Citation: 2013 TCC 16
Date: 20130117
Docket: 2012-1649(IT)I
BETWEEN:
Abdeltif Farah,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Lamarre J.
[1]
The appellant is
appealing from the reassessment dated April 11, 2011, made pursuant to the Income
Tax Act (ITA) by the Minister of National Revenue (Minister) for the 2010
taxation year that indicates a nil balance.
[2]
The appellant is also
appealing from a determination by the Minister dated July 5, 2011, regarding
the goods and services tax (GST) credit for the period of July 2011 to June
2012 (2010 base year). According to this determination, the appellant was not
eligible for the GST credit for the period because his household income was too
high, exceeding the $45,740 limit in 2010.
[3]
The appellant's income
was $90,763 for the 2010 taxation year and his spouse did not have any income
that year. They had a dependent child under the age of 19 who lived with them
during the year.
[4]
The appellant is
challenging this assessment and this determination on the ground that the
majority of the $90,758.36 income he received in 2010 came from the income
replacement benefits from the Commission de la santé et de la sécurité du
travail (CSST) for 2007 to 2010 inclusively, as confirmed by the document he
submitted as Exhibit A-1.
[5]
He claims that it is a
personal injustice to have his right to the GST credit withdrawn because his
income for 2010 does not reflect reality but rather, corresponds to a lump sum
payment of annual benefits he was entitled to for 2007 to 2010 inclusively.
[6]
Unfortunately for the
appellant, I cannot allow his claim.
[7]
The GST credit for
which a taxpayer is eligible is calculated four times a year, in each specified
month, according to the adjusted income of the base year. The months specified
for the 2010 base year are July and October 2011 and January and April 2012 (subsection
122.5(4) ITA).
[8]
To determine
entitlement for the GST credit, the adjusted income for the base year must be
established. The adjusted income, under the definition at subsection 122.5(1), is
the total income for the year of the individual and of the qualified relation
of the individual (in this case, Khadija Dakiri). The income is the income as
calculated at Division B of Part 1 of the ITA, at section 3. It is not the
taxable income as calculated at Division C of Part 1 of the ITA.
[9]
The relevant
legislative provisions are reproduced here:
INCOME
TAX ACT
PART I — INCOME TAX
Part A — Liability for tax
2. (1)
Tax payable by persons resident in Canada — An income tax shall be paid, as required
by this Act, on the taxable income for each taxation year of every person
resident in Canada at any time in the year.
2. (2) Taxable
income — The taxable income of a taxpayer for a taxation year is the
taxpayer’s income for the year plus the additions and minus the deductions
permitted by Division C.
...
Division B — Computation of income
Basic
Rules
Section 3. Income
for taxation year — The
income of a taxpayer for a taxation year for the purposes of this Part is the
taxpayer’s income for the year determined by the following rules:
(a) determine the total of all amounts each
of which is the taxpayer’s income for the year (other than a taxable capital
gain from the disposition of a property) from a source inside or outside
Canada, including, without restricting the generality of the foregoing, the taxpayer’s
income for the year from each office, employment, business and property,
(b) determine the amount, if any, by which
(i) the total of
(A) all of the taxpayer’s taxable capital
gains for the year from dispositions of property other than listed personal
property, and
(B) the taxpayer’s taxable net gain for the
year from dispositions of listed personal property,
exceeds
(ii) the amount, if any, by which the
taxpayer’s allowable capital losses for the year from dispositions of property
other than listed personal property exceed the taxpayer’s allowable business
investment losses for the year,
(c) determine the amount, if any, by which
the total determined under paragraph (a)
plus the amount determined under paragraph (b)
exceeds the total of the deductions permitted by subdivision e in computing the
taxpayer’s income for the year (except to the extent that those deductions, if
any, have been taken into account in determining the total referred to in
paragraph (a), and
(d) determine the amount, if any, by which
the amount determined under paragraph (c)
exceeds the total of all amounts each of which is the taxpayer’s loss for the
year from an office, employment, business or property or the taxpayer’s
allowable business investment loss for the year,
and
for the purposes of this Part,
(e) where an amount is determined under
paragraph (d) for
the year in respect of the taxpayer, the taxpayer’s income for the year is the
amount so determined, and
(f) in any other case, the taxpayer shall
be deemed to have income for the year in an amount equal to zero.
