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Citation: 2003TCC598
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Date: 20030902
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Docket: 2003-382(IT)I
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BETWEEN:
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EDWARD FRANKLIN,
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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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____________________________________________________________________
REASONS FOR JUDGMENT
Beaubier, J.
[1] This appeal pursuant to the
Informal Procedure was heard at Kamloops, British Columbia on
August 19, 2003. The Appellant was the only witness.
[2] The substance of the appeal is set
forth clearly in the Reply to the Notice of Appeal. Paragraphs 1,
2, 9 and 10 of the Reply read:
1. With
respect to the Appellant's allegations of fact in the Notice
of Appeal, he admits that the Minister of National Revenue (the
"Minister") issued the Appellant a Notification of
Confirmation dated January 21, 2003. He states that the
Notification was issued in respect of the Appellant's 2001
taxation year respecting Workers' Compensation payments of
$78,973.00 to be included in the Appellant's income under
paragraph 56(l)(v) of the Income Tax Act, R.S.C. 1985, c.1
(5th Supp.) (the "Act"), resulting in the
Appellant having to repay Old Age Security Benefits of
$5,232.27.
2. He does not
agree with the Appellant's submission in the Notice of Appeal
that Workers' Compensation payments of only $8,774.78 should
be used in determining his net income for the 2001 taxation year
for the purpose of calculating the "clawback" of his
Old Age Security benefits.
...
9. In so
assessing the Appellant, the Minister relied on the following
assumptions:
a) the
Workers' Compensation Board issued the Appellant a T5007
Information slip advising him that it paid him Workers'
Compensation benefits of $78,973.40 in the 2001 taxation year;
and
b) the
Appellant received Workers' Compensation benefits of
$78,973.40 in the 2001 taxation year.
B. ISSUE
TO BE DECIDED
10. The issue is whether
the Minister properly included Workers' Compensation benefits
of $78,973.40 in the computation of the Appellant's net
income for the 2001 taxation year for the purpose of calculating
the "clawback" of Old Age Security benefits.
[3] None of the assumptions in
paragraph 9 were refuted by the evidence.
[4] The law in this matter was set
forth clearly by Lamarre-Proulx, J. in Poulin v. The
Queen, 97-927(IT)I, [1998] T.C.J. No. 36, when she said at
paragraphs 12 to 17 inclusive:
12 For 1995, the $50,000
threshold referred to in paragraph 180.2(1)(b) of the
Act (cited above) was indexed to
$53,215. According to that paragraph, the
individual's income which is taken into account is his
"income", not his "taxable
income". Under the Act, income and taxable
income are different concepts and are governed by specific
legislative provisions. "Income" is computed
under Division B of Part I of the Act, while "taxable
income" is computed under Division C of the Act,
entitled "Computation of Taxable Income". Paragraph
110(1)(f) is in Division C of Part I of the Act.
Although the Act does not say why workers'
compensation paid is not included in computing taxable income,
one may think that this is partly so in order to take account of
the fact that an income replacement indemnity is normally
computed on the basis of the employee's income after source
deductions.
13 The same reasons would
therefore not exist for excluding workers' compensation in
computing income for the purposes of old age security benefits,
since such benefits are based on need, determined on the basis of
an income threshold, and since such compensation really is part
of the appellant's income.
14 In any event, it is the
statute as written that must be interpreted. Paragraph
56(1)(v) of the Act reads as follows:
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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,
(v) Worker's compensation -
compensation received under an employees' or
workers' compensation law of Canada or a
province in respect of an injury, a disability or
death;
(emphasis added)
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15 The concept of the receipt of
an amount and the relevant taxation year has already been
considered by the courts; I am referring, inter alia, to
Vegso v. M.N.R., 56 D.T.C. 173, M.N.R. v. Claude
Rousseau, 60
D.T.C. 1236, and the decision cited by the agent for the
respondent, Archambault v. M.N.R., 88
D.T.C. 1722. The courts have been consistent on
this point. When the legislation provides that an
amount received must be included in computing income for the
year, the amount must be included in the year it is received, not
the years for which it was paid.
16 In conclusion, the
Minister correctly computed the appellant's 1995 income by
including the $101,415 therein and correctly assessed the
appellant under Part I.2 of the Act when he determined
that the appellant should pay a tax equal to the benefits
received in 1995 under the Old Age Security Act.
17 Accordingly, the appeal is
dismissed.
[5] The Appellant pointed out that if
the amount of $78,973 consisting of arrears due in Workers'
Compensation, which he received in 2001, had been paid to him
during tax years when it was due, he would not have exceeded the
$50,000 limit so as to incur the "clawback". Nor would
he have been taxed since Workers' Compensation is not subject
to income tax.
[6] But the Income Tax Act
words deal with the amount in the year of receipt.
[7] The law has not changed since
Poulin v. The Queen.
[8] Therefore the appeal is
dismissed.
Signed at Saskatoon, Saskatchewan, this 2nd day of September
2003.
Beaubier, J.
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