Docket: T-1151-14
Citation:
2015 FC 446
Toronto, Ontario, April 10, 2015
PRESENT: The
Honourable Mr. Justice Diner
|
BETWEEN:
|
|
LYNN CHMELNITSKY MOORS
|
|
Applicant
|
|
and
|
|
THE MINISTER OF NATIONAL REVEUNE,
THE CANADA REVENUE AGENCY, AND
THE ATTORNEY GENERAL OF CANADA
|
|
Respondents
|
JUDGMENT AND REASONS
I.
Overview
[1]
The Canadian Human Rights Commission [CHRC]
decided on April 15, 2014, upon the review of an investigator’s report and
pursuant to section 44(3)(b)(i) of the Canadian Human Rights Act, RSC,
1985, c H-6 [CHRA], to dismiss the Applicant’s claim that the Canada Revenue
Agency [CRA] discriminated against her on the basis of sex and family status.
This is a judicial review of that decision.
[2]
The Applicant, Ms. Moors, is an elementary
school teacher from Brampton, Ontario and a member of the Ontario Teachers’
Pension Plan [OTPP]. She went on maternity leave in November 1998 after the
birth of her first child. She had two more children in December 2000, and
November 2002, and returned to teaching in September 2006. It was at this time
that she attempted to buy back pension credits related to her time on maternity
leave. Due to her factual circumstances, the CRA instructed Ms. Moors that she
would be subject to a Past Service Pension Adjustment [PSPA], the consequences
of which, she submits, impeded her ability to save for retirement, in a
discriminatory manner. I shall address the Applicant’s submissions regarding
the PSPA’s discriminatory treatment below, but begin with an overview of the
pension architecture in operation in this case.
II.
Background: Financial Framework of the RRSP and
RPP Investment Vehicles
[3]
Registered Retirement Savings Plans [RRSPs] and
Registered Pension Plans [RPPs] are investment vehicles designed to encourage
Canadians to save for retirement by providing tax-deferral on income earned
within the plans. While RRSPs are savings plans established by individuals,
RPPs are arrangements between an employer or union to provide periodic payouts
to employees upon their retirement. Canadians are permitted to participate in
both of these plans simultaneously; however, the cumulative contribution made
to these plans cannot exceed 18% of an employee’s earned income per annum, up
to a specified dollar amount.
[4]
A pension adjustment [PA] is the value of
benefits accrued in an RPP in a given year, and this amount reduces an
employee’s RRSP deduction limit for the following year. When an employee
performs contractual duties for an employer, the pension benefits associated
with that employment, accumulated on a present basis, are referred to as “current service” benefits. This can be distinguished
from “past service” benefits, which are pension
benefits provided to employees retroactively, for service rendered prior to the
year(s) of the benefit.
[5]
When member contributions are made for past
service pension benefits, a PSPA must be reported by the employer and certified
by the CRA. A PSPA is, at its maximum, equivalent to the sum total of the PAs
that would have been calculated for the employee had they been accrued on a
current service basis. The member has an interest in contributing funds to the
pension for the time they spent on leave, otherwise described as “buying back pension benefits”, as it can influence
the payout upon retirement from defined benefit-RPPs. In simpler language, the
greater the years of pensionable service a member has upon retirement, the
greater the payout will be. Purchasing past service benefits allows members to
retroactively increase their years of pensionable service.
[6]
What must be noted, however, is that the PSPA
certification is contingent on the member having unused RRSP deduction room.
The purpose of the certification is to ensure there is no double counting of
retirement benefits, and so no advantage is gained relative to what the person
would have accumulated with current service contributions. In short, the CRA
seeks to avoid a scenario where the employee contributes the maximum RRSP
amount, and then through the purchase of prior benefits, also contributes the
equivalent RPP amount, albeit retroactively. Under such a scenario, the member
would have effectively contributed 36%, as opposed to the allowable 18%, of
income to these two retirement savings vehicles, resulting in a “double dipping” of retirement contributions.
[7]
Thus, the unused RRSP deduction must be equal or
greater than the amount of the PSPA for the certification to be approved.
Members who have insufficient RRSP deduction room must transfer or withdraw property
from their RRSPs to create it. This RRSP withdrawal may have immediate negative
tax consequences for that member.
[8]
When a member takes a leave of absence, such as
maternity leave, parental leave or disability leave, the individual does not
receive compensation from the employer during the absence, and is thus unable
to accrue current RPP service benefits. To remedy the negative consequences that
the inability to accrue current service benefits would have on a member during
a leave of absence, the Income Tax Act (RSC, 1985, c. 1 (5th Supp)) [ITA] permits
compensation to be prescribed to an employee during these periods of leave. The
prescribed compensation generally equals the earnings the employee would have
received during the period of the absence, had they not taken leave. As a
result of the prescribed compensation, the member is able to continue to accrue
benefits on a current service basis until the return to work.
