Frank M. Smith, Executor of the Estate of the Late Lillian Lamash v. Minister of National Revenue, [1990] 2 CTC 2534, 91 DTC 9

Christie, A.C.T.C.J.: —Lillian Lamash died at Victoria, British Columbia, on July 27, 1982. This appeal pertains to two basic issues arising under the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act") from her death. The taxation years under review are 1982 (first issue) and 1983 (second issue).

The deceased spent a number of years in the Public Service of Canada, but retired early on account of ill health. She never married. At the time of her death she was the annuitant under three registered retirement savings plan contracts with the Bank of Montreal. The amounts involved were $7,791.69, $5,652.49 and $5,652.49 for a total of $19,096.67. This sum was received by Mr. Frank M. Smith in his capacity as executor of the estate. He filed a separate rights or things return pertaining to the $19,096.67 under subsection 70(2) of the Act. The only income reported in that return is the $19,096.67. The first question is whether subsection 70(2) authorized this.

By letter dated October 7, 1985, to a firm of certified general accountants in Victoria that had been retained by Mr. Smith, Revenue Canada said a number of things including:

1. A “Rights & Things” return has been filed under subsection 70(2) of the Income Tax Act, to include the deemed receipt of the RRSPs belonging to the deceased taxpayer.

This should have been included in the subsection 70(1) [1] return, as RRSPs do not qualify as “Rights and Things”. Please refer to Interpretation Bulletin I.T. 212R. Paragraph 17.

The reply is dated March 26, 1986, and reads in part:

In response to your letter of October 7, 1985, please be advised as follows (in corresponding numerical order per your letter):

1. We are in agreement. The RRSP should be reported on Mrs. Lamash's date of death return.

The executor disagreed with his accountants and he was bolstered in this when he discussed the matter with another tax consultant.

Mr. Smith had also filed a "date of death return" under paragraph 150(1)(b) of the Act [2] .

In reassessing in respect of the date of death return the respondent added the $19,096.67 to income and deleted that amount from income regarding the rights or things return.

Subsection 70(2) of the Act reads:

70.(2) Where a taxpayer who has died had at the time of his death rights or things (other than any capital property or any amount included in computing his income by virtue of subsection (1)), the amount whereof when realized or disposed of would have been included in computing his income, the value thereof at the time of death shall be included in computing the taxpayer's income for the taxation year in which he died, except that where his legal representative has, within one year from the date of death of the taxpayer or within 90 days after the mailing of any notice of assessment in respect of tax of the taxpayer for the year of death, whichever is the later day, so elected, a separate return of the value shall be filed and tax thereon shall be paid under this Part for the taxation year in which the taxpayer died as if he had been another person entitled to the deductions to which he was entitled under section 109 for that year.

In support of his contention that the amounts of the RRSP contracts were properly included in the return filed under subsection 70(2) of the Act, counsel for the appellant made reference to the judgment of the Tax Appeal Board in Kenneth J. McArdle Estate (No. 1) v. M.N.R. (1962), 29 Tax A.B.C. 395; 62 D.T.C. 397, and the decision of the Supreme Court of Canada dealing with the same case: [1965] C.T.C. 295; 65 D.T.C. 5176. The decision of the Tax Appeal Board had been reversed by the Exchequer Court: [1964] C.T.C. 172; 64 D.T.C. 5104. The decision of Mr. Justice Dumoulin of the Exchequer Court turns entirely on the application of certain provisions of the Quebec Civil Code and it is not relied on by the appellant in this appeal. The essential facts in McArdle as related by Tax Appeal Board member Maurice Boisvert, Q.C. are that prior to his death Kenneth J. McArdle had participated in a pension plan established by the corporation that employed him. He died before attaining the normal retirement age of 65 and $13,844.20 was paid under the plan. Article XI of the plan provided:

XI. If a Participant should die while in the employ of the Employer, the death benefit payable under any contract then held by the Trustees (Pension fund trustees) in respect to the Participant shall, subject to Section 4 of Article VII hereof, be paid to the Estate of the Participant.

