Citation: 2008TCC408
Date: 20080707
Docket: 2008-387(OAS)
BETWEEN:
ANDRÉ BOUCHARD,
Appellant,
and
THE MINISTER OF HUMAN RESOURCES
AND SOCIAL DEVELOPMENT,
Respondent.
[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Lamarre Proulx J.
[1] This is an appeal under the Old Age Security
Act (the Act).
[2] The issue is whether the Minister of Human
Resources and Social Development (the Minister) properly took account
of a QPP disability pension amount of $12,401.16 that the Appellant received from
the Régie des rentes du Québec during the 2006 taxation year.
[3] On May 15, 2006, the Appellant filed a Statement of Estimated Income after Retirement or Reduction in Pension Income: Year 2006 (Statement of Estimated Income)
because his employment insurance benefits had ceased on March 5, 2005.
The statement was received by the Old Age Security Directorate on May 17, 2006
(Exhibit I‑1).
[4] The monthly
guaranteed income supplement is addressed in Part II of the Act, sections 10
to 18.
[5] Subsection 14(4) of the Act reads as
follows:
Additional statement where loss of pension income in
current payment period
(4) Where in a current
payment period 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 payment period 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, file a statement of the person's
estimated income for the calendar year in which the loss is suffered, other
than pension income received by that person in that part of that calendar year
that is before the month in which the loss is suffered, in which case the
person's income for the base calendar year shall be calculated as the total of
(a) the person's income for that calendar
year, calculated as though the person had no pension income for that calendar
year, and
(b) 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.
[6] Under this
provision, the applicant may make a Statement of Estimated Income after the
termination or reduction of income from his pension plan. Here, the
reduction of income stems from the fact that the Appellant ceased to be paid employment
insurance benefits as of March 2005.
[7] The provision
refers to a "loss
of income due to termination or reduction of pension income."
[8] Section 14 of
the Old Age Security Regulations (the Regulations) describes what is included
in the definition of "pension income". I quote paragraphs (a)
and (c) through (g):
14. For the purposes of section 14 of the
Act, "pension income" means the aggregate of amounts received as
(a) annuity 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;
. . .
[9] Paragraph (c)
refers to employment insurance benefits. As we have seen, the Appellant's Statement
concerning the reduced pension income was made due to the cessation of his
employment insurance benefits.
[10] In section C of the Statement of Estimated Income,
which bears the heading "Information about your pension and/or annuity
income", the Appellant states that he received a monthly disability
benefit of $3,000 from a private insurance plan starting in May 2005. However,
in a handwritten annotation, he states that this category of benefits is
[TRANSLATION] "non-taxable", and he does not include any amount in
his income. It should be noted that the Appellant nonetheless sets out the
monthly amount of the disability benefit.
[11] The dispute in the case at bar is not about the
fact that these disability benefits from a private insurance plan were not
included. However, at my request, counsel for the Respondent made
representations to me concerning this subject, in view of paragraph 14(d)
of the Regulations, supra.
[12] Counsel for the
Respondent agrees that the Appellant did not have to include these amounts in
the aforementioned Statement of Estimated Income, because the premiums under
the disability plan in question were paid entirely by him. He submits
that, under these circumstances,
benefits received pursuant to a private insurance plan need not be included in
computing income, as stated in paragraph 6(1)(f) of the Income Tax Act
(the ITA).
[13] Paragraph 6(1)(f) of the ITA reads as
follows:
6. (1) There shall be included in computing the income of a taxpayer
for a taxation year as income from an office or employment such of the
following amounts as are applicable:
. . .
(f) Employment insurance benefits — the total of all amounts received by the taxpayer in the year that
were payable to the taxpayer on a periodic basis in respect of the loss of all
or any part of the taxpayer's income from an office or employment, pursuant to
(i) a
sickness or accident insurance plan,
(ii) a
disability insurance plan, or
(iii) an
income maintenance insurance plan;
to or
under which the taxpayer’s employer has made a contribution
.
. .
