Docket: 2012-2932(IT)I
BETWEEN:
TREVOR W. JACKSON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Appeal
heard on March 22, 2013, at Nanaimo, British Columbia
Before: The Honourable
Justice Réal Favreau
Appearances:
|
For the Appellant:
|
The
Appellant himself
|
|
Counsel for the Respondent:
|
Shankar Kamath
|
____________________________________________________________________
JUDGMENT
The appeal from the reassessment dated December 21, 2011 made
by the Minister of National Revenue by virtue of the Income Tax Act
concerning the 2007 taxation year is dismissed, without costs, in accordance
with the attached Reasons for judgment.
Signed at Ottawa, Canada, this 19th day of June 2013.
"Réal Favreau"
Citation: 2013 TCC 195
Date: 20130619
Docket: 2012-2932(IT)I
BETWEEN:
TREVOR W. JACKSON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Favreau J.
[1]
This is an appeal under
the informal procedure against a reassessment dated December 21, 2011 made by
the Minister of National Revenue (the “Minister”) for the appellant’s 2007
taxation year.
[2]
The appeal concerns the
application of subparagraph 56(1)(a)(i) and
subsections 110.2(1), 110.2(2) and 120.31(2) of the Income Tax Act,
R.S.C., 1985, c. 1 (5th Supp.), as amended (the “Act”) which
provisions provide a special tax calculation that may benefit a taxpayer who is
in receipt of a retroactive lump-sum payment for Canada Pension Plan disability
benefits (the “C.P.P. Lump-Sum”). The appellant received a C.P.P. Lump-sum of
$61,744 in his 2007 taxation year and made a request in his 2007 tax return for
the special tax calculation for the C.P.P. Lump-Sum.
[3]
The appellant’s 2007
taxation year was initially assessed on May 23, 2008. The appellant was advised
on his notice of assessment that his request for the special tax calculation with
respect to the C.P.P. Lump-Sum could not be carried out for all of the years
requested, as he had not filed his tax returns for certain years to which he
was requesting to have the C.P.P. Lump-Sum applied.
[4]
The appellant late filed
his 1997, 1998, 1999 and 2000 income tax returns on June 30, 2008 which were
initially assessed on September 3, 2008 in the case of the 1997 taxation year
and on September 25, 2008 in the case of the 1998, 1999 and 2000 taxation
years.
[5]
On December 21, 2011,
the Minister reassessed the appellant’s 2009 taxation year:
a) to reduce the C.P.P. Lump-Sum for the 2007 taxation year to $10,515;
and
b) to allow the remaining C.P.P. Lump-Sum of $51,229 to be allocated to
prior years (1997 to 2006) in the computation of his taxable income.
[6]
In reassessing the
appellant for the 2007 taxation year, the Minister relied on the following
facts, set out in paragraph 20 of the Reply to the Notice of Appeal:
a) the
Government of Canada issued the Appellant a T4A information slip stating that
they paid the Appellant the C.P.P. Lump Sum of $61,744 for the 2007 taxation
year; (admitted)
b) the C.P.P. Lump Sum totalling $61,744, included
retroactive payments attributable to the following years: (admitted)
|
1997
|
$8,561
|
|
1998
|
$8,724
|
|
1999
|
$8,802
|
|
2000
|
$8,943
|
|
2001
|
$9,167
|
|
2002
|
$3,065
|
|
2003
|
$955
|
|
2004
|
$985
|
|
2005
|
$1,002
|
|
2006
|
$1,025
|
c) the C.P.P. Lump Sum applicable for the 2007 taxation year
was $10,515; (admitted)
d) the C.P.P. Lump Sum amounts totalling $61,744 were
allocated to the Appellant’s current and previous tax years to which they
related to; (admitted)
e) the Appellant’s 2007 taxes payable included taxes payable
on the C.P.P. Lump Sum amounts as if they were received in the previous tax
years; and (admitted)
f) the cumulative total tax payable from applying the
retroactive C.P.P. Lump Sum to previous tax years was $2,664.72 as set out in
the attached Schedule “A”. (denied because Schedule “A” does not show the total
amount of the tax)
Schedule “A”
|
|
Assessed
Taxable
Income
|
CPP
Lump-Sum
|
Non-
Refundable
Tax
Credits
|
Tax
Rate
|
|
1997
|
$0.00
|
$8,561.00
|
$6,456.00
|
17%
|
|
1998
|
$0.00
|
$8,724.00
|
$6,456.00
|
17%
|
|
1999
|
$0.00
|
$8,802.00
|
$6,794.00
|
17%
|
|
2000
|
$0.00
|
$8,943.00
|
$7,231.00
|
17%
|
|
2001
|
$2,475.00
|
$9,167.00
|
$7,412.00
|
16%
|
|
2002
|
$6,376.00
|
$3,065.00
|
$7,634.00
|
16%
|
|
2003
|
$9,048.00
|
$955.00
|
$8,047.00
|
16%
|
|
2004
|
$8,914.00
|
$985.00
|
$9,233.00
|
16%
|
|
2005
|
$9,066.00
|
$1,002.00
|
$8,648.00
|
15%
|
|
2006
|
$9,274.00
|
$1,025.00
|
$8,839.00
|
15.25%
|
[7]
The appellant argued