The issue was whether a separate return could be filed under paragraph 64(2)(b) [3] of the Act, which with some changes was subsequently replaced by subsection 70(2) of the Act, in respect of the $13,844.20. The Board held that that was authorized under paragraph 64(2)(b). Mr. Boisvert said at page 401 (Tax A.B.C. 402):

On the other hand, a payment of this nature made to the Estate after the death of the Participant to the pension plan cannot be considered to be among any of the payments specified in subsection (2) of section 64 of the Act (supra), as it is not interest, rent, royalty, annuity, remuneration from an office or employment, or other amount payable periodically. However, in the light of the said subsection (2) of section 64 of the Income Tax Act, it must be said that, at the time of death, the said McArdle had a right to the payment of $13,844.20, which was the value, on that date, of the benefit coming to him in case of death before the normal retirement date. By virtue of the agreement to which he had subscribed, he had acquired certain rights, one of which was "the payment of a lump sum amounting to the aggregate of the premiums paid prior to death".

Mr. Justice Abbott delivered the judgment of the Supreme Court. He disagreed with the judgment of the Tax Review Board and said at page 297-98 (D.T.C. 5178):

The said $13,844.20 unquestionably became payable by reason of covenants contained in the pension plan Agreement but it was not received nor was it receivable prior to McArdle’s death and indeed the amount could be definitely ascertained only upon the happening of that contingency. In fact, the amount was not paid to the appellant until April 9, 1958. The sum involved was derived from three sources namely, payments made to the trustees by (1) the deceased (2) his employer and (3) interest earnings. It could never have become payable in the lifetime of the deceased and in my view it was clearly a death benefit under article XI of the Agreement. I can see no difference in principle between such payment and any other pension benefit payable after death from a pension fund or plan to which a deceased person has contributed.

It follows that in my opinion the right to such payment was not a right or thing "the amount whereof when realized or disposed of would have been included in his (McArdle's) income”, had he lived, within the meaning of section 64(2).

Mr. Underwood also cited No. 338 v. M.N.R. (1956), 15 Tax A.B.C. 55; 56 D.T.C. 217. The headnote reads:

Mr. X, a lawyer and a member of a legal partnership, died in 1953. One of his heirs filed a 1953 return covering the income of the deceased to the date of his death. In 1954 the appellant (the Estate of Mr. X) received $10,000 from the deceased's former partners for all Mr. X's rights and interests in the partnership. Of this sum $9,500 represented his share of fees received by the partnership since his death as well as fees for cases pending in which the estate might have an interest. The balance of $500 was for Mr. X's interest in office furniture. The Minister assessed the receipt of $9,500 as part of the 1953 income of Mr. X, in accordance with the provisions of section 64(2) of the Act. (Section 64(2) provides that where a deceased person possessed rights, the realization or disposal of which would have resulted in income subject to tax, the value of these rights at the time of death shall be included in his income for the year in which he died unless his legal representative has, before the tax has been assessed, elected to (1) spread the value of the rights over the last five years of the deceased's life, or (2) file a separate return as if the value of the rights comprised another year's income of the deceased.)

Held, that the appeal is dismissed. At the time of his death, Mr. X had vested rights in all the legal affairs of the partnership. If Mr. X himself had realized these rights, the amount received by him would have been included in computing his income. In view of the provisions of section 64(2), the value of these rights at the time of his death was properly included in his income for the year in which he died, since his legal representative had not, within the prescribed period, elected to apply either of the alternative methods of computation.

Chairman of the Board, Fabio Monet, Q.C., said at page 221 (Tax A.B.C. 62):

At the time of his death M X was a member of a legal firm and had vested rights in all the legal affairs of the said firm. These rights were in the proportion of 26%. As it is obvious that if M X himself had realized his vested rights in the affairs of the said legal firm on 17 August 1953, the amount or amounts received by him when the said rights were realized would have been included in computing his income, it is just as obvious that, in view of the provisions of section 64(2) of the Act, the value of the said vested rights at the time of his death should be included in computing his income for the taxation year in which he died unless his legal representative had, before the tax for the year of death had been assessed, elected that one of the rules provided in paragraphs (a) or (b) of section 64(2) should apply.

The legal representative of M X did not, in the prescribed period, elect that either of the rules provided in the said paragraphs (a) and (b) of section 64(2) apply, and, as the value of the said vested rights of the deceased in the affairs of the legal firm to which he had belonged, which value had been determined by the parties at $9,500, was not discussed, I am of the opinion that the assessment as amended by the respondent was proper and I would dismiss the appeal.

With respect to McArdle counsel for the appellant said:

What the Court looked at there (McArdle) and what we have here is different. Here we have an amount under an RRSP which is, in fact, something which can be ascertained and which can be received and is receivable prior to the death of the taxpayer.

