REASONS
FOR JUDGMENT
Woods J.
[1]
The issue in this appeal is whether the
respondent correctly decided that contributions by George Legge made under the Canada Pension Plan are deemed to be zero for 2006 and 2007 pursuant to subsection 30(5)
of that legislation.
[2]
Subsection 30(5) is reproduced below:
30(5) The amount of any
contribution required by this Act to be made by a person for a year in respect
of their self-employed earnings for the year is deemed to be zero where
(a) the return of those earnings
required by this section to be filed with the Minister is not filed with the
Minister before the day that is four years after the day on or before which the
return is required by subsection (1) to be filed; and
(b) the Minister does not assess
the contribution before the end of those four years.
Background
[3]
The basis for the Minister’s position is set out
in the Reply to the Notice of Appeal at paragraph 10. It is reproduced below.
10. In making her decision, the Minister
relied on the following assumptions of fact:
a) the
Appellant received pension and business income in both the 2006 and 2007
taxation years;
b) the
Appellant’s income tax returns for the 2006 and 2007 taxation years were due to
be filed with the Minister by June 15, 2007 and June 15, 2008, respectively;
c) the
Appellant filed income tax returns for the 2006 and 2007 taxation years on
November 27, 2008;
d) upon
filing income tax returns for the 2006 and 2007 taxation years, the Appellant
reported business losses from self-employment;
e) upon
filing income tax returns for the 2006 and 2007 taxation years, the Appellant’s
pensionable earnings were nil;
f) on
or around November 12, 2012, the Appellant filed T1 adjustment requests for his
2006 and 2007 taxations years and changed his business losses to business
income; and
g) the
Appellant did not file a return reporting self-employed earnings of $5,524 and
$5,116 within four years of the day his income tax returns for 2006 and 2007
were due to be filed.
Analysis
[4]
The only issue to be decided is whether
subsection 30(5) of the Canada Pension Plan deems contributions to be
zero for the years 2006 and 2007.
[5]
The Crown submits that subsection 30(5) applies
on the basis that Mr. Legge did not file a return of self-employed
earnings within four years of the filing due date for the income tax return for
those years. The Crown submits that this requirement is not satisfied because
Mr. Legge reported losses rather than earnings.
[6]
I do not accept the Crown’s submission because
it ignores that there are two requirements for the application of s. 30(5), a
taxpayer filing requirement in paragraph (a) and an assessment requirement in
paragraph (b).
[7]
Even if I were to accept the Crown’s argument,
subsection 30(5) does not apply unless I also find that the Minister had not
assessed contributions within the requisite four year period. The assessment
requirement in paragraph (b) is not mentioned in the Reply and it was not
mentioned by the Crown at the hearing. It would be unfair to Mr. Legge to
dismiss the appeal in these circumstances.
[8]
Further, there is no stated assumption as to
what assessments, if any, were made within the four year period. Accordingly,
the Crown has the burden to establish by evidence that the requirement in s. 30(5)(b)
has been satisfied. This burden has not been satisfied.
[9]
For these reasons, the appeal will be allowed on
the basis that subsection 30(5) of the Canada Pension Plan does not
apply to contributions for the years 2006 and 2007.
[10]
The result is in a sense a windfall to Mr. Legge
because it is likely that there was no assessment of contributions for 2006 and
2007. However, the Crown is well aware of the requirement to properly plead its
case and to establish the facts supporting its position, either by evidence or
by assumptions.
[11]
If this appeal were governed by the general procedure
rules of the Court, it may have been appropriate to obtain written submissions
of the parties with respect to this issue. However, written submissions are
generally not practical when the appeal is not under the general procedure. Accordingly,
it is appropriate for the Court to issue judgment without further submissions.
Signed
at Toronto, Ontario this 1st day of December 2014.
“J.M. Woods”
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