[14] This paragraph
provides that amounts payable under a disability insurance plan to the taxpayer
on a periodic basis, in respect of loss of income, must be included in
computing the taxpayer's income if the disability insurance plan was one to
which the employer contributed. According to counsel—and I am not casting doubt
on his assertion—if the disability plan is a plan to which the employer alone contributed,
the benefits should not be included in computing the income. The apparent logic
behind this assertion is that the premiums paid by an individual would not be
deductible by the employee in computing his employment income if the insurance
plan were one to which the employee alone contributed. If the employer made
contributions, the employee could deduct the premiums paid and the benefits
would be taxable.
[15] Thus, in the
submission of counsel for the Respondent, since the disability benefits were
from a private insurance plan to which the Appellant alone contributed, the
Appellant did not have to include that income in his Statement of Estimated
Income. In my view, this means that paragraph 14(d) of the
Regulations would apply only where the disability benefits are paid pursuant to
a private plan to which the employer has contributed.
[16] As I have stated,
this question of including or not including amounts in the computation of income
from a pension plan within the meaning of section 14 of the Act and
section 14 of the Regulations is not in issue. What is in issue is the
retroactive payment of a QPP disability pension by the Régie des rentes du
Québec and the reimbursement of benefits paid by the private insurer, based on
the grounds and facts that I shall explain in the paragraphs below.
[17] According to a T4A – Statement of Quebec
Pension Plan Benefits, issued for the 2006 taxation year, the Appellant, in the
course of that year, received a disability pension of $16,441.97, consisting of
$12,401.16 for the 2006 year and $4,040.80 for the 2005 year. The Appellant
included this amount in computing his income for the 2006 year and was assessed
on that basis. The amounts are included in the computation of income in
accordance with paragraph 56(1)(a) of the ITA.
[18] I refer to a letter, dated
July 10, 2006, from the Régie des rentes du Québec (Exhibit A‑1):
[TRANSLATION]
Subject: Consent to the assignment of the
retroactive payment of a disability pension under the Québec Pension Plan
Dear Sir:
The insurer that is currently paying you
disability pension benefits has provided the Régie des rentes du Québec with
the form you signed authorizing the Régie to remit retroactive disability pension benefits directly to
the insurer.
The form authorizes the Régie to
reimburse the administrator of your disability insurance plan for amounts paid
to you under that plan until you receive your disability pension from the
Régie, if you are entitled to one. You also authorized the
two organizations to share information regarding the pension.
[19] The letter says that the Appellant, as a QPP
recipient, authorized the Régie des rentes du Québec to reimburse the insurance
company for the amounts that it had paid him, pending payment of his QPP
disability pension.
[20] Following the
hearing, the Appellant provided the Court with the documents that he and the
private insurer exchanged. Those documents clearly show that all the
authorizations necessary to effect the reimbursement and comply with the terms
and conditions thereof were signed by the Appellant on May 19, 2006.
[21] On October 19, 2006, the Appellant received
the following letter from the Régie des rentes du Québec:
[TRANSLATION]
Subject: Application for disability pension
Dear Sir:
This is to inform you that the Régie des rentes du Québec has
accepted your application for a disability pension. Your pension begins in
September 2005 and the amount of your pension is $1,010.20 per month.
However, we will send you a more detailed final notice as soon as
your insurance company provides us with the information that will enable us to
complete your file and release the payments to you.
[22] On October 31, 2006,
the Appellant received another letter from the Régie des rentes du Québec along
with a cheque covering the retroactive amount that he was owed. The amount of $14,142.80,
out of a total of $14,375.10, was remitted to the private insurer.
[23] The Appellant says
that he signed the QPP disability benefit application and the reimbursement
authorization under duress. He says that he only wanted his insurance company's
disability benefits, but that his
insurance company forced him to apply to the Régie des rentes du Québec for a
disability pension and sign the form. He is therefore asking that I not
take the actual income into account for the 2006 year.
