Date: 20010727
Docket: 2000-2785-IT-I
BETWEEN:
PAULINE ANN KENNEDY,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
For the Appellant: The Appellant herself
Counsel for the Respondent: Paul Plourde
___________________________________________________________________
Reasons for Judgment
(Delivered orally from the Bench on June 21,
2001, at Ottawa, Canada)
Bowie J.
[1]
This appeal from an assessment under the Income Tax Act
for the 1998 taxation year was heard pursuant to the informal
procedure. The only point in issue is whether the Appellant is
entitled to the tax credit under subsection 118(3) of the
Income Tax Act, which establishes what is sometimes called
the pension credit. That subsection reads:
118(3) For the purpose of computing
the tax payable under this Part by an individual for a taxation
year, there may be deducted an amount determined by the
formula
A x B
where
A is the appropriate percentage for the year; and
B is the lesser of $1,000 and
(a)
where the individual has attained the age of 65 years before the
end of the year, the pension income received by the individual in
the year, and
(b)
where the individual has not attained the age of 65 years before
the end of the year, the qualified pension income received by the
individual in the year.
"Pension income" and "qualified pension
income" are both defined terms. I shall return presently to
the meaning of those.
[2] I
should, perhaps, point out that the appropriate percentage for
the year in question was 17, with the result that the credit at
issue in this case is $170, inasmuch as the Appellant's
pension income exceeded $1,000.
[3]
The facts of the case are not in dispute. Ms. Kennedy worked for
some 16 years as a federal public servant. At the end of
that time, she was one of a number of public servants whose
employment terminated as part of a downsizing of the public
service. These individuals were given the option of leaving their
contributions in the Public Service Superannuation Fund and
receiving a deferred benefit, or if they preferred, taking their
then current entitlements and rolling them over into a Registered
Retirement Savings Plan (RRSP).
[4]
The Appellant chose the latter option and her funds were then
subsequently transferred to two Registered Retirement Income
Funds (RRIFs) from which she received annuity payments totalling
$3,329, in 1998.
[5]
This brings me back to the definitions of "pension
income" and "qualified pension income". For
present purposes, it is sufficient to understand that a payment
under a life annuity "out of or under a superannuation or
pension plan" would fall within the definition of
"pension income", and also within the definition of
"qualified pension income". Other types of pension
income, including "a payment out of or under a registered
retirement income fund" meet the definition of
"qualified pension income" only if they are received as
a consequence of the death of a spouse of the recipient.
[6]
At the end of 1998, the Appellant had not attained 65 years of
age. Nor did she receive her annuity payments as the result of
the death of a spouse. In fact, she was not a widow. The Minister
denied her the pension deductions, and it is from that decision
that she now appeals.
[7]
The Appellant argued first that her payments from the RRIFs
qualify as being payments "out of or under a superannuation
or pension plan" and are therefore "qualified pension
income", because the original source of the funds which in
1998 comprised the RRIFs was from her entitlement under the
Public Service Superannuation Fund. This argument cannot succeed.
The language of subparagraph (a)(i) of the definition of
pension income simply cannot bear the interpretation that
payments from a RRIF funded with proceeds from a superannuation
fund which are rolled over, first, to a RRSP and then to a RRIF
are payments from the superannuation fund. This ground of appeal
fails.
[8]
Secondly, the Appellant argued that the two limitations placed on
the right to the pension credit offend section 15 of the
Charter of Right and Freedoms, and so, are inoperative. If
the Appellant had attained the age of 65 before the end of the
taxation year, she would have qualified under paragraph
118(3)(a), because she received more that $1,000 of income
which it is not disputed was pension income in 1998. Also, if the
Appellant had received her pension income as the result of the
death of a spouse, then it would be "qualified pension
income", and she would be entitled to the credit under
paragraph 118(3)(b). She says, therefore, that she is
discriminated against on the grounds of both age and marital
status.
[9]
The Supreme Court of Canada recently considered the operation of
section 15 of the Charter, in the context of
legislation providing a social benefit. Law v. Canada[1] concerned the
age-based restriction on benefits payable to a surviving spouse
with no children. The Appellant, in that case, received no
benefits as she was under the age of 35. If she had been 45 years
old, she would have received a full benefit. If between 35 and
45, she would have received a benefit of a reduced amount.