that the calculation of the notional tax on the C.P.P. Lump-Sum was not done
correctly by the Minister as the amount of tax owing for 2007 has been
over-estimated. The reassessment for the 2007 taxation year showed a revised
taxable income of $10,595 and an amount of the tax payable of $3,347.39. The
appellant was told by Canada Revenue Agency (“CRA”) officers that the larger
amount of tax represented tax from the previous years in which the allocation
of the C.P.P. Lump-Sum has been made. The appellant has apparently never
received from the CRA the details for the calculation of the tax payable in
each of the years in which a portion of the C.P.P. Lump-Sum has been allocated.
The appellant considers that he has been unfairly treated and that he has been
penalized because he is a disabled pensioner. The appellant also referred to
the fact that the CRA’s officers should have explained to him how the tax has
been computed without using a tone that has often been disrespectful,
accusatory and derisive.
[8]
The appellant considered
that the Minister should have allowed a deduction of $4,000 per year for
medical expenses and that the Minister should have accepted a settlement by virtue
of which the amount of tax payable in respect of the 2007 taxation year should have
been reduced by one-half and no interest should have been charged.
Analysis
[9]
The mechanism found in
sections 110.2 and 120.31 of the Act is intended to provide relief
to individuals for the computation of income tax on certain retroactive
lump-sum payments. Under this regime, taxpayers have the choice of paying tax
on “qualifying retroactive lump-sum payments” not at the rate otherwise
applicable in the year of actual receipt, but rather at the lower rate that
would have been applicable if the amounts had been received in the earlier
years to which they relate. The intent is to compensate individuals for the
penalizing effects of the graduated rates of taxation used in the Act.
[10]
The 1999 Budget Plan,
which introduced sections 110.2 and 120.31, states at page 202:
In
recomputing the notional tax liability for prior years, no adjustments will be
made to the income tax returns for those years. That is, individuals will not
be able to modify items such as RRSP contributions and tax credits. Similarly,
the government will not recapture income-tested benefits paid in prior years.
Any reduction in federal tax through this measure will also have the effect of
reducing provincial tax liability in those provinces that are part of the tax
collection agreements…
[11]
The notional tax
liability for prior years is computed without making any adjustments to the
income tax returns filed for those years. In this case, the Minister allowed
only the non-refundable tax credits to which the appellant was entitled to in
determining the tax liability of the appellant. Contrarily to the appellant’s
opinion, the Minister did not have discretion to take into account other
factors in the determination of the appellant’s tax liability. The computation
of the notional tax liability does not trigger the reopening of the prior years.
Clearly the special tax calculation per section 120.3 of the Act
was the most beneficial calculation for the appellant.
[12]
I did not review in
detail the calculations made by the CRA officers because the appellant admitted
that the differences in numbers that he pointed out were always resolved in his
favour as the lowest numbers were used for reassessment purposes. I also noted
that in this case interests were never calculated while they should have been
charged to the appellant.
[13]
For the above reasons,
I consider that the Minister properly included the C.P.P. Lump-Sum in computing
the appellant’s income for the 2007 taxation year pursuant to
subparagraph 56(1)(a)(i) of the Act and that the Minister
properly allocated the retroactive portion of the C.P.P. Lump-Sum to the prior
years to which they relate in computing the appellant’s taxable income pursuant
to subsections 110.2(1), 110.2(2) and 120.31(3) of the Act.
[14]
This Court has no
jurisdiction to provide relief in respect of interest or in the implementation
of a payment plan with CRA. This Court may not force CRA to issue a letter of
apology for their delays and errors, for the inconvenience and stress they
caused and their refusal to provide the information requested.
[15]
The appeal is dismissed
without costs.
Signed at Ottawa, Canada, this 19th day of June 2013.
"Réal Favreau"
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