[24] Counsel for the
Respondent cited paragraph 56(1)(a) of the Act, which reads:
Section 56: Amounts to be
included in income for year
(1) 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,
(i) a superannuation or pension benefit including, without limiting
the generality of the foregoing,
. . .
(B) the amount of any benefit under the Canada
Pension Plan or a provincial pension plan as defined in section 3 of that
Act,
[25] Counsel referred to
paragraphs 7, 8, 9 and 10 of the decision in Abdul‑Rahman v.
Canada (Minister of Human Resources Development), [2005] T.C.J. No. 115 (QL):
[7] That provision [paragraph
56(1)(a) of the Income Tax Act] stipulates that an amount of any benefit
received by a taxpayer under a provincial plan as defined in section 3 of the Canada
Pension Plan must be included in the taxpayer's income.
[8] Section 3 of the Canada
Pension Plan reads as follows:
APPLICATION AND OPERATION OF ACT
3(1) In this Act,
"provincial pension plan" means
a plan of old age pensions and supplementary benefits for the establishment and
operation of which provision has been made as described in paragraph (a)
or (b) of the definition of "province providing a comprehensive
pension plan" under a law of a province providing a comprehensive pension
plan;
"province providing a comprehensive
pension plan" means a province prescribed by a regulation made on the
recommendation of the Minister of Human Resources Development for the purposes
of this Act as a province
(a)
the government of which has, on or before May 3, 1965, signified
the intention of that province to provide for the establishment and operation
in that province, in lieu of the operation therein of this Act, of a plan of
old age pensions and supplementary benefits providing for the making of
contributions thereunder commencing with the year 1966 and providing for the
payment of benefits thereunder comparable to those provided by this Act, or
...
[9] The Prescribed Province
Pension Regulations read as follows:
1. These Regulations may be cited as the Prescribed
Province Pension Regulations.
2. The Province of Quebec is hereby
prescribed, for the purposes of the Canada Pension Plan, as a province
the government of which has, before the 30th day after April 3, 1965,
signified the intention of such province to provide for the establishment and operation
in that province, in lieu of the operation therein of the Canada Pension
Plan, of a plan of old age pensions and supplementary benefits providing
for the making of contributions thereunder, commencing with the year 1966 and
providing for the payment of benefits thereunder comparable to those provided
by the Canada Pension Plan.
[10] Section 105 of the Québec
Pension Plan reads as follows:
QUALIFICATIONS FOR BENEFIT
105 The Board shall,
subject to the rules laid down in this Act, pay the following pensions and
benefits:
(a) a retirement pension to a
qualified contributor,
[…]
[26] Counsel then
referred to paragraph 105(b) of the Act respecting the Québec
Pension Plan, which provides for the payment of a disability benefit to a qualified
disabled contributor. It reads:
(b) a disability pension to a qualified disabled
contributor;
Analysis and conclusion
[27] Under subsection 12(1)
of the Act, the amount of the supplement that can be paid to a pensioner for a
month is computed on the basis of the pensioner's monthly base income. "Monthly base
income" is defined in section 12 as well: it is based on the income
for the base calendar year. Under section 2 of the Act, "income"
is computed in accordance with the Income Tax Act, subject to certain
deductions contained in the Act. Thus,
according to section 12 of the Act, the amount of the supplement
payable to a pensioner is based on the income determined in accordance with the
ITA.
[28] Under subsection 14(4)
of the Act, a recipient may choose to apply for the guaranteed income
supplement based on estimated income (as opposed to actual income) where
there is a reduction of pension income in the course of a year. This is
permitted in order to meet the emergency needs of pensioners, but this
provision permitting the use of estimated income does not set aside the
provisions stipulating that the monthly guaranteed income supplement is
computed on the basis of the actual income.