Clearly, she was treated differently than a person over the age
of 35 would have been, and to her disadvantage. There was,
therefore, adverse differential treatment based on age.
[10] However,
the Court held that in addition, to invalidate legislation under
section 15 of the Charter, it must me shown that the
differential treatment withholds the benefit from the claimant in
a way that reflects the stereotypical application of presumed
group or personal characteristics, or that it has the effect of
perpetuating or promoting the view that the individual is less
capable or worthy of recognition or value as a human being or as
a member of Canadian society.
[11] In the
present case, the group of persons to which the Appellant belongs
that is treated differently is those under age 65, or
alternatively, those whose annuity income derives not from the
death of a spouse but from some other source.
[12] It is, I
think obvious, that the object of the provisions in question is
to ameliorate to some small degree the lot of persons over 65
years of age, and of those who have lost a spouse who contributed
to the family income. As Iaccobucci J. points out at page 551 of
his reasons for judgment in Law, it will be a rare case
where such ameliorating legislation is found to violate the human
dignity of more advantaged individuals.
[13] I have no
evidence before me that tends to show that either persons of less
than 65 years of age, or persons whose annuities derive from
their own economic resources, rather than through the death of a
spouse, are likely to suffer a violation of their human dignity
or freedom because they are denied a pension credit of $170
($1,000 x 17%) in computing their tax payable. Nor is there any
factor that was referred to me in argument that would cause me to
reach that conclusion without the benefit of evidence.
[14]
Certainly, neither of the groups who are not eligible for the tax
credit, as I have described them above, can by any stretch of the
imagination qualify, as prior jurisprudence requires under
section 15, as discrete and insular minorities.
[15] A similar
argument with respect to the age credit available to taxpayers
65 years of age and older under subsection 118(2) was
considered and rejected by Garon J. (as he then was) in
Tiberio et al. v. M.N.R., 91 DTC 17. I am not aware of any
subsequent decision that would cast doubt on the correctness of
that judgment. Nor do I see any rational basis upon which one
might distinguish between the age credit and the pension credit
for purposes of section 15 of the Charter.
[16] Age of
course is an enumerated ground under section 15 of the
Charter. Marital status, and the source of one's
annuities, are not enumerated grounds. Clearly, as the section 15
argument cannot succeed in respect of age, then it cannot succeed
in respect of a non-enumerated ground. The Appellant's
reliance on the Charter is misplaced. That ground of
appeal must fail, as well.
[17] Finally,
the Appellant advanced an argument to the effect that the annuity
payments received by her are said by the guide to qualify her for
the pension credit. It was not made clear to me whether the guide
in question was one issued by the Minister of National Revenue or
by some private service. Nor was it clear to me how that guide
(which is in extract Exhibit A-4) would lead one to the
conclusion that the Appellant suggested it had led her to.
Putting this argument at its highest, I am prepared to assume
that the Minister's officials in fact advised the Appellant
through this document, that her pension income entitled her to
the credit that she claims. Such advice, if given, would have
been patently wrong, but erroneous advice whether it comes from
officials of the Minister, the Minister himself, or some private
source, simply cannot change the law as written by Parliament and
raise an entitlement to tax credits which in reality is not found
in the words of the Act: see: M.N.R. v. Inland
Industries Limited.[2]
[18] The
appeal is dismissed.
Signed at Ottawa, Canada, this 27th day of July, 2001.
"E.A. Bowie"
J.T.C.C.
COURT FILE
NO.:
2000-2785(IT)I
STYLE OF
CAUSE:
Pauline Anne Kennedy
and Her Majesty the Queen
PLACE OF HEARING:
Ottawa, Ontario
DATE OF
HEARING:
June 18, 2001
REASONS FOR JUDGMENT BY: The
Honourable Judge E.A. Bowie
DATE OF JUDGMENT: June 21,
2001
APPEARANCES:
For the
Appellant:
The Appellant herself
Counsel for the Respondent: Paul Plourde
COUNSEL OF RECORD:
For the Appellant:
Name: --
Firm:
For the Respondent: Morris
Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
Email this Content