Citation: 2006TCC61
Date: 20060203
Docket: 2004-3715(IT)I
BETWEEN:
FRANK A. LARKIN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Margeson J.
[1] This appeal is from an assessment of the Minister from
the 2002 taxation year, wherein the Minister included in the income of the appellant,
the amount of $10,382.40, on the basis that the income was not exempt from tax
in Canada under the Canada – UK Income Tax Treaty.
[2] The Appellant took
the position that the amount was not taxable in Canada because it was pension
income that he received from Ireland which was based upon his contributions made in Ireland while he was working
there.
[3] The Appellant
appeared in Court with an agent who indicated that he was not feeling well and
could not conduct the case properly.
[4] After hearing from both
parties the Court was of the belief that the Appellant was capable of providing
the necessary evidence in support of his position. The nature of the evidence
was straight forward and uncomplicated.
[5] In his testimony
before the Court the Appellant agreed with the presumptions contained in the
Reply to the Notice of Appeal as follows:
(a) the Appellant was a factual resident of Canada throughout the 2002 taxation year
and has been for many previous years;
(b) the Appellant received Registered Retirement
Income Fund amounts totalling $5,739.42 and Canadian pension or superannuation
amounts totalling $4,421.28, which he correctly included in computing his
total, net and taxable income for the 2002 taxation year;
(c) the Appellant is entitled to and was allowed
the maximum allowable gross non-refundable tax credit in the amount of
$1,000.00 for a Pension income amount for the 2002 taxation year;
(d) the Appellant received Old Age Contributory
Pension ("OACP") income from the Republic of
Ireland in the amount of $10,382.40 Cdn during the
2002 taxation year, and he correctly included this amount in his total and net
income for the year;
(e) the Appellant made contributions in respect of
the OACP while working in previous taxation years; and
(f) the Appellant failed to include the OACP
income in the amount of $10,382.40 Cdn in his taxable income for the 2002
taxation year.
[6] He also said that
his Irish pension was very important to him and was the largest that he
received and he could not afford to give most of it away. He did not feel that
he should be paying tax on it. He was told by his agent that it was deductible.
Argument on behalf of the
Respondent
[7] Counsel for the
Respondent said that the sole issue was whether or not the Irish Pension income
was taxable. He referred to subsection 2(1) of the Income Tax Act which
requires that all income be reported. Further section 3 requires the taxpayer
to determine the income from all places and countries. Subsection 56(1)
requires the taxpayer to include all pension income.
[8] Section 110 of the Act
allows the taxpayer to make certain deductions in computing taxable income. The
only possible basis for a deduction for this taxpayer is subparagraph 110(1)(f)(i),
"an amount exempt from income tax in Canada because of a provision
contained in a tax convention or agreement with another country that has the
force of law in Canada, ...".
[9] Subsection 248(1)
defines "superannuation or pension benefit" and would include the
amount in issue.
[10] The appropriate provisions
of the Canada-Ireland (former) Tax Treaty – Canada-Ireland (former) Income Tax
Agreement provide for the avoidance of double taxation as follows:
Article I
1. The taxes which are the subject of
this Agreement are:
(a) in Canada: the
income taxes, including the old age security tax on income, which are imposed
by the Government of Canada (hereinafter referred to as "Canadian
tax").
(b) in Ireland: the
income tax, including sur-tax, and the corporation profits tax (hereinafter
referred to as "Irish tax").
Article XI
1. Any pension or annuity derived form sources within Canada by an individual who is a resident
of Ireland shall be exempt from
Canadian tax.
2. Any pension or annuity derived from sources within Ireland by an
individual who is a resident of Canada shall be exempt from Irish tax.
[11] Under the provisions
of section 110 of the Income Tax Act we have an amount that is exempt in
Ireland. There is no other
provision that would be of assistance to the Appellant.
[12] The appeal should be
dismissed.
Argument on behalf of the Appellant
[13] At trial, the
Appellant requested that his argument be postponed until his agent was feeling
better and able to present it in writing. The Court agreed to allow the
Appellant's argument to be given in writing by December 17, 2005 and allowed
the Respondent to Reply, if desired within 10 days.
[14] By way of a letter
received from the Appellant on December 13, 2005, he indicated that his agent
was still ill and that the Appellant could not continue to rely upon his
representation and that he would no longer be representing the Appellant.
[15] The Appellant merely
indicated to the Court what he had said while testifying and further that he
felt that he was entitled to keep his money untaxed due to the fact that it
dates back many years to his life in Ireland and that he should be able to use
his pension to ease the responsibility of his old age.
[16] The Respondent did
not wish to make further arguments.
Analysis and Decision
[17] The Court can
understand the Appellant's concern about having this benefit taxed in Canada and he is not alone in
that regard. However, it is clear to the Court that the amount in issue is
taxable under the Income Tax Act, there is no provision that would allow
the amount to be exempt from taxation in Canada.
[18] The provisions of
the Canada Ireland Agreement do not operate to allow the amount to be exempt
from taxation in the hands of the Appellant during the year in issue.
[19] The appeal is
dismissed and the Minister's assessment is confirmed.
Signed at New Glasgow, Nova Scotia, this 3rd
day of February, 2006.
“T.E. Margeson”
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