And with respect to No. 338 he said:

Once again, I think the important thing is that the amount of the benefit was ascertained, and his right to acquire that benefit was vested. Similarly in this case, the right to acquire the benefit was vested and the amount was ascertained. Had she wished, the annuitant could quite easily have asked that the RRSPs be cashed out.

In answer to the foregoing, counsel for the Minister said that subsection 146(8.8) of the Act is applicable and disposes of this issue in his favour. The subsection reads:

146.(8.8) Where the annuitant under a registered retirement savings plan (other than a plan that had matured before June 30, 1978) dies after June 29, 1978, he shall be deemed to have received, immediately before his death, an amount as a benefit out of or under a registered retirement savings plan equal to the amount, if any, by which

(a) the fair market value of all the property of the plan at the time of his death exceeds

(b) the portion thereof that, as a consequence of his death,becomes receivable by his spouse, or would become so receivable should that spouse survive throughout all guaranteed terms contained in the plan.

I regard subsections 70(2) and 146(8.8) as being in the same context for the purposes of statutory interpretation and I agree that the late Lillian Lamash is deemed to have received, immediately before her death, the $19,096.67 in dispute and consequently she could not have had rights, within the meaning attributable to that word in subsection 70(2), in relation to those funds at the time of her death. The subsection speaks of rights the amount whereof when realized or disposed of would have been included in computing the deceased's income. In Cullity, Forbes, Brown, Taxation and Estate Planning, 2d ed. Carswell, Toronto, this is said at pages 68-69:

Registered Retirement Savings Plans, Etc.

17. A taxpayer is not considered to have a right or thing in respect of a registered retirement savings plan, whether matured or not, of which he was, until his death, the annuitant. However, except in the case of a plan that had matured before June 30, 1978, where the annuitant dies after June 29, 1978, the fair market value of all the property of the plan at the time of death (less amounts receivable by the spouse of the deceased or received as a refund of premiums by a child, grandchild or other beneficiary of the deceased, as described in subsections 146(8.8) to (8.91)) must be included in the income of the deceased on his final return by virtue of subsection 146(8.8). Similarly, a taxpayer is not considered to have a right or thing in respect of a registered retirement income fund or a registered home ownership savings plan.

The appeal fails on the first issue.

Turning now to the second issue. A letter dated November 30, 1982, to the executor of the estate from Supply and Services Canada, Superannuation Division, reads in part:

The late Miss Lamash, was a contributor under the terms of the Public Service Superannuation Act. On her death, her estate became entitled to a lump sum Guaranteed Five Year Minimum Benefit. We have determined that the gross amount of the above benefit is $23,455.46.

Please note that the first $10,000 of the Guaranteed Five Year Minimum Benefit is tax exempt.

He also received from the Superannuation Division a "Statement of Pension, Retirement, Annuity and other Income" (T-4A) that included reference to a death benefit of $10,000.

On October 27, 1983, Mr. Smith filed a "Trust Information Return and Income Tax Return" (T-3 Rev. 82) under paragraph 150(1)(c) [4] of the Act for the period July 28, 1982 to June 30, 1983. Under this heading in the return; “Summary of Income and Deductions Before Allocations" there is an item "Superannuation or Pension Payments" and the amount of $10,703.40 stated with respect thereto excluded $10,000 from the amount received as a guaranteed five year minimum benefit. In so doing Mr. Smith and the accountants relied on the letter from Revenue Canada of November 30, 1982, and the T-4A.

Subparagraphs 56(1)(a)(i) and (iii) of the Act provide:

56.(1) Without restricting the generality of section 3, there shall be included in computing the income of a taxpayer for a taxation year,

(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 (other than the portion thereof received out of or under an employee benefit plan that is required by paragraph 6(1)(g) to be included in computing his income for the year, or would be required to be so included if that paragraph were read without reference to subparagraph (ii) thereof), including, without limiting the generality of the foregoing,

(A) the amount of any pension, supplement or spouse's allowance under the Old Age Security Act and the amount of any similar payment under a law of a province, and

(B) the amount of any benefit under the Canada Pension Plan or a

provincial pension plan as defined in section 3 of that Act,

(iii) a death benefit.

In reassessing in respect of the 1983 taxation year the respondent added $10,000 to the total income in the hands of Mr. Smith relying on subparagraph 56(1)(a)(i) [5] . Subsection 248(1) of the Act defines "Superannuation or pension benefit” as including “any amount received out of or under a superannuation or pension fund or plan”.

