Date: 19971203
Docket: 97-1527-IT-I
BETWEEN:
SLOBODAN TRSIC,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
G. Tremblay, J.T.C.C.
[1] This appeal was heard at Montréal, Quebec, on
November 10, 1997, pursuant to the informal procedure.
Point at issue
[2] According to the Notice of Appeal and the Reply to the
Notice of Appeal, the issue is whether as a non-resident the
appellant should pay taxes of $3,473.69, $3,386.03, $3,055.91,
$3,154.57 and $4,212 respectively for the 1991, 1992, 1993, 1994
and 1995 taxation years pursuant to s. 212(1) of the
Income Tax Act (hereinafter "the Act") and
articles XI and XVIII of the Tax Convention between Canada
and the United States (hereinafter "the
Convention").
[3] According to the respondent, the appellant lived in the
United States of America throughout all those years. He received
a pension from Hydro-Québec and received interest from the
Royal Bank of Canada. No 15 percent deduction has been made
since 1984 from the amounts received as provided for in the
Convention.
Burden of proof
[4] The appellant has the burden of showing that the
respondent's assessments are incorrect. This burden of proof
results from several judicial decisions, including a judgment by
the Supreme Court of Canada in Johnston v. Minister of
National Revenue.[1]
[5] In the same judgment the Court held that the facts assumed
by the respondent in support of the assessments or reassessments
are also deemed to be true until the contrary is shown. In the
instant case the facts assumed by the respondent are set out in
subparagraphs (a) to (j) of paragraph 4 of the Reply to
the Notice of Appeal. That paragraph reads as follows:
[TRANSLATION]
4. In arriving at the assessments dated December 22, 1995
for the 1991 and 1992 taxation years, and January 10, 1997
for the 1995 taxation year, and the reassessments dated
December 22, 1995 for the 1993 and 1994 taxation years, the
Minister assumed inter alia the following facts:
(a) since 1980 the appellant has been retired from the
Société Hydro-Québec;
(b) Société Hydro-Québec is a
resident of Canada;
(c) during the taxation years at issue the appellant received
from the Société Hydro-Québec a
retirement pension the amounts of which are set out in
paragraph 2 above;
(d) the appellant was a non-resident of Canada during the
taxation years at issue;
(e) the appellant lived in the U.S.A. during the taxation
years at issue;
(f) during the taxation years at issue no deductions were made
by Société Hydro-Québec from the
pension income paid to the appellant;
(g) during the taxation years at issue the appellant received
interest income from the Royal Bank, the amounts of which are set
out in paragraph 2 above, and from which no deductions were
made;
(h) during the taxation years at issue the said Royal Bank was
a resident of Canada;
(i) during the taxation years at issue the Tax Convention
between Canada and the U.S. provided for a taxation rate of
15 percent;
(j) during the taxation years at issue the appellant paid no
taxes in Canada on the income set out in paragraph 2
above.
Facts in evidence
[6] The appellant admitted all the facts alleged above by the
respondent in paragraph 4 of the Reply to the Notice of
Appeal.
[7] The appellant left Canada to live in the U.S. in 1980.
At this point no taxes had to be paid on pensions and interest
from Canada under the Convention between Canada and the U.S. No
tax return had to be filed in Canada either. These facts were
explained to him in a letter dated June 18, 1991 signed by
J.P. Lapointe of Revenue Canada, Taxation
(Exhibit A-1).
[8] In 1984 the Convention between the two countries was
amended, stipulating in articles XI, "Interest"
and XVIII, "Pensions and Annuities", that the tax
charged should not exceed 15 percent of the gross amount of
interest and gross amount of pensions and annuities.
[9] The appellant raised the question of whether non-residents
should be informed of the tax rate in the event of a change, that
is, if the rate changed from 15 to 20 percent or
0 percent, as he put it in his Notice of Appeal
[10] Further, in his Notice of Appeal the appellant also
referred to the many letters and even attachment of his bank
account by the respondent's representatives, which in his
opinion demonstrated [TRANSLATION] "a sort of mental
cruelty", and he argued that [TRANSLATION] "the
uncertainty of this unending proceeding is affecting his state of
health". He accordingly asked for compensation.
Analysis
[11] There is nothing in the Act which requires the Department
to inform all U.S. residents receiving interest and pensions from
Canada of the tax payable. In fact, the well-known rule must be
applied: "Ignorance of law excuses no one".
[12] Moreover, according to the admission of counsel for the
respondent, neither Hydro-Québec nor the Royal Bank
of Canada, which failed to make the 15 percent source
deductions on pension and interest paid, had in their computers
the information that the deductions were to be made.
[13] As regards the compensation claimed, the Court does
sympathize with the appellant's problem but it cannot award
damages.
[14] The appellant should appreciate the fact that he has only
been taxed since 1991, not since 1984, that is the date the
15 percent taxation rate came into effect, nor on the
accumulated interest.
Conclusion
[15] The appeal is dismissed.
"Guy Tremblay"
J.T.C.C.
[OFFICIAL ENGLISH TRANSLATION]
Translation certified true on this 22nd day of May
1998.
Benoît Charron, Revisor
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