REASONS
FOR JUDGMENT
Bocock J.
I. Introduction
and factual background
[1]
Virginia Vincent (“Ms. Vincent”) was denied
Guaranteed Income Supplement (“GIS”) benefits for the period July 2015 to June
2016 (the “payment period”) by the Minister of Employment and Social
Development (the “Minister”). The Minister did so after re-calculating Ms.
Vincent’s GIS benefit income for the relevant based year, 2014. In turn, that
re-calculation occurred because the Canada Revenue Agency (the “CRA”) reassessed
Ms. Vincent’s income for the base year 2014 (the “base year”). The CRA
added an additional amount on account of “other pension/superannuation income”
as a lump-sum. This changed Ms. Vincent’s base year total for such source of
income to $14,039.00 from the previous $2,356.00 and her total income to
$35,553.00 (“Total Income”).
[2]
The base year is used by the Minister to
determine whether Ms. Vincent falls below an income level warranting payment of
GIS benefits for the subsequent payment period. The Minister asserts the lump-sum
payment pushed Ms. Vincent’s income above the maximum income threshold for GIS
and therefore she was denied the GIS benefit. The Minister’s decision involved
a determination of income. Therefore, the Social Security Tribunal, when Ms. Vincent
exercised her right of appeal, referred the matter to this Court pursuant to
the Old Age Security Act, R.S.C., 1985, c. O-9 (the “OAS Act”).
[3]
The reassessment by CRA arose because it
received a T1198 (Statement of Qualifying Retroactive Lump-Sum Payment) and T4A
from the Alberta Pensions Services Corporation indicating that an additional
lump-sum pension benefit of $11,683.00 was received by Ms. Vincent in 2014.
[4]
Based upon this T1198 and T4A, the CRA adjusted
Ms. Vincent’s Total Income. As well, the CRA applied section 110.2 of the Income
Tax Act, RSC 1985, c.1, as amended (the “ITA”). This discretionary
adjustment assigned $9,326.00 of the lump-sum to taxation years prior to 2014
for the purposes of calculating tax payable. Therefore, Ms. Vincent did not pay
income tax on this reallocated amount in 2014. However, Ms. Vincent’s total
income in 2014 was not altered by the CRA. The continued inclusion of the
entire lump-sum in 2014 Total Income has direct bearing of the calculation of
income for GIS benefit purposes. Therefore, the appeal before the Court.
[5]
As to process for the hearing, Ms. Vincent’s
agent requested that the hearing of the appeal be conducted by written
representations, given Ms. Vincent’s ongoing health issues. On motion to
the Court and in accordance with the latitude permitted under the relevant
rules, the hearing was held through written submissions. On November 30, 2017,
the period for submissions expired. Therefore, the Court proceeds to render its
decision based upon the submissions received.
(a) Issue
[6]
The overriding issue for the Court is whether
the Minister correctly determined Ms. Vincent’s base year income (2014) for the
purpose of calculating her GIS benefits during the payment period.
(b) Some Additional Facts
[7]
The T1198 prepared by the Alberta pensions
official on September 25, 2014 recorded the total of the “qualifying
retroactive lump-sum” as $11,683.39. The T1198 also separated the aggregate
lump-sum over four years: $12.56 in 2011, $4,634.88 in 2012, $4,679.40 in 2013
and (by handwritten entry) $2,356.56 in 2014. The corresponding T4A recorded
the aggregate Pension or Superannuation benefits as $14,039.95, being some
$2,356.00 greater than the amount recorded in the T1198. Since these differing
amounts ultimately bear on the determination of total income for 2014, the Court
will attempt to resolve that conflict later in these reasons.
II. The
Law: calculating GIS “qualifying” income
a) The period to measure
[8]
The calculation period is not in dispute. The
base calendar year is 2014 and the payment period is July 2015 to June 30,
2016: OAS Act at section 10.
b) Calculating
income for GIS purposes: what goes in, what stays out
[9]
The inclusion requirements for computing income
for GIS purposes are provided for in the OAS Act and the Regulations.
These rules for computing income for such purposes are distinct from, but
reference the ITA.
[10]
Section 2 of the OAS Act defines a
pensioner’s income as determined under the ITA. The ITA, within paragraph
56(1)(a)(i), provides for the inclusion of pension benefits where it is
written:
SECTION 56:
Amounts to be included in income for year
56(1) Without restricting the generality of section 3, there shall be
included in computing the income of a taxpayer for a taxation year,
Pension benefits,
unemployment insurance benefits etc.