The appellant says that the proceeds of the lump sum five-year minimum benefit is taxable as a death benefit under subparagraph 56(1)(a)(iii) of the Act. "Death benefit” is also defined under subsection 248(1). The definition is of some length, but for the purposes of this appeal what is relevant in the subsection states that for a taxation year it "means the amount or amounts received in the year by any person upon or after the death of an employee in recognition of his service in an office or employment minus" $10,000. If, therefore, the five year minimum benefit is a "death benefit” within the meaning of subsection 248(1) there is legal justification for what Mr. Smith did in preparing the return. It is alleged by the appellant that in the context of this appeal, ambiguity arises out of subparagraphs 56(1)(a)(i) and (iii), the definition of "death benefit” and the definition of "superannuation or pension benefit” and that this ambiguity must be resolved in favour of the taxpayer, i.e. in favour of the view that the five-year minimum benefit is a "death benefit” within the meaning of subsection 248(1) and therefore taxable under subparagraph 56(1)(a)(iii).

In Johns-Manville Canada Inc. v. The Queen, [1985] 2 C.T.C. 111; 85 D.T.C. 5373 (S.C.C.) Mr. Justice Estey in delivering the judgment of the Court said at page 126 (D.T.C. 5384) that this was a “basic concept in tax law": "Where the taxing statute is not explicit, reasonable uncertainty or factual ambiguity resulting from lack of explicitness in the statute should be resolved in favour of the taxpayer."

I find no ambiguity regarding the case at hand and hence no need to resort to any special rule of statutory interpretation. The minimum benefit was paid under the Public Service Superannuation Act, R.S.C. 1970, c. P-36 and to my mind it is clearly an amount received out of or on account of a superannuation fund or plan within the meaning of subsection 248(1).

On the other hand, in my opinion, the five year minimum benefit cannot be said to have been received after the death of Lillian Lamash in recognition of her service in the employment of the Public Service. I believe the correct view is that it was received because the deceased was required to contribute to the superannuation account established under the Public Service Superannuation Act, and in consequence the minimum benefit was payable under subsection 15(2) of that Act. What is relevant to this appeal in that subsection provided that:

Where, on the death of a contributor who was required to contribute to the Superannuation Account, there is no person to whom an allowance provided under this Part may be paid, an amount equal to the amount by which

(a) the greater of

(ii) an amount equal to five times the annuity to which the contributor was or would have been at the time of his death entitled

exceeds

(b) (-not applicable therefore zero-)

shall be paid, as a death benefit,

(d) to the estate of the contributor.

The fact that the minimum benefit is described as a "death benefit” in the Public Service Superannuation Act does not make it a death benefit as defined in subsection 248(1). In The Queen v. Cumming, [1976] C.T.C. 447; 76 D.T.C. 6265 (F.C.T.D.) the question for determination was whether what was described in the Canada Pension Plan as a "death benefit” was also a death benefit under the Income Tax Act. The answer given was no. Mr. Justice Mahoney said at pages 447-49 (D.T.C. 6265-66):

The issue is whether a death benefit under the Canada Pension Plan Act, R.S.C. 1970, c. C-5, is a death benefit as defined by the Income Tax Act.

Earl F. Cumming was a contributor to the Canada Pension Plan (hereinafter called "CPP"). He had worked for the same employer for over 25 years prior to his death in 1973. He left a will naming his wife, the defendant, sole executrix and heir if she survived him for 30 days. She survived; the will was not probated. She applied for the CPP death benefit on behalf of the estate and a cheque for $560 payable to "The Estate of Earl F Cumming" was delivered to her in payment thereof. She endorsed the cheque personally, without reference in the endorsement to the estate or to her capacity as executrix, and deposited the proceeds in her own bank account. The $560 was not, of course, reported as income in the personal return filed for Earl F Cumming for the portion of 1973 he lived. No return was ever filed for the estate as such.

In her own personal return for 1973, the defendant reported the $560 as income and claimed an offsetting deduction. The Income Tax Act provides:

56.(1) Without restricting the generality of section 3, there shall be included in computing the income of a taxpayer for a taxation year,

(a) any amount received 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,

(B) the amount of any benefit under the Canada Pension Plan. . .

(iii) a death benefit,

248.(1) In this Act,

"'death benefit” for a taxation year means the amount or amounts received in the year by any person upon or after the death of an employee in recognition of his service in an office or employment minus

(a) where the amount or amounts were received by his widow, the lesser of

(i) the amount or amounts so received, and

(ii) .

Subparagraph 248(1)(a)(ii) provides for a variety of situations, however, it is undisputed that the $560 received was the lesser amount whatever calculations might have pertained under subparagraph (ii).

