Date: 20000919
Docket: 2000-469-IT-I
BETWEEN:
BERNARD A. HODSON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Campbell, J.T.C.C.
[1] By Notice of Assessment dated August 16, 1999, the
Minister of National Revenue assessed the Appellant's income
tax return for the 1998 taxation year.
[2] The Appellant filed a Notice of Objection dated October
31, 1999.
[3] By letter dated November 18, 1999, the Minister advised
the Appellant that the Notice of Objection and the Notice of
Assessment would be nullified by a Notice of Reassessment dated
November 22, 1999, which was not related to the matter under
appeal.
[4] The Appellant then filed a Notice of Appeal on January 27,
2000 for the 1998 taxation year.
[5] By Notice of Reassessment dated February 16, 2000, the
Minister reassessed the Appellant's tax return for the 1998
taxation year with respect to an issue not related to the matter
under appeal.
[6] The Appellant requested that the Court provide the
following relief:
1) cancel instalment payments due for 1998 and 1999,
2) deduct interest charged on instalments from the arrears
amount,
3) cancel interest on arrears for 1998, 1999 and 2000,
4) apply monies deducted from pension income including Old Age
Pension firstly to the arrears,
5) cancel "claw back" of Old Age Pension benefits
for 1998, 1999 and 2000.
6) RRSP withdrawals not be considered in assessing instalment
payments,
7) remove tax deducted from superannuation so it can be
applied directly to arrears,
8) accept cheques totalling $60,000 postdated over a period of
time for payment of arrears.
[7] The ninth ground of relief relating to arrears reduction
in compensation for stress and anxiety was withdrawn by the
Appellant.
[8] The Appellant requested that I look at some of these
issues not only for 1998 but also 1999 and 2000. He pointed out
that what happened in 1998 had an impact on future years.
However, I can deal only with the 1998 taxation year which is
before me.
[9] Before presenting his case, the Appellant read from a
prepared statement to the effect that his case would be better
served if certain Revenue Canada officials, whose names he did
not have, were present. The Appellant had agreed to have two
Revenue Canada officials, Mary Sue Drynan and David Seally,
present instead of David Miller as it was these individuals who
were most knowledgeable concerning the facts of this case. The
Appellant now felt that David Miller and other officials
might have knowledge of his case. He was prepared to proceed in
their absence but asked that I take this into consideration at
this hearing. The Appellant was denied an earlier adjournment
which he had requested and was advised that he should be prepared
to proceed. After hearing the evidence, I conclude that the two
Revenue Canada witnesses called by the Appellant were
sufficiently knowledgeable to provide detailed information on the
Appellant's assessment.
[10] The Appellant gave evidence on a number of hardships,
which occurred in his life in 1998. There were unexpected medical
bills and the family's home was burglarized. Insurance
coverage was inadequate. Consequently, the Appellant used credit
cards and RRSP withdrawals to cover these expenses. In 1999, an
arsonist set fire to the Appellant's car and premises. The
Appellant moved his family and incurred moving expenses. Although
this happened in 1999, the Appellant wanted the Court to know
that it affected his ability to pay instalments and interest
charges assessed for 1998. There is no doubt that the Appellant
has survived a number of tragic events in a very short period of
time.
[11] The Appellant felt that this appeal was primarily
concerned with unjustified demands by Revenue Canada officials
for instalment payments and interest charges for the
1998 taxation year. He felt that Revenue Canada officials
did not understand or ignored the fact that the additional
instalments were due to the extraordinary events that arose in
1998. These unexpected events in 1998 which prompted the
Appellant to withdraw cash from his RRSPs had an impact on his
future taxation years. He was not expecting the additional
income, which resulted in additional tax in 1998.
[12] The Appellant also submitted that even if the instalment
payments were justified; the interest payments should be
cancelled due to the unexpected events.
[13] Revenue Canada official, David Seally, set out in detail
how the Appellant's 1998 return was assessed. He explained
fully the pension source deductions, calculation of instalments,
instalment interest and interest on arrears.
