Citation: 2013TCC323
Date: 20131015
Docket: 2013-1442(OAS)
BETWEEN:
GAIL BRIGHTON,
Appellant,
and
THE MINISTER OF HUMAN RESOURCES
AND SKILLS DEVELOPMENT,
Respondent.
REASONS FOR JUDGMENT
Paris J.
[1]
Ms. Brighton has
appealed the decision of the Minister of Human Resources and Skills Development
(“the Minister”) that she was not entitled to any amount of the Guaranteed
Income Supplement (GIS) under the Old Age Security Act (OAS) for
the period from July 1, 2012 to June 30, 2013.
[2]
In most cases, the GIS
benefit for a payment period, running from July 1 each year to June 30 of the
following year, is based on an applicant’s income for the calendar year
preceding the start of the payment period. The preceding calendar year is
referred to as the “base calendar year”. An applicant is required to provide a
statement of his or her income for the base calendar year in relation to each
payment period.
[3]
A GIS applicant is also
permitted by subsections 14(2) to 14(6) of the OAS to file an
additional statement of estimated income for the year following the base
calendar year if he or she ceases to hold office or employment or ceases to
carry on business or suffers a reduction in, or loss of, pension income in the
year. These provisions allow the Minister to take into account that the
applicant’s current income from those sources will be less than during the base
calendar year. However, an estimate of income still takes into account the
amount of income received by the applicant from all other sources in the base
calendar year.
[4]
According to section 2
of the OAS, a person’s income for a calendar year is, with some
exceptions that are not applicable in this case, his or her income as
determined in accordance with the Income Tax Act.
[5]
In this case, Ms.
Brighton ceased carrying on a business on December 31, 2011. Therefore, she was
entitled to file a statement of estimated income for 2012 as provided for in paragraph
14(5)(a) of the OAS. Under subparagraphs 14(5)(a)(i) and
(ii) of that provision, she was entitled to estimate her employment, business and
pension income for 2012. However, subparagraph 14(5)(a)(iii) still
required that her income from all other sources during the base calendar year (2011)
be included in her 2012 estimated income.
[6]
The relevant parts of paragraph
14(5)(a) read as follows:
(5) If,
in the circumstances described in paragraphs (a) and (b), a
person who is an applicant… ceases to hold an office or employment or ceases to
carry on a business, the person may…,
(a) if
the person ceases to hold that office or employment or to carry on that
business in the last calendar year ending before the payment period, file a
statement of the person’s estimated income for the calendar year ending in the
current payment period, which income shall be calculated as the total of
(i) any
pension income received by the person in that calendar year,
(ii) the
income from any office or employment or any business for that calendar year,
other than income from the office, employment or business that has ceased, and
(iii) the
person’s income for the base calendar year calculated as though, for that year,
the person had no income from any office or employment or any business and no
pension income;
[7]
Ms. Brighton’s total income
for 2011, the base calendar year in this case consisted of the following
amounts:
|
CPP retirement
income
|
7,017
|
|
Dividends and
capital gain
|
284
|
|
Net rental loss
|
(9,168)
|
|
Net business
loss
|
(22,246)
|
|
RRSP income
|
42,508
|
|
Total
|
$18,395
|
[8]
On her statement of estimated
income for 2012, filed under paragraph 14(5)(a), Ms. Brighton
listed only CPP retirement income of $7,213.44 and rental income of $1,500. The
Minister determined that Ms. Brighton was also required by subparagraph 14(5)(a)(iii)
to include her dividends and capital gains as well as her net rental loss and
her RRSP income for 2011 in her estimate of income. After taking these amounts
into account, her estimated income pursuant to paragraph 14(5)(a) was
$40,837.44.
[9]
By the Minister’s calculations,
Ms. Brighton’s income for the base calendar year income as well as her income estimated
in accordance with paragraph 14(5)(a) both exceeded the income threshold
for payment of GIS benefits, which was $16,512 for the 2012-2013 benefit
payment period.
