment
Insurance Act or Part VII of the Employment Insurance Act on or
before April 30 of the following year, to the extent that the amount was not
deductible in computing the taxpayer’s income for any preceding taxation year;
[10]
In the
instant case, the appellant repaid the employment insurance benefits in 2004
and benefited in 2004 from a full deduction of the amount repaid.
[11]
However,
part of the worker's compensation received by the appellant was not deducted in
computing his income for the 2004 taxation year. Worker's compensation must
be included in computing the taxpayer's income for the taxation year during
which it is received, in accordance with paragraph 56(1)(v) of the Act,
and is deductible in computing the taxpayer's taxable income under
paragraph 110(1)(f) of the Act. Those provisions read as
follows:
56(1)(v) Workers’ compensation - compensation received
under an employees' or workers' compensation law of Canada or a province in
respect of an injury, a disability or death;
110(1)(f) Deductions for payments – . . . any amount that is
(i)
. . .
(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,
[12]
In
accordance with the definition of "non-capital loss" found in
subsection 111(8) of the Act, the Minister justly considered the part of
the compensation that was not deducted in computing the appellant's income for
2004, namely, $9,192, to be non-capital loss. Paragraph (b) of item E of
the formula for determining the non-capital loss of a taxpayer for a taxation
year specifically refers to an amount deductible under paragraph 110(1)(f)
of the Act cited above. Paragraph (b) of item E of that formula
reads as follows:
(b) an amount deducted under paragraph
(1)(b) or section 110.6, or deductible under any of paragraphs 110(1)(d)
to (d.3), (f), (g), (j) and (k), section 112
and subsections 113(1) and 138(6), in computing the taxpayer’s taxable income
for the year, or
[13]
The amount
of the appellant's non-capital loss for the 2004 taxation year was reduced by
the farm loss amount of $1,659 claimed by the appellant. That reduction
in the non-capital loss was required by item D of the formula for determining
the non-capital loss of a taxpayer for a taxation year. Item D reads as follows:
D is the amount that would be the taxpayer’s
farm loss for the year if the amount determined for B in the definition “farm
loss” in this subsection were zero,
[14]
The
non-capital loss, as determined for the 2004 taxation year, was applied in full
in computing the appellant's taxable income for the 2005 taxation year. No balance of
the appellant's non-capital loss for 2004 could be carried forward to the 2006
taxation year.
[15]
Subparagraph 56(1)(a)(iv)
and paragraphs 56(1)(v), 60(n) and 110(1)(f)
of the Act are unambiguous. A review of the appellant's record showed no clear error on
the part of the Minister.
[16]
The appellant
was therefore correctly assessed in accordance with the facts and the Act, and
his appeal must be dismissed.
Signed at Ottawa, Canada, this 15th day of September
2009.
"Réal Favreau"
on this 21st day
of October 2009
Margarita
Gorbounova, Translator
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