[9]
The ITA does not mandate that employers
provide current service pension benefits to employees during periods of leave,
nor does it mandate who pays for the benefits during such periods. These
details must be negotiated between the employer and employee.
[10]
The purchase of current service benefits during
a period of leave may be made concurrently as the benefits accrue. The ITA
also allows an employee to purchase current service benefits after the member
has returned from a leave of absence. In such a circumstance, the member must
elect this option prior to April 30th of the year immediately
following the calendar year in which the period of leave comes to an end.
[11]
If the member makes the election in the required
timeframe, the purchase will be treated as though it had been made concurrently
in the time period during which the benefit accrued, resulting in a PA for the
member. Making the election before April 30 does not necessarily oblige the
member to pay for the period of absence in a lump sum: the nature of the
payment for these benefits (whether by lump sum or instalment) is a matter
dictated by the terms of the RPP, not the ITA. In other words, it is up
to the employer to determine the length of time for which the prescribed
compensation benefit can be left unfunded.
[12]
If the member chooses not to make the election
in the required timeframe, the pension benefits must be purchased on past
service basis, and a PSPA, discussed above, must be certified by the CRA.
III.
Facts of this Case
[13]
When the Applicant, Ms. Moors, was approved for
maternity leave, she was given three options:
a)
Contribute to the plan during her leave of
absence; her PAs would be reported;
b)
Once returning to work, elect to contribute to
the plan by April 30th of the year following her return; her PAs
would be reported; or
c)
Buy back her pension credits, having not
contributed during her leave of absence or elected to contribute to the plan by
April 30th of the year following her return. A PSPA would need to be
certified by the CRA, contingent on unused RRSP room and a threshold of savings
(currently $8,000) sufficient to satisfy the requirements for certification.
[14]
From November 1998 to August 1999, the Applicant
contributed to her plan on a monthly basis (Option A). From September 1999
forward, the Applicant was no longer able to afford her monthly contributions
during her maternity leave.
[15]
The Applicant returned to teaching in September
2006. The Applicant did not elect to buy back the pension credits accumulated
during her leave by April 30, 2007, as she was under the impression that she
had 5 years upon her return to work to buy back the credits. When the Applicant
subsequently attempted to purchase the pension credits related to the period
from September 1999 to August 2006, she was informed by the CRA on February 3,
2011 that for a PSPA to be certified and the buyback completed, a qualifying
RRSP withdrawal would need to be made.
[16]
The Applicant submits that even after having
withdrawn RRSP funds, she was precluded from buying back the credits relating
to the entirety of her maternity leave because she did not have sufficient RRSP
deduction room.
[17]
Ms. Moors contends that the provisions of the ITA
which base pension buy back eligibility on RRSP deduction limits are
discriminatory, based on gender and family status. The Applicant argues that
since only women take maternity leave, the failure of the ITA to enable
RRSPs to allow for contributions pursuant to prescribed income, as it does for
RPPs, has a discriminatory effect resulting in a reduced ability for women to
save for retirement. The Applicant expanded her arguments in the oral hearing
before this Court to include men taking parental leave to care of their
children.
[18]
Ms. Moors launched a complaint with the Canadian
Human Rights Commission in September 2011. An investigator was appointed and
issued a report on January 27, 2014. The CHRC adopted the conclusions of the
investigator and dismissed the complaint on April 15, 2014. The CHRC found
that while the ITA rules relating to PSPAs adversely affected the
complainant, the “adverse effects were unrelated to
factors related to the complainant’s sex and/or family status” (Applicant’s
Record [AR], p 153).
IV.
Standard of Review
[19]
As recently explained by Justice Webb in Attaran
v Canada (Attorney General), 2015 FCA 37 [Attaran], when the Court reviews
a decision of the CHRC not to refer a complaint to the Human Rights Tribunal, the
findings of fact made by the CHRC are to be reviewed on the standard of
reasonableness (Attaran at para 14). If these factual findings are
reasonable, the Court is then required to assess whether the CHRC’s dismissal
is reasonable, cognizant that the deference to be applied to the decision is constrained
by the determinative nature of the decision (Attaran at para 14).
V.
