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Citation: 2006TCC237
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Date: 20060413
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Docket: 2005-3134(IT)I
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JACQUES PELLETIER,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Lamarre J.
[1] This is an appeal from a reassessment for the 2003
taxation year.
[2] The issue is whether a sum withdrawn from a Registered
Retirement Savings Plan (“RRSP”) must be included in the calculation of the
Appellant’s income, although, according to him, the corresponding sum was not
deducted in the calculation of his income for the prior years. Sections 56 and
146 of the Income Tax Act (the “Act”) are applicable.
[3] In his reassessment, the Minister of National Revenue
(the “Minister”) relied on the following facts described in paragraph 6 of his
Reply to the Notice of Appeal (the “Reply”):
(a)
The
Minister, through the information slip matching program, discovered a T4RSP
form containing the following information:
(i)
issuer:
Fonds de Solidarité des travailleurs du Québec
(ii)
beneficiary:
Appellant
(iii)
contract:
AI242951013
(iv)
withdrawal
$5,851
(v)
federal
tax withheld $585.11
(b)
The
Minister therefore added, by way of a reassessment for the 2003 taxation year,
the sum of $5,851 as income from an RRSP to the calculation of the Appellant’s
total income, and added $585.11 in federal tax withheld to the calculation of
the reimbursement or balance owing;
(c)
At
the objection stage, the Appellant indicated that the withdrawal matched
contributions to an RRSP that were not deducted in the calculation of his
income during the period from 1998 to 2003 because they exceeded the RRSP
deduction limit for each of those years;
(d)
The
Minister is of the opinion that a withdrawal or the reimbursement of all or
part of the non-deductible premiums paid into an RRSP is taxable in the hands
of the beneficiary;
(e)
The
Appellant was informed annually since 1999, by notice of assessment, that he
was not entitled to a deduction for RRSP contributions in the calculation of
his income;
(f)
According
to the Ministry’s records, no contribution to an RRSP by the Appellant was
registered for the taxation years from 1999 to 2003.
[4] The Notice of Appeal contains the following facts:
—
From
1998 until 2003, I contributed a total of $7098.00 to the fonds de Solidarité
des travailleurs du Québec without being entitled to the deduction for
registered retirement savings plans for the above-mentioned years. The reason
for this is that since 1998 my pension adjustment amount has been at its
maximum, i.e. $0.00 in deductions.
—
Income
tax paid on moneys ($7,098.00), for contributions paid into the plan and taxes
paid on the withdrawal from the plan without having obtained the deduction on
line 208 of my tax declaration since 1998.
—
Moreover,
the fund’s share depreciated and I took a loss of $1,500.00.
—
Also,
the sum of $5,851.00 withdrawn was used to reimburse overdue taxes.
[5] The facts of the Reply were admitted by the Appellant.
With regard to the Notice of Appeal, certain documents have been produced by
the Appellant. The Respondent also produced income tax returns for the previous
years showing the surplus contributions were not reported and that for at least
one year a significant withdrawal and equivalent deduction had been claimed. In
any event, the facts from 2003 are the ones that are matter.
[6] During the hearing, the Appellant believed that he
contributed to his RRSP during 2003. But he later confirmed in writing to
counsel for the Respondent that, contrary to his recollection, he stopped
contributing to his RRSP in December 2002. He did indeed make a withdrawal of
$5,851.14 from his RRSP account during 2003.
[7] Counsel for the Respondent relied on the following
decisions: Wilkinson v. The Queen, [2004] 1 C.T.C. 2201 (T.C.C.); St‑Hilaire v. The
Queen, [1997] 3 C.T.C. 2711 (T.C.C.); Carroll v. The Queen,
84 DTC 1616 (T.C.C.); and Howlett v. The Queen, 85 DTC 97
(T.C.C.). She indicates that the legislative provisions applicable in this case
do not allow overcontributions to be deducted except in the circumstances
specified in subsection 146(8.2) of the Act. Moreover, she indicates that the
overcontributions may be subject to a Tax in respect of overcontributions to
deferred income plans under Part X.1 of the Act. This shows the
legislator’s intention to dissuade against them.