[10]
Ms. Brighton disputes
the Minister’s calculation of her estimated income for 2012. In particular, she
disputes the inclusion by the Minister of her 2011 RRSP income under subparagraph 14(5)(a)(iii)
of the OAS. She takes the position that it should be excluded from the
calculation of her 2011 base calendar year income because it was pension
income. Subparagraph 14(5)(a)(iii) requires that the applicant’s income
for the base calendar year be calculated on the assumption that he or she did
not have any pension income or income from employment or a business.
[11]
In her testimony, Ms.
Brighton explained that she was the beneficiary of an RRSP belonging to her
ex-spouse, who died on March 1, 2009. After his death, one of her late
ex-spouse’s relations challenged the designation of Ms. Brighton as the
beneficiary of the RRSP. The matter was resolved in Ms. Brighton’s favour and
the proceeds of the RRSP were paid to her in April, 2011. She admitted that
she reported the amount in her 2011 income tax return.
[12]
The question of whether
payments out of an RRSP are pension income, as that term is defined for the
purposes of the OAS, has arisen in at least two other cases decided by
this Court: Drake v Minister H.R.D.C., 2005 TCC 498, and Gonder v
Minister H.R.S.D.C., 2011 TCC 505. In each case the Court held payments
received out of an RRSP are not pension income as that term is defined in the OAS.
That definition is found in section 14 of the OAS Regulations.
It reads as follows:
14. For
the purposes of section 14 of the Act, “pension income” means the
aggregate of amounts received as
(a) annuity payments;
(b) alimony and maintenance payments;
(c) employment insurance benefits;
(d) disability benefits deriving from a
private insurance plan;
(e) any benefit, other than a death
benefit, under the Canada Pension Plan
or a provincial pension plan as defined in the Canada Pension Plan;
(f) superannuation or pension payments,
other than a benefit received pursuant to the Act or any similar payment
received pursuant to a law of a provincial legislature;
(g) compensation under a federal or
provincial employee’s or worker’s compensation law in respect of an injury,
disability or death;
(h) income assistance benefits under an
agreement referred to in subsection 33(1) of the Department of Human Resources Development Act
by reason of a permanent reduction in the work force as described in that
subsection; and
(i) income assistance benefits under the
Plant Workers’ Adjustment Program, the Fisheries Early Retirement Program or
the Northern Cod Adjustment and Recovery Program by reason of a permanent
reduction in the work force.
[13]
In Drake,
Justice Bowie stated that “[e]ven the most generous reading of this definition
cannot include the withdrawal of funds from a registered plan prior to its
maturity. Specifically, it is not an annuity payment, because it is not paid on
a periodic basis. Nor could it possibly fall into any of the other clauses of
section 14.”
[14]
I agree with this
conclusion and find that the Minister did not err by including the RRSP payment
in the estimate of 2012 income pursuant to paragraph 14(5)(a). It
is not material that the RRSP payment was a one-time event, as contended by the
appellant.
[15]
Ms. Brighton also
suggested that the way in which the funds from her late ex-spouse’s RRSP were
transferred to her could have been amended in some way by the financial
institution that held the RRSP so that it would not have affected her income in
2011. However, I cannot take into account what could have been done, only what
in fact was done. It is clear that Ms. Brighton received the payment in 2011
and was required to include it in her income pursuant to subsection 146(8) and
paragraph 56(1)(h) of the Income Tax Act and that it was part of
her 2011 base calendar year income for the purposes of the OAS.
[16]
The difficulty in this
case, it appears, is that Ms. Brighton was not aware that the RRSP payment would
affect her GIS entitlement. The resulting loss of the GIS benefit to her in the
2012-2013 payment period has caused her great hardship. She states that she is
on the verge of losing her home because she has been unable to make the
mortgage payments on it. This is extremely unfortunate and I regret that I am
unable to allow her appeal, but the law is clear that the RRSP payment must be
taken into account. Parliament has chosen not to include RRSP withdrawals in
the definition of “pension income” under the OAS Regulations and this Court
must apply the law as it has been enacted by Parliament.
[17]
The appeal is therefore
dismissed.
Signed at Ottawa, Canada, this 15th day of October 2013.
“B.Paris”
Email this Content