Analysis
[20]
The initial onus rests on a human rights
complainant to establish a prima facie case that discrimination has
occurred under the CHRA. Having done so, the burden then shifts to the
opposing party to justify the conduct or practice. To establish a prima
facie case of discrimination, the Applicant must show (i) she has a
personal characteristic protected from discrimination under the CHRA;
(ii) she experienced an adverse impact with respect to the service; and (iii)
the protected characteristic was a factor in the adverse impact (Moore v
British Columbia (Education), 2012 SCC 61 at para 33).
[21]
Once the complainant establishes a prima
facie case, the party against whom the complaint is made may provide a
reasonable explanation that, despite its appearance, the practice is not
actually discriminatory. If a reasonable explanation is so provided, the
complainant would have the burden of demonstrating that the explanation was a
pretext for a practice that is actually discriminatory (Attaran at para
25). If the opposing party cannot provide a reasonable explanation for the discriminatory
treatment, it may still avoid having engaged in a discriminatory practice if one
of the exemptions available under the CHRA, such as bona fide justification, is
applicable (Attaran at para 24; Canada (Human Rights
Commission) v Canada (Attorney General), 2014 FCA 131 at para 21).
[22]
While I note that the CHRC did not have the
benefit of the Federal Court of Appeal’s guidance in Attaran prior to
its decision, I find its decision to be a reasonable one. The inability of the
Applicant to purchase pension credits did not stem from discrimination related
to her sex or family status. The investigator’s report, the conclusion of which
CHRC adopted, stated at various points that:
“The evidence does
not support that the ITA rules relating to PSPAs adversely affected the
complainant based on sex and/or family status. These tax consequences exist for
anyone who requires a PSPA.”
(AR, p 152)
“The evidence also indicates that the ITA
rules relating to PSPAs adversely affected the complainant. However, the
adverse effects were unrelated to factors related to the complainant’s sex
and/or family status.”
(AR, p 153)
[23]
In my view, these passages indicate that the
CHRC concluded that the Applicant had not successfully established a prima
facie case of discrimination. In other words, her sex and family status
were not factors in the financial hardship she suffered in her pension
planning.
[24]
Section 5(b) of the CHRA states that it
is a discriminatory practice in the provision of services to differentiate
adversely in relation to any individual based on a prohibited ground of
discrimination. To differentiate adversely is to treat a person differently by
drawing a formal distinction between the claimant and others, or to fail to
take into account the claimant’s already disadvantaged position within Canadian
society (Quebec (Attorney General) v A, 2013 SCC 5 at para 151). In this
case, the service provided by the CRA is the certification of a PSPA for a
member of an RPP who wishes to purchase pension credits after an approved leave
of absence.
[25]
While I have sympathy for the Applicant’s
inability to complete the purchase of the pension credits accumulated during
her approved maternity leave, this was the result of an incomplete election of
those credits by the requisite deadline. Had the Applicant made the election to
purchase the credits by April 30, 2007, there would have been no need for the
CRA to certify a PSPA and no contributions would have been precluded due to
insufficient unused RRSP room. As such, this matter is related more to an
unfortunate incident of financial planning on the part of the Applicant with
respect to her RPP, rather than the discriminatory effect of the ITA.
Indeed, subsequent to the time period in question, the OTTP was changed to
allow for greater flexibility in terms of payment over time than had been the
case when the Applicant took her maternity leave.
[26]
In summary, the Applicant’s situation might have
been played out differently had she taken her leave after the change noted
above was implemented, but the rules in place at that time she took her leave, impacted
her desired outcome negatively. I do not find that the negative outcome was
triggered by discrimination within the law that can be remedied by the present
judicial review.
[27]
As the investigator noted, the Applicant claims
that the reason for missing the election date of April 30, 2007 was that she
did not have sufficient funds to purchase the credits in a lump sum
contribution. This was the not the function of the ITA, but the
Applicant’s RPP. While the Applicant’s RPP in this case required the plan
member to pay into the plan by a specified date (April 30, 2007) for the
buyback to be completed on a deemed current service basis, the ITA
itself does not specify when the funds related to the election must be
contributed, only that an election be made.
[28]
The Applicant contends that the date imposed for
the buyback pursuant to section 8308(4) of the Income Tax Regulations
[ITR], April 30 of the year following a return from leave, is arbitrary and
discriminatory. I agree with the Respondents that it was not this deadline that
precluded the Applicant from purchasing her pension credits, but rather her
inability to provide a lump sum contribution to her plan at the deadline. In
other words, while it was open to OTPP to recognize the Applicant’s election
and allow for contribution by instalment, the restrictions which prohibited her
from doing so came from the terms of the plan, not the ITA or ITR.
As mentioned above, the OTTP has since revised its practices and no longer
requires a full contribution from a member by the deadline; it now only requires
an expression of intent to purchase the credits, regardless of when payment is
made (although the Court is mindful that this wasn’t the case for her plan at
the period in which her issues arose).