Analysis and conclusion
[8] Paragraph 56(1)(h), the
definition of “benefit” in subsection 146(1), subsection 146(8) and
paragraph 146(8.2)(c) of the Act read as follows:
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,
...
(h) Registered
retirement savings plan, etc. — amounts required by section 146 in respect
of a registered retirement savings plan or a registered retirement income fund
to be included in computing the taxpayer's income for the year;
146(1) In this section:
"benefit"
includes any amount received out of or under a retirement savings plan other
than:
...
146(8) Taxable
benefits — There shall be included in computing a taxpayer's income for
a taxation year the total of all amounts received by the taxpayer in the year
as benefits out of or under registered retirement savings plans, other than
excluded withdrawals as defined in subsection 146.01(1) or 146.02(1) of the
taxpayer and amounts that are included under paragraph (12)(b) in
computing the taxpayer's income.
146(8.2) Amount deductible - Where:
…
(c) the payment is received by the taxpayer
or the taxpayer's spouse or common-law partner in a particular taxation year
that is
(i)
the year in which the
premiums were paid by the taxpayer,
(ii)
the year in which a
notice of assessment for the taxation year referred to in subparagraph (i) was
sent to the taxpayer, or
(iii)
the year immediately
following the year referred to in subparagraph (i) or (ii);
[9] I quote a passage
from the decision by Judge Cardin in Carroll, supra,
at page 1617:
For these reasons, I must conclude that the
legislators did intend that any and all amounts received or withdrawn from a
superannuation or pension plan, including Registered Retirement Savings Plans,
are taxable whether or not premiums paid into the plan or fund had been
previously deducted from the appellant's income. ...
[10] The case law is
consistant. When a sum is received or withdrawn from an RRSP, it is deemed a
benefit. According to
paragraph 56(1)(h) and subsection 146(8) of the Act, a benefit
from an RRSP must be included in the calculation of income.
[11] I cite the relevant
passages of the Department of Finance Technical Notes for the Income Tax Act,
1st edition, Thomson Carswell, at pages 1205 and 1206
with respect to subsection 146(8.2) of the Act:
146(8.2)
May 1994 TN::
Subsection 146(8.2) is a relieving measure which provides a deduction for
RRSP or RRIF distributions included in computing an individual’s income that
are in respect of certain non-deducted RRSP premiums paid by the individual to
the individual’s own RRSP or to a spousal RRSP.
...
June 1992, TN:
Subsection 146(8.2) is a relieving measure which provides a deduction for
RRSP or RRIF distributions included in computing an individual’s income that
are in respect of non-deducted RRSP premiums paid by the individual to his or
her own RRSP or to a spousal RRSP. Subject to an anti-avoidance rule in
paragraphs 146(8.2)(e) and (f), the subsection allows non
deducted RRSP premiums (typically RRSP overcontributions) to be withdrawn on a
tax-free basis within a specified time-frame.
[12] Subsection 146(8.2)
of the Act is a relieving provision. But only in certain circumstances set
forth in subsection 146(8.2)
can the taxpayer claim the deduction of excess premiums.
[13] The Appellant did
not demonstrate that he could take advantage of one of the circumstances set
out in that subsection. Counsel for the Respondent would have accepted to do it
under sub-paragraph 146(8)(c)(i) of the Act had certain premiums
that were overpaid been paid in the year of the withdrawal, i.e. 2003. This was
not the case. All of the excess premiums were paid in the years before
receiving the benefit. I see no other circumstances that could be relied on by
the Appellant in relation with subsection 146(8) of the Act.
[14] The appeal must be
dismissed.
Signed at Ottawa, this 13th day of April
2006.
Lamarre
Proulx J.
on this 29th day of October 2006.
GibsonBoyd,Translator
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