[14] The Appellant's 1998 income tax return showed five
sources of income i.e. employment, Old Age Security Pension,
Canada Pension, other pension/superannuation and RRSP income. I
accept that portion of Exhibit R-4 entitled Statement of Account
referring to the 1998 taxation year as accurately reflecting the
calculation of instalment payments for 1998 together with
interest. The Appellant failed to pay the required instalments
during 1998. Interest at the prescribed rate was applied on the
instalments not received in 1998 in accordance with subsection
161(2) of the Income Tax Act. This was correctly
calculated at $868.25 and arrears interest was also
correctly calculated at $183.12.
[15] The Minister established that instalment payments were
required for the 1998 taxation year, in accordance with
subsection 156(1) and paragraph 156.1(2)(b) of the
Act. The Appellant expressed dissatisfaction with the way
in which instalment reminders were sent. The evidence suggested
that these reminders were properly forwarded in accordance with
prescribed procedure.
[16] The Appellant also had some disagreement with the
handling of his Old Age Pension benefits by Revenue Canada. The
Appellant properly included the total of his Old Age Pension
benefits as income in his 1998 tax return. Due to the amount of
income in 1998 he had to repay all of the Old Age Pension
benefits. The Appellant mistakenly believed that the deductions
at source in respect to his Old Age benefits were instalments.
They were not. They would, however, reduce the amount of
instalment interest otherwise owing.
[17] The Appellant presented an argument for more equitable
treatment of his assessment in respect to instalments, and
interest payments due to the unfortunate mishaps that had
occurred. The issue was whether the Tax Court of Canada has
jurisdiction to cancel or otherwise give some type of equitable
relief to the taxpayer when the amounts have been otherwise
correctly calculated. I believe that the case law is clear. As
stated by Sobier, T.C.J. Sunil Lighting Products v.
Canada, [1993] T.C.J. No. 666:
The jurisprudence clearly affirms that the Tax Court of Canada
is not a court of equity and its jurisdiction is based within its
enabling statute ... In addition, the Court cannot grant
declaratory relief given that such relief is beyond the
jurisdiction of the Court ... In an income tax appeal, the
Court's powers are spelled out in subsection 171(1) of the
Income Tax Act. Consequently, these powers essentially entail the
determination of whether the assessment was made in accordance
with the provisions of the Income Tax Act ...
[18] It is clear from the evidence that under the Act,
the Appellant was liable for instalment payments for 1998
taxation year. Paragraph 56(1)(h) of the Act states
that RRSP withdrawals are to be included in income for that year.
There is no jurisdiction in this Court to cancel instalment
payments that have been correctly assessed.
[19] I fully appreciate that the only reason the RRSPs were
cashed was because of the unfortunate circumstances which arose
in 1998. This argument however is not one which this Court can
consider. The instalments were correctly calculated by the
Minister and the Appellant did not show otherwise.
[20] The Appellant also argued that the interest on instalment
payments in the amount of $868.25 and interest on arrears in the
amount of $183.12 should be cancelled due to the mishaps in his
life. No matter what the reasons are I have no jurisdiction to
interfere if the interest is properly calculated. On the evidence
the amounts were correctly calculated and this Court has no
jurisdiction to cancel interest payments in the name of
fairness.
[21] The Appellant agreed he made RRSP withdrawals which he
included in income. All documentation clearly sets out the
instalments and interest rates and the amounts owing. There is
nothing before me on these issues that would indicate they are
incorrect. They appear to be properly calculated and I therefore
have no jurisdiction to grant the relief requested by the
Appellant.
[22] The Tax Court has no jurisdiction in collection issues
either. Therefore, I cannot address the Appellant's request
that cheques deposited with Revenue Canada be accepted as payment
of arrears.
[23] Although the Appellant advised the Court he was
withdrawing his claim for relief for stress, I can not award
damages or compensatory relief to him in any event as there is no
jurisdiction to do so.
[24] I understand that the Appellant has survived a number of
traumatic events. He believes that he has received unfair
treatment, but I have no jurisdiction to provide the relief he is
requesting. I accordingly dismiss the appeal.
Signed at Ottawa, Canada, this 19th day of September 2000.
"Diane Campbell"
J.T.C.C.