[29] In the event of an
overpayment or underpayment, section 18 of the Act provides for the
necessary adjustments. The section reads:
Adjustment of payment of supplements
18. Where it is determined that the income for a base calendar year (in this
section referred to as the “actual income”) of an applicant for a supplement does
not accord with the income of the applicant (in this section referred to as the
"shown income") calculated on the basis of a statement or an estimate
made under section 14, the following adjustments shall be made:
(a) if the actual income exceeds
the shown income, any amount by which the supplement paid to the applicant for
months in the payment period exceeds the supplement that would have been paid
to the applicant for those months if the shown income had been equal to the
actual income shall be deducted and retained out of any subsequent payments of
supplement or pension made to the applicant, in any manner that may be
prescribed; and
(b) if the shown
income exceeds the actual income, there shall be paid to the applicant any
amount by which the supplement that would have been paid to the applicant for
months in the payment period if the actual income had been equal to the shown
income exceeds the supplement paid to the applicant for those months.
[30] The provision states
that adjustments must be made where the income of the supplement applicant for
a base calendar year does not accord with the estimated income.
[31] As explained to the Appellant
at the hearing, and as he understood at that time, this Court does not have
jurisdiction to rule on his allegation that he signed the QPP disability
pension application documents and the reimbursement authorization under duress exerted
by the private insurer.
[32] This Court will
consider the payment of QPP disability benefits to the Appellant as of September
2005. It is on the basis of
the authorization signed by the Appellant, in his capacity as the owner of
these benefits, that the Régie des rentes du Québec reimbursed the private
insurer for the disability insurance benefits that the private insurer had
paid. The Appellant participated, as recipient and owner of the disability
pension, in the reimbursement to the insurance company of the interim
disability benefits he had received. Consequently, the benefits received from
the Régie des rentes du Québec had to be included in computing the Appellant's
income for the year 2006 under paragraph 56(1)(a) of the
Income Tax Act. And the Appellant did, in fact, include that amount. With
respect to the inclusion of amounts in a recipient's income, see this Court's
decision in Tessier v. Canada, [2005] T.C.J. No. 502 (QL), affirmed
by the Federal Court of Appeal, [2007] F.C.J. No. 544 (QL).
[33] According to the
Reply to the Notice of Appeal, the Minister chose the year 2005 as the basis
for computing the Appellant's allowance from July 2006 to June 2007
because it worked to the Appellant's advantage, i.e., his 2005 income was lower
than his 2006 income.
[34] As stated above, the monthly guaranteed
income supplement is computed on the basis of one’s income, determined in
accordance with the Income Tax Act. QPP pensions are included in
computing the Appellant's income under paragraph 56(1)(a) of the
ITA. Therefore, having analyzed the facts and the law in the instant case,
I am of the opinion that the Minister's decision was well‑founded in
fact and in law and that the appeal must be dismissed.
[35] Subsection 37(4)
of the Act pertains to the discretion of the Minister of Social Development to
remit all or any portion of a benefit overpayment. It reads:
(4) Notwithstanding subsections (1), (2)
and (3), where a person has received or obtained a benefit payment to which
that person is not entitled or a benefit payment in excess of the amount of the
benefit payment to which that person is entitled and the Minister is satisfied
that
(a) the amount or excess of the
benefit payment cannot be collected within the reasonably foreseeable future,
(b) the administrative costs of
collecting the amount or excess of the benefit payment are likely to equal or
exceed the amount to be collected,
(c) repayment of the amount or
excess of the benefit payment would cause undue hardship to the debtor, or
(d) the amount or excess of the
benefit payment is the result of erroneous advice or administrative error in
the administration of this Act,
the Minister may, unless that person has
been convicted of an offence under any provision of this Act or of the Criminal
Code in connection with the obtaining of the benefit payment, remit all or
any portion of the amount or excess of the benefit payment.
[36] I should note, for
the purposes of this subsection, that when the Régie des rentes du Québec
notified the Appellant that his disability pension had been accepted, several
months had elapsed since he had made his Statement of Estimated Income.
Signed at Ottawa, Canada, this
7th day of July 2008.
"Louise Lamarre Proulx"
Translation certified true
this 22nd day of September 2008
Stefan Winfield, Reviser
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