Citation: 2007TCC649
Date: 20071026
Docket: 2006-2931(IT)I
DOCKET:
FIDUCIE CHANTALE NAUD,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[official english translation]
REASONS FOR JUDGMENT
Jorré J.
Facts
[1] Mme Chantale Naud and M. Daniel
Bourret had two children: Olivier, born on March 5, 1989, and Marylou, born on
December 10, 1990.
[2] The parents were separated in 1995.
[3] Mr. Bourret died from a highway accident
on August 14, 2001. The children were not in the vehicle.
[4] The Société d’assurance automobile du
Québec (the SAAQ) paid a lump sum indemnity to the minor children.
[5] Ms. Naud (the Appellant) created a trust
to administer amounts received from the SAAQ.
[6] The investments made under the trust using
the indemnities paid to the children by the SAAQ generated the following
interest revenue: $5,087 in 2002 and $8,035 in 2003.
[7] As a result of Daniel Bourret’s death, the
Naud family stopped receiving the support that he paid for the children. This
created a difficult situation.
[8] The children were seriously affected by
their father’s death.
Issue
[9] Is the interest of $5,087 and
$8,035 paid in 2002 and 2003 excluded from the computation of the
Appellant’s interest under paragraphs 81(1)(g).1) and g.2) of the
Income Tax Act (the ITA) Paragraph 81(1)(g.1) excludes:
. . . the income for the year from any property
acquired by or on behalf of a person as an award of, or pursuant to an action
for, damages in respect of physical or mental injury to that person, or from
any property substituted therefor and any taxable capital gain for the year
from the disposition of any such property,…
Analysis
[10] For the purposes of the analysis, I shall
go on the assumption that the children suffered psychologically from their
father’s death. What did the SAAQ pay the indemnities for? Were they paid as
compensation for psychological damage?
[11] The Automobile Insurance Act of
Quebec (R.S.Q. c. A-25) provides, at section 66 of chapter III, for death
indemnities for dependants of the victim of the (M. Bourret). This
includes minor children. Section 68 provides for an additional indemnity for
minor children where the victim is without a spouse at the time of death.
68. If the victim has no spouse on the date of his
death but has a dependant as defined in paragraph 3 or 4 of the definition of
the word “dependant” in section 2, the dependant is entitled, in addition to an
indemnity under section 66 and, as the case may be, in addition to an indemnity
under section 67, to a lump sum indemnity in an amount equal to the indemnity
provided for by section 63. If there is more than one dependant, the indemnity
shall be divided equally among them.
[12] These indemnities are one-time payments
and are always payable, whether the dependants suffered psychological damage or
not.
[13] Therefore, the indemnities were not paid as
compensation for physical or psychological damages and paragraph 81(1)g.1)
of the ITA cannot apply.
Internal Interpretation by
Revenu Québec
[14] I studied the Revenu Québec’s internal
interpretation (file 02‑0104964, July 2002), which the Appellant
brought to my attention. This interpretation analyses the application of
sections 494 and 495 of the Taxation Act (R.S.Q., c. I‑3) to
fact that largely resemble those of the case at issue. Sections 494 and 495
are identical to paragraphs 81(1)g.1) and g.2) of the ITA.
[15] Revenu Québec came to the following
interpretation:
[translation]
. . . in its Rules of Application, the second
paragraph of section 6 of this Act sets out the presumption that the person
entitled to a death benefit is presumed to be a victim. In this context, the
Minister is of the opinion that, due to the loss of the mother, your two
dependant children are considered as having suffered mental injury within the
meaning of section 494 of the Act and the death benefit that they received
should not be included in the computation of their income.
[16] I do not share this reasoning for the
following reasons.
[17] Section 6 of the Automobile Insurance
Act of Quebec states,
Every person who suffers
bodily injury in an accident is a victim.
Unless the context indicates
otherwise, every person who is entitled to a death benefit where the death of
the victim results from the accident is also presumed to be a victim for the
purposes of this division.
[My emphasis.]
Section 6 is found in section II entitled
“General Rules” of chapter I.
[18] Sections 66 and 68 are found in chapter
III. Subsection 2 of section 6 is not applicable to these two sections.
[19] It is also worth looking at the structure
of the Automobile Insurance Act of Quebec. The structure of this Act is,
in part, the following:
Title I Definitions
. . .
Title II Compensation for Bodily Injury
Chapter I General Rules
Section I Definitions
and Interpretation
. . .
Section II General
Rules
. . .
[Section 6]
. . .
Chapter II Income
Replacement Indemnity and Other Indemnities
. . .
Chapter III Death Benefit
. . .
[Section 66]
. . .
[Section 68]
. . .
Chapter IV Non-pecuniary
damage indemnity
. . .
Lump Sum Indemnity.
73. For loss of enjoyment of life, pain, mental suffering
and other consequences of the temporary or permanent injuries or functional or
cosmetic sequelae that a victim may suffer following an accident, a victim is
entitled, to the extent determined by regulation, to a lump sum indemnity not
exceeding $175 000 for non-pecuniary damage.
. . .
Chapter V Reimbursement of Certain
Expenses and Rehabilitation
. . .
[My Emphasis.]
[20] An analysis of the Automobile Insurance
Act of Quebec shows that it is mainly geared towards compensation of
victims for their losses of income and for certain costs incurred. It is also
seeks to assist them in their readaptation.
[21] Chapter III, Death Benefit, deals with the
financial impact of the death on the conjoint(e) and dependants, as the amount
payable under sections 63 or 66 varies corollary to the beneficiary’s age. A
victim having suffered psychologically is indemnified under section 73 of
chapter IV.
[22] I Must conclude that the SAAQ did not pay
the indemnities in question as compensation for mental injury.
Conclusion
[23] In conclusion, I must, regretfully dismiss
the appeal.
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