[29]
With regards to the deadline, the Applicant
argues that the “establishment of this date bears no
logical relationship to relevant considerations and is itself discriminatory to
a woman who has taken maternity leave” (AR, p 213, para 48).
[30]
As a matter of practical necessity, the mere
imposition of a deadline of general application cannot in itself be
discriminatory. Deadlines imposed under the ITA and ITR are
central to administrative efficiency (1057513 Ontario Inc v The Queen,
2014 TCC 272 at paras 29-30). There is no evidence in the record that it has
had this effect relative to members returning from absences related to family
leave or disability. Therefore, s. 8308(4) of the ITR does not
discriminate against pregnant women or mothers on maternity leave in these
circumstances.
[31]
This brings me to the crux of the Applicant’s
argument – that the ITA is discriminatory in effect because RRSPs
do not provide for a mechanism of prescribed compensation in the manner that
RPPs allow.
[32]
I should begin by stating that the Applicant in
this case was not limited to the vehicle of RRSPs to save for her retirement. She
could have, for instance, contributed to her RPP without the need for a PSPA on
a deemed current service basis by either making monthly payments while on leave,
or by electing to purchase the pension credits by the deadline. To that
extent, she is not in the same situation as a person taking a leave of absence
whose sole investment vehicle for retirement is limited to an RRSP.
[33]
Furthermore, while the Applicant makes this
argument regarding a discriminatory effect of the ITA upon judicial
review, this was not the basis of the original complaint made to the CHRC.
Rather, in the original complaint made on September 6, 2011, the Applicant
stated that:
“I believe I was subjected to discrimination
due to my sex and feel that because of having gone on maternity/parental leave
that I have been economically disadvantaged and unable to meet the criteria for
Option 1 and 2 [the current service contributions and the buyback at the
deadline] and I will continue to be disadvantaged in my pensionable years until
the day I die because of the current PSPA rules.” [emphasis and
clarification added]
(AR, p 56, para 6)
[34]
The investigator, accordingly, devoted the
report to addressing whether the PSPA rules discriminate against the Applicant.
This Court is limited to assessing the analysis undertaken by the investigator
in light of the complaint lodged. Addressing ancillary issues, however valid,
would go beyond the role of this Court upon judicial review (Alberta
(Information and Privacy Commissioner) v Alberta Teachers' Association,
2011 SCC 61 at para 55).
[35]
To the extent that the Applicant argues that the
ITA and PSPA rules pertaining to RPPs disproportionately discriminate
against women because only women take maternity leave, I do not agree that this
is an appropriate way to frame the issue. The PSPA rules apply to a broad range
of parties, including persons on family leave and disability leave (of both
genders) and come into effect only when an election by the deadline has not
been made. The PSPA framework is the default regime for past service pension
buybacks, subject to provisions in the ITA and ITR which allow a
buyback on a deemed current service basis. The ITA recognizes the
particular significance of maternity and paternity leaves for RPPs by allowing
members to accrue pension benefits at a notional full-time equivalent salary
for up to 8 years of eligible leave – 3 years longer than the timeframe
permitted for other types of leave. The provisions governing RPPs are
consequently more sensitive to women on maternity leave when compared to
members taking leave for alternate reasons, not less.
[36]
The Respondents point the Court to Sollbach v
Canada, [1999] FCJ 1912 at para 9 [Sollbach], in which the Federal
Court of Appeal held that pregnant women seeking employment benefits did not
suffer discrimination as the provision limiting such benefits was applied
neutrally. Justice McDonald wrote for the Court:
[9] We find that the Applicant has
failed to show that pregnant women are discriminated against as a group under
the legislation. Pregnant women are treated exactly the same as men and women
on parental leave and the same as men and women who suffer from a disability.
All are limited to a maximum of 30 weeks of compensation.
(See also Miller v Canada (Attorney General), 2002 FCA 370 at paras 5, 23).
[37]
Even though human rights jurisprudence in Canada has evolved in the two decades since the Federal Court of Appeal’s decision in Sollbach,
it remains binding, and bolsters the investigator’s conclusion that there was
no actual or effective discrimination in this case.
VI.
Conclusion
[38]
I am of the opinion that the CHRC’s decision,
which found that the inability of the Applicant to purchase pension credits did
not stem from discrimination related to her sex or family status, was a
reasonable one. I make this finding despite the very able written preparation,
oral arguments, and best efforts of the Applicant to convince me otherwise.
[39]
This application is accordingly dismissed. No
costs will be awarded.
Email this Content