The payment was to the estate not to the defendant. I do not, however, accept the plaintiff's argument that the Income Tax Act demands a strict interpretation of the expression "received by his widow” that a payment otherwise a death benefit for the purposes of the Act, destined in fact and in law to the widow, would lose its character simply because it passed through the estate en route to her. The $560 paid by the CPP was "received" by the widow within the meaning of section 248(1) (a).

To be a death benefit under the Income Tax Act the payment must, inter alia, have been in recognition of the deceased's service in an office or employment. The ordinary meaning of the word "recognition" in the phrase “in recognition of” iS

The acknowledgment or admission of a kindness, service, obligation or merit, or the expression of this in some way. (The Oxford English Dictionary)

acknowledgment of something done or given esp. by making some return (a gift in—of a service). (Webster's Third New International Dictionary)

The defendant is correct in stating that the Act does not link the payor directly with the employment but it does link the payment with a recognition of service in that employment. It is true that the deceased was a contributor to CPP because he was employed; it is equally true that the CPP death benefit became payable because he was a contributor but to say that it was paid “in recognition of his service in employment" is to do considerable violence to the idea plainly conveyed by those ordinary English words.

The death benefit payable under the Canada Pension Plan Act is not a "death benefit” within the meaning of section 248(1) of the Income Tax Act. It is, however, a benefit under the Canada Pension Plan and is specifically required to be included in its recipient's income by clause 56(1)(a)(i)(B). [6]

The appellant alleges that placing reliance on the representations already referred to made by Supply and Services in the letter to him of November 30, 1982, and the T-4A and on certain notices of assessments and statements of account issued by Revenue Canada showing there was nothing owing regarding any of the returns of income he had filed, he distributed the assets of the estate to the beneficiaries named in the will thereby acting to his detriment. He invokes the doctrine of estoppel. Although this was not spelled out the inference that I draw is that he takes the position that the respondent is estopped from denying those representations and cannot act on the reassessments made subsequent thereto.

In my opinion estoppel can have no application to this case. First, the assets of the estate were distributed without obtaining a certificate from the respondent as required under subsection 159(2) of the Act. It provides:

159.(2) Every assignee, liquidator, administrator, executor and other like person, other than a trustee in bankruptcy, before distributing any property under his control, shall obtain a certificate from the Minister certifying that taxes, interest or penalties that have been assessed under this Act and are chargeable against or payable out of the property have been paid or that security for the payment thereof has, in accordance with subsection 220(4), been accepted by the Minister.

Indeed it was a letter dated February 27, 1985, to Revenue Canada from Mr. Smith's accountants that precipitated the reassessments that led to this appeal. That letter reads:

Attached is the final T3 return for the above noted estate. We request issuance of a clearance certificate in order for the final distribution of assets to be made.

If there are any questions, please contact this office.

The reply is dated October 7, 1985. Extracts from this letter dealing with the rights or things return and $10,000 death benefit exemption have already been quoted in these reasons. The opening sentence of the letter reads: "We are currently reviewing T/1 and T/3 returns for the above taxpayer and her Estate, in response to your request for a clearance certificate.” Second, I do not believe that erroneous statements of law made by officials of Supply and Services are in any way attributable to the respondent in respect of his authority to assess or reassess liability to tax under the Act. Third, there is no evidence that the appellant is in jeopardy of suffering loss by reason of the reassessments that led to this appeal or by reason of the disposition of the appeal. The beneficiaries under the will are the father and the two sisters of the late Lillian Lamash. Mr. Smith is married to one of the sisters. There is no suggestion that these beneficiaries have any intention of leaving Mr. Smith with the liability to pay income tax relating to the death of their benefactor. Fourth, in Stickel v. M.N.R., [1972] C.T.C. 210; 72 D.T.C. 6178 (F.C.T.D.) Mr. Justice Cattanach said at page 219 (D.T.C. 6185): “In short, estoppel is subject to the one general rule that it cannot override the law of the land.” This means that representations made by a servant or officer of the Crown cannot operate to prevent the application of the law pertaining to income tax as enacted by Parliament or in subordinate legislation made under the authority of the Act. See also: Western Smallware & Stationery Co. v. M.N.R., [1972] C.T.C. 7; 72 D.T.C. 6036 at 14 (D.T.C. 6041-2) (F.C.T.D.); Gibbon v. The Queen, [1977] C.T.C. 334; 77 D.T.C. 5193 at 337 (D.T.C. 5195) (F.C.T.D.); Wollenberg v. M.N.R., [1984] C.T.C. 2043; 84 D.T.C. 1055 at 2045 (D.T.C. 1057) (T.C.C.); Starlite Bottlers Ltd. v. The Queen, [1988] 2 C.T.C. 60; 88 D.T.C. 6272 at 61 (D.T.C. 6273) (F.C.T.D.) and United Equities Ltd. v. M.N.R., [1989] 2 C.T.C. 2171; 89 D.T.C. 391 at 2176 (D.T.C. 395) (T.C.C.).

