Betty E. Burke v. Minister of National Revenue, [1993] 1 CTC 2115, 93 DTC 60

Hamlyn, T.C.C.J.:—The parties proceeded by way of agreed statement of facts and written submissions.

The appellant appeals the reassessment of her 1984 taxation year.

The facts of this case have been agreed upon by the parties and are set out in the agreed statement of facts dated February 5, 1992, as follows:

1. In reporting her income for her 1987 taxation year, the appellant claimed a noncapital loss carry back of $7,380.51 and requested that a non-capital loss carry back in the amount of $4,290 be applied to her 1984 taxation year.

2. By notice of reassessment dated June 12, 1989, the respondent reassessed the tax liability of the appellant for the 1984 taxation year by, inter alia, allowing a noncapital loss carryback from her 1987 taxation year in the amount of $4,900.

3. By further notice of reassessment dated April 12, 1990, the respondent reassessed the tax liability of the appellant for the 1984 taxation year by, inter alia reducing the non-capital loss carry back from her 1987 taxation year to $4,311.

4. The appellant, in her 1987 income tax return claimed R.R.S.P. contributions of $2,319.78 comprised of the following:

Trimark	$100
Trimark	300
Royal Trust	157.68
Central Trust	1,762.10
TOTAL	$2,319.78

5. The appellant did not report any pension income in the 1987 taxation year.

6. The appellant’s earned income was nil for the 1987 taxation year.

7. The appellant was not entitled to deduct her R.R.S.P. contributions in the 1987 taxation year and thus increase her non-capital loss for that year as her earned income was nil.

8. The appellant was reassessed on April 12, 1990, resulting in her income being increased in her 1984 taxation year by $589, thereby increasing her income tax liability for that year.

9. As a result of the reassessment, the appellant became liable to pay the Receiver General interest on the increased amount of income tax liability, (hereinafter referred to as the "interest") at a rate prescribed by the Income Tax Act and Regulations thereto.

10. The appellant has rejected or refused and continues to neglect or refuse to pay the interest assessed against her.

11. The interest payable as of April 12, 1990 is $120.64.

DATED at the City of Huntington Beach, in the State of California, U.S.A., this 20 day of January, A.D., 1992.

PER: BETTY E. BURKE

DATED at City of Edmonton, in the Province of Alberta, this 5th day of February, A.D. 1992.

JOHN C. TAIT, Q.C.

Deputy Attorney General of Canada

Solicitor for the respondent

Per: DAVID I. BESLER

As set out in paragraph 8 of the agreed statement of facts, the appellant's 1984 taxation year was reassessed on April 12, 1990 by, inter alia, increasing her income by $589. This change in 1984 income was a result of a reduction in the non-capital loss carry back from 1987 from $4,900 to $4,311, the difference being the amount of $589 added to the 1984 taxation year income. The Minister of National Revenue (the"Minister") reduced the amount of the 1987 non-capital loss carry back by disallowing deductions for contributions to registered retirement savings plans ("R.R.S.P.") claimed by the appellant in 1987.

The appellant challenged by way of this appeal this reduction.

Paragraph 7 of the agreed statement of facts states that the respondent and the appellant acknowledge that the latter was not entitled to deduct her R.R.S.P. contributions in the 1987 taxation year as her earned income was nil for that year.

The amount of R.R.S.P. premiums deductible by the appellant in her 1987 taxation year is as set out in subsection 146(5) of the Act:

There may be deducted in computing the income for a taxation year of a taxpayer who is an annuitant under a registered retirement savings plan or becomes an annuitant thereunder within 60 days after the end of the year, the aggregate of all amounts each of which is the amount of any premium paid by the taxpayer under the plan during the year or within 60 days after the end of the year (to the extent that it was neither deducted in computing his income for a previous year nor designated for the purposes of paragraph 60(j), (j.1) or (1)), not exceeding the amount, if any, by which

(a) where the taxpayer was employed in the year and

(i) as a consequence thereof was a person who is or may become entitled to benefits under a pension fund or plan that provides for payment of a pension to him payable in whole or in part out of contributions made or to be made to the fund or plan or out of or in respect of amounts credited or to be credited in lieu of such contributions by a person other than the taxpayer in respect of the taxpayer's employment in the year,

(ii) contributed an amount in the year to a deferred profit sharing plan of which he was a beneficiary, or

(iii) as a consequence thereof was a person in respect of whom a contribution was made by an employer to a deferred profit sharing plan in the year,

an amount that, when added to the amount, if any, deductible under paragraph 8(1)(m) in computing the income of the taxpayer for the year, does not exceed the lesser of $3,500 and 20 per cent of his earned income for the year, or

(b) in any other case, the lesser of $7,500 and 20 per cent of his earned income for that taxation year

exceeds the amount, if any, deductible under subsection (6) in computing his income for that taxation year.

Subsection 146(5) provides for the deduction from income of contributions made to R.R.S.P.s within certain time limits. The deduction permitted for a particular year under subsection 146(5) is limited to contributions made within a specified time period out of the taxpayer's earned income as defined in paragraph 146(1)(c).

Paragraphs 146(5)(a) and 146(5)(b) clearly limit the appellant's contribution to 20 per cent of her earned income if that is the lesser amount. It was admitted by the appellant in paragraphs 6 and 7 of the agreed statement of facts, that her earned income for 1987 was nil for the purposes of paragraph 146(1)(c) of the Act. The appellant's R.R.S.P. contribution for the 1987 taxation year, based on 20 per cent of her income, is therefore nil. On these agreed facts, the loss carry back remains as reassessed and therefore the amount of income reassessed for the 1984 taxation year stands as is.

The final matter to be dealt with in this appeal is that of the liability of the appellant for interest on the increased amount of income tax liability for the 1984 taxation year.

The appellant's income for the 1984 taxation year was correctly reassessed by the Minister on April 12, 1990, thereby increasing her income tax liability for that year in the amount of $589. As a result of this reassessment, the appellant is liable to pay the Receiver General interest on the increased amount of income tax liability at the prescribed rate pursuant to subsection 161(1) of the Act.

The appeal is dismissed.

Appeal dismissed.