REASONS
FOR JUDGMENT
Paris J.
[1]
The appellant is appealing a reassessment by the
Minister of National Revenue (the "Minister")
for the 2001 taxation year. The Minister added $10,765 of taxable income
received from a Registered Retirement Savings Plan ("RRSP")
to the applicant's income under subsection 146(8) and paragraph 56(1)(h)
of the Income Tax Act (the "Act").
The Minister issued the reassessment after the normal reassessment period under
subparagraph 152(4)(a)(i) of the Act.
The facts
[2]
In 2001, the appellant invested $22,200 in the
Coopérative de producteurs de bois précieux Québec Forestales (the "Coop") through his self-directed RRSP for the purchase of seedlings and precious woods
from Costa Rica, which was to generate a return of 25% per year. The investment
promoters also indicated that the Coop would pay the applicant an amount equal
to 50% of the amount invested.
[3]
The appellant admitted that the promoters gave
him approximately $10,000 in cash in an envelope shortly after he made the
investment. The appellant says that he asked the promoter if he should report
the amount as income, but was told that as it was a return on his investment,
it was not taxable.
[4]
On cross-examination, the appellant admitted to
having signed a receipt prepared by the investment promoters for the money they
gave him, and recognized his signature on the receipt. The receipt was for
$11,000. He also changed part of his testimony with respect to the answer he
was given when he asked the promoter if he had to report the money in the
envelope. On cross-examination, the appellant said that the promoter answered: [translation] "Do
what you want. We don't send anything to the government." The
appellant admitted that he did not report the money and did not inform the
accountant who prepared his 2001 tax return, either.
Appellant's arguments
[5]
The appellant is not disputing the fact that he
received approximately $10,000 from the Coop's investment promoter, and admits
that he should have reported it in his 2001 tax return. However, he is
contesting the amount of interest accumulated on the reassessment, which he
finds exorbitant, and is complaining about the delays in resolving his case. He
also suggests that the Court take the dishonest behaviour of the promoters,
whom he trusted, into account.
Analysis
[6]
The evidence clearly shows that the appellant
misrepresented the facts by failing to report the amount he received in cash
from the promoters. Because he invested in the Coop through his RRSP, all returns on the investment that he personally
received constitute a withdrawal from an RRSP
and must be included with his income in accordance with paragraph 56(1)(h)
and subsection 146(8) of the Act. The provisions read as follows:
56 (1)
Without restricting the generality of section 3, there shall be included in
computing the income of a tax-payer for a taxation year,
. . .
Registered retirement savings
plan, etc.
(h) amounts required by section 146 in respect of a registered
retirement savings plan or a registered retirement income fund to be included
in computing the taxpayer’s income for the year;
Benefits taxable
146 (8) There shall be included in computing a taxpayer's income for a
taxation year the total of all amounts received by the taxpayer in the year as
benefits out of or under registered retirement savings plans, other than
excluded withdrawals (as defined in subsection 146.01(1) or 146.02(1)) of the
taxpayer and amounts that are included under paragraph (12)(b) in computing the
taxpayer's income.
("Excluded
withdrawals” are not relevant to this discussion.)
[7]
"Benefit" is defined as follows in subsection 146(1) of the Act:
benefit
includes any amount received out of or under a retirement savings plan. . .
[8]
None of the exceptions listed in the definition
of "benefit" apply in this case.
[9]
I find that the appellant's failure to report
the amount is either due to inattention or negligence on his part. Although he
seems to have had doubts as to whether to report the money, he did not seek out
advice from his accountant or any other professionals when preparing his
return. That is not the behaviour of a wise or cautious person.
[10]
I therefore conclude that the respondent
discharged the burden of proof that required him to justify the late
reassessment of the appellant.
[11]
In terms of interest, the Court is not
authorized to reduce the interest because of a late reassessment. However, I
note that at any point after issuing the reassessment in June 2008, the
appellant could have paid the required amount to avoid accumulating interest.
[12]
For all of these reasons, the appeal is
dismissed.
Signed at
Toronto, Ontario, this 10th day of March 2016.
"B. Paris"
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