...
Subdivision d — Other sources of income
Section 56. (1) Amounts
to be included in income for year — Without restricting the generality of
section 3, there shall be included in computing the income of a taxpayer for a
taxation year,
...
(v) Workers' compensation — compensation received under an employees’ or workers’ compensation
law of Canada or a province in respect of an injury, a disability or death;
...
Division C — Computation of taxable
income
110. (1) Deductions permitted — For the purpose of computing the taxable income of a taxpayer
for a taxation year, there may be deducted such of the following amounts as are
applicable
...
(f) Deductions for payments — any social assistance payment made on the
basis of a means, needs or income test and included because of clause 56(1)(a)(i)(A) or paragraph 56(1)(u) in computing the
taxpayer’s income for the year or any amount that is
...
(ii) compensation received under an
employees’ or workers’ compensation law of Canada or a province in respect of
an injury, disability or death, except any such compensation received by a
person as the employer or former employer of the person in respect of whose
injury, disability or death the compensation was paid,
Division E – Computation of tax
Subdivision
a – Rules applicable to individuals
Section 122.5: definitions
(1) The following definitions apply in
this section.
"adjusted
income" — "adjusted income", of an
individual for a taxation year in relation to a month
specified for the taxation year, means the total of the individual’s income for
the taxation year and the income for the taxation year of the individual’s
qualified relation, if any, in relation to the specified month, both calculated
as if in computing that income no amount were
(a) included
(i) under paragraph 56(1)(q.1)
or subsection 56(6),
(ii)
in respect of any gain from a disposition of property to which section 79
applies, or
(iii)
in respect of a gain described in subsection 40(3.21); or
(b) deductible under paragraph 60(y) or (z).
122.5(4)
Months specified. For the purposes of this section,
the months specified for a taxation year are July and October of the
immediately following taxation year and January and April of the second
immediately following taxation year.
[10]
Section 2 (included in
Division A, Part 1 of the ITA, on the liability for tax) clearly distinguishes
between an individual's income and the taxable income on which the tax payable
is calculated.
[11]
Section 3 et seq. of
Division B address the computation of income, which is referenced in the
definition of adjusted income at section 122.5.
[12]
Therefore, the
allowance the appellant received in 2010 must be included in his income
pursuant to paragraph 56(1)(v) of the ITA, which is part of Division B
on the computation of income.
[13]
The appellant noted
that he paid back $35,000 in social assistance benefits, received in prior
years. This amount is taken into consideration in the deduction allowed in the
computation of taxable income for 2010, pursuant to subparagraph 110(1)(f)(ii)
of the ITA.
[14]
Even though the taxable
income is reduced by this deduction, it does not have any impact on the GST
credit, which is determined based on income (as calculated under Division B of
the ITA) and not based on the taxable income (as calculated under Division C of
the ITA, which includes the deduction under subparagraph 110(1)(f)(ii)).
[15]
The respondent was
therefore correct to disallow the GST credit on the ground that the appellant's
2010 income exceeded the allowed limit.
[16]
The appellant feels
that he is the victim of discrimination and injustice. He did not provide
evidence of discrimination in terms of a specific group. This is an application
of tax provisions adopted by Parliament and that apply equally to all
individuals in the same situation.
[17]
For these reasons, I
must dismiss both the appeal from the nil reassessment for 2010 and the
appeal from the determination disallowing the GST credit.
Signed at Ottawa, Canada, this 17th day of January 2013.
"Lucie Lamarre"
Translation certified true
on this 4th day of February 2013.
Elizabeth Tan,
Translator
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