(a) any amount received by the taxpayer
in the year as, on account or in lieu of payment of, or in satisfaction of,
(i) a superannuation or pension benefit
including, without limiting the generality of the foregoing,
…
(C) the amount
of any payment out of or under a specified pension plan, and …
[11]
To calculate one’s income for the purposes of
the OAS Act and specifically GIS benefits one follows a prescribed
route. The OAS Act directs a taxpayer to the ITA. The ITA
provides general guidance regarding various inclusions from pension type
payments. For GIS specifically, one turns back to the OAS Act and
Regulations. The calculation of income for GIS purposes is then made. If one
exceeds the maximum allowable income threshold, GIS benefits are not paid.
(c) Ms.
Vincent’s submissions
[12]
Ms. Vincent’s agent asserts several bases as to
why the lump-sum should be excluded from GIS qualifying income. These
submissions may be summarized as follows:
(i) the
$9,325.00 should not be included in total base year income because it factually
arose from retroactive payments in 2014, but related to previous years;
(ii) although
the CRA increased total income by $14,039.00, the CRA nonetheless “reduced your
[Ms. Vincent’s] 2014 income by $9,325.00 which is the amount of the payment
that applies to previous years”;
(iii) the
T1198 clearly apportions $9,325.00 to the 2011, 2012 and 2013 taxation years;
and
(iv) the
quantum of the GIS benefits denied is a significant amount of money to Ms.
Vincent and represents a financial burden for her.
III. Analysis
and Decision
[13]
The views and sentiments of Ms. Vincent’s agent are
similar to many others who come to this Court concerning the measurement of
income for GIS purposes. They assert that the measurement of income for GIS
benefits should be taxable income and not total income. Regrettably, it is the
opposite. While there are some permitted adjustments to total income (Part I,
Division B income) for GIS determination purposes, lump-sum retroactive pension
payments are not among them: Gaisford v. Canada (Minister of
Human Resources and Skills Development), 2011 FCA 28 at paragraph 4. Ms. Vincent
did not pay tax on the lump-sum retroactive payments because, although they are
included and remain in total income, a portion of such payments may, where
section 110.2 of the ITA is applied, be deducted from taxable income. This
discretionary ministerial re-allocation is made to taxable income. However, the
fact that a portion of the lump-sum is not included in taxable income in a
given year does not mean it is excluded from total income. Instead, the measure
of taxable income (Part I, Division C) and deduction of a portion of the lump-sum
retroactive pension payment are not relevant to the measure of total income (Part
I, Division B) and related GIS income calculation: Burchill v. HMQ,
FCA 145 at paragraphs 4 and 5.
[14]
On this particular ground of appeal, Ms. Vincent
cannot succeed. Simply, she has not paid tax as taxable income on a portion of the
lump-sum paid in 2014 pursuant to section 110.2, but she must include it in 2014
total income for GIS purposes. The CRA accurately reflected this in the notice
of reassessment which clearly illustrates the disparity between 2014 filed and
revised “Total Income” and “Taxable Income”: $35,353.00 up from $23,870.00 versus
$20,366.00 up from $18,008.00. Since GIS benefits are based upon total income
(with some exclusions) and not taxable income, the amounts determined are
generally correct.
[15]
On the final issue regarding Ms. Vincent’s
“double counting” argument, it is uncertain whether there is an error in the
calculation of Total Income for 2014. In 2014, the amount of $2,356.56, which
appeared as a “Qualifying Retroactive Lump-Sum Payment, was initially included
in her filed return as 2014 pension income.
[16]
The amount is also coincidentally equal to the
amount reflected by a handwritten notation as being paid as a retroactive
lump-sum in 2014. As further coincidence, it is also one-half of the amounts
paid as lump-sum retroactive payments for 2012 and 2013. Adding this handwritten
$2,356.56 to the amount initially reported also coincidentally equals the full
amount of the retroactive lump-sum payments recorded for 2012 and 2013. The
court simply cannot determine on the basis of the evidence before it which is
correct. Is the $2,356.56 recorded on the T1198 and T4A for 2014 additional to the
amount then already received and reported by Ms. Vincent? If so, this would
bring her 2014 pension benefits to amounts consistent with the 2012 and 2013 lump-sum
payments. Alternatively, is the $2,356.56 double counted? Fortunately, such an
error would be inconsequential. The margin of error makes no difference to Ms.
Vincent regarding the maximum income threshold calculation for GIS benefit
purposes. If it had, Ms. Vincent may rest assured the Court would have
requested further information and made a decision. However, even if double
counted in error, the reduction to Ms. Vincent’s total income would still place
total income above the maximum income threshold for GIS benefit purposes. Therefore,
the Court need not undertake the request for further information needed to
resolve this final assertion.
[17]
For the foregoing reasons, the appeal is
dismissed without costs. Based upon the T4A dated September 25, 2014 received
by the CRA from the Alberta Pension Services Corporation and the other declared
amounts of income, the Minister’s determination of income for GIS benefit purposes
was correct.
Signed at Ottawa,
Canada, this 19th day of December 2017.
“R.S. Bocock”
Email this Content