Citation: 2005TCC677
Date: 20051019
Docket: 2005-2154(IT)I
BETWEEN:
JACQUES ROSAIRE TESSIER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Lamarre J.
[1] The Appellant is appealing from an assessment by the Minister of National Revenue ("the Minister") dated September 21, 2004. The assessment pertains to his 2003 taxation year, and in it, the Minister determined that the Appellant's taxable income was $30,999 (see Exhibit A-1, page 3).
[2] This taxable income is the sum of two amounts: $15,740 from a registered retirement savings plan (RRSP) (see Exhibit A-1, page 11) plus $15,259 consisting of amounts paid by the Régie des rentes du Québec ("the QPP payments") during the year 2003 based on the "Relevé 2" form issued by the Ministère du Revenu du Québec (see Exhibit A-1, page 10).
[3] The Appellant objects to the inclusion of this second amount of $15,259 in his income for the year 2003. He submits that the Quebecgovernment withheld $7,343 from this amount of $15,259 in repayment of social assistance benefits that he had received, and that the actual amount of QPP payments that he received is equal to the $7,916 difference.
[4] Based on the Relevé 2 issued by the Ministère du Revenu du Québec (Exhibit A-1, page 10), the details of the amount of $15,259 are as follows:
$ 8,779.20 attributable to the year 2003
$ 6,480.72 attributable to the year 2002, and received in 2003
$15,259.92 in total
[5] The evidence reveals that, in a letter to the Appellant dated April 17, 2003, the RRQ agreed to pay the Appellant a disability pension retroactive to April 2002. The letter stated that a cheque was being enclosed for the retroactive amount due to the Appellant (see Exhibit A-1, page 13). According to the explanation of payment attached to the letter of April 17, 2003, the amount to be paid to the Appellant was calculated as follows: for the year 2002, the Appellant was entitled to a monthly pension of $720.08 for nine months (April to December 2002), totalling $6,480.72; and for the year 2003, the Appellant was entitled to a monthly pension of $731.60, which means that, on April 17, 2003, the date on which the Appellant was notified of his right to a disability pension, the RRQ acknowledged that it owed the Appellant $2,926.40, i.e. a monthly pension of $731.60 for four months (January to April 2003). The total at the end of April 2003 was therefore $9,407.12.
[6] Since the Appellant had made a disability pension application in 2001, he received social assistance benefits while waiting to find out if he was eligible for the disability pension. However, he had agreed to reimburse these benefits to the Ministère de la Solidarité sociale out of the disability pension that he would eventually receive.
[7] Hence, upon issuing a disability cheque to the Appellant on April 23, 2003, the RRQ withheld $7,275.11 from the total pension of $9,407.12 that was due at that date. This left the Appellant with a cheque for the difference of $2,132.01 (see Exhibit A-1, page 12).
[8] It is this amount of $7,275.11 (the Appellant had referred to an amount of $7,343 in his Notice of Appeal but acknowledges that the correct amount is $7,275.11) that the Appellant refuses to have included in his income, because he says that he did not receive this amount in 2003 as it had already been included in his income.
[9] Based on the documents that the Appellant tendered in evidence, it appears that he received $7,153 in social assistance benefits (emergency financial assistance) in 2002. This amount was included on the Appellant's provincial income tax return for 2002, and he was allowed back a $1,096 deduction (one can assume that the Appellant reimbursed $1,096 worth of social assistance in 2002). This brought his taxable income on his 2002 provincial return to $25,146 (see Exhibit A-1, page 15). At the federal level, social assistance payments must also be included in income by virtue of paragraph 56(1)(u) of the Income Tax Act ("the Act"). They are then fully deducted in computing taxable income (whether the Appellant repays the benefits or not) under paragraph 110(1)(f) of the Act. This explains why, in 2002, the Appellant's net federal income is $25,146 (including $7,153 received as emergency financial assistance, from which the $1,096 repaid was already subtracted, based on Exhibit A-1, page 15) and why an additional deduction of $6,057 was allowed ($7,153 minus $1,096), resulting in taxable income of $19,089 in 2002 (see Exhibit A-1, page 14). Thus, it can be seen that the $7,153 in social assistance received by the Appellant in 2002 was not included in computing the Appellant's taxable income for that year.
[10] In 2003, the Appellant received $3,066 in emergency financial assistance, which was included in his income on his provincial tax return (see Exhibit A-1, page 18) and he was allowed a $7,343 deduction following the repayment that he had made that year and which includes the $7,275.11 mentioned above. Thus, the Appellant's net taxable income for provincial purposes is $26,722 for 2003 (see Exhibit A-1, page 18). This is explained by the fact that in 2002, the Appellant had had to include the social assistance amount of $7,153 and only benefited from a deduction of $1,096, which corresponds to what he probably repaid in 2002. In 2003, since he had had to reimburse the amount of $7,275.11, he was allowed this deduction because he had not been allowed it in a previous year (actually, the provincial deduction that was allowed at the provincial level was $7,343).
[11] At the federal level, the Appellant's taxable income in 2003 was $30,999, which does not include the $3,066 in social assistance received in 2003, and does not include a $7,343 deduction because the social assistance was not included in the Appellant's taxable income in 2002, as it had been at the provincial level.
[12] The $30,999 includes $15,740 that the Appellant received from his RRSP (the Appellant does not contest this amount) and $15,259 which corresponds to the total QPP disability pension payments in 2003 (see Exhibit A-1, page 10), including the retroactive payment for 2002.
[13] It is true that, in repayment of the social assistance that the Appellant received temporarily as he awaited the award of his disability pension, the Régie des rentes du Québec withheld $7,275 from the total amount that it was required to pay the Appellant for 2003. Whether the Appellant received the full amount of $15,259 and wrote out a cheque to the Quebec government in repayment of the social assistance that he received temporarily, or whether the Quebecgovernment set off the amount from the disability pension that it owed the Appellant, the result is the same. The set-off procedure does not change the fact that the Appellant received $15,259 in disability payments in 2003, and that this amount is taxable under paragraph 56(1)(d) of the Act. Since the Appellant never included the social assistance benefits that he had to repay in his federal taxable income, this amount cannot serve to reduce the amount of the disability pension, which is taxable in its entirety.
[14] I therefore find that the Minister correctly calculated the Appellant's taxable income as $30,999 for 2003, and that the assessment under appeal is well-founded.
[15] The appeal is dismissed.
Signed at Ottawa, Canada, this 19th day of October 2005.
"Lucie Lamarre"
Translation certified true
on this 6th day of March, 2006.
Garth McLeod, Translator
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