The final point has to do with the rights or things return. As already indicated this return reported income of $19,096.67, all of which related to the RRSPs. The tax payable was said to be $3,733.11. This was paid and acknowledg- ment was received from Revenue Canada by documents mailed on January 10 and March 3, 1984. Mr. Smith informed the Court that when the return was reassessed and the $19,096.67 added as income to the date of death return, he neither received a refund nor a credit for this amount. At trial his counsel sought a direction with respect to an accounting for that $3,733.11. Even assuming that an action for an accounting could be brought in respect of the money I questioned whether this Court has that jurisdiction and referred to its authority in disposing of an appeal. Section 171 of the Act provides:

171.(1) The Tax Court of Canada may dispose of an appeal by

(a) dismissing it, or

(b) allowing it and

(i) vacating the assessment,

(ii) varying the assessment, or

(iii) referring the assessment back to the Minister for reconsideration and reassessment.

On further reflection I am reinforced in my view that the Court does not have the jurisdiction referred to. The Tax Court of Canada is a purely statutory creation and its jurisdiction is confined to what is expressly conferred on it by Parliament and what is necessarily implied from what is expressly conferred. In New Brunswick Electric Power Commission v. Maritime Electric Co. and National Energy Board, [1985] 2 F.C. 13, Mr. Justice Stone, with whom Mahoney and Ryan, JJ. agreed, said at page 25:

The Federal Court, unlike a superior court of a province, is a statutory court. Its jurisdiction to hear and determine disputes must therefore be found in the language used by Parliament in conferring jurisdiction.

He went on at pages 26-28 to find that the Federal Court of Appeal has implied jurisdiction where to hold otherwise would result in its appellate mandate becoming futile and being reduced to mere words lacking in practical substance. That is, implied jurisdiction exists where denying its existence would render an appeal nugatory. In that case the New Brunswick Electric Power Commission obtained leave to appeal to the Federal Court of Appeal from an order of the National Energy Board respecting the sale of electric power. It also sought a stay in the execution of that order pending disposition of the appeal. The stay was not granted. Stone, J. said at page 30:

I am not persuaded that the particular circumstances favour a stay. While operation of the order pending the appeal will result at very least in temporary loss of revenue to the applicant it would not as such render the appeal nugatory.

In McMillen Holdings Ltd. v. M.N.R., [1987] 2 C.T.C. 2327; 87 D.T.C. 585 (T.C.C.), the appellant asked the Court for a direction to the respondent to pay interest on a dividend refund made under subsection 129(1) of the Act. Sections 12 and 13 of the Tax Court of Canada Act, S.C. 1980-81-82-83, c. 158, provide:

12.(1) The Court has exclusive original jurisdiction to hear and determine references and appeals to the Court on matters arising under the Canada Pension Plan, the Income Tax Act, the Old Age Security Act, the Petroleum and Gas Revenue Tax Act, where references or appeals to the Court are provided for in those Acts.

(2) The Court has exclusive original jurisdiction to hear and determine appeals on matters arising under the War Veterans Allowance Act and the Civilian War Pensions and Allowances Act and referred to in section 17 of the Veterans Appeal Board Act.

(3) The Court has exclusive original jurisdiction to hear and determine questions of law, fact or mixed law and fact referred to it under section 173 or 174 of the Income Tax Act.

(4) The Court has exclusive original jurisdiction to hear and determine applications to extend the time to object or appeal pursuant to section 167 of the Income Tax Act.

13. The Court has, with respect to the attendance, swearing and examination of witnesses, the production and inspection of documents and other matters necessary or proper for the due exercise of its jurisdiction, all such powers, rights and privileges as are vested in a superior court of record.

Judge Rip held that the Court did not have jurisdiction. He said at pages 2336 (D.T.C. 591-92) (the references to "the Act” are to the Income Tax Act):

Section 12 of the Tax Court of Canada Act grants this Court original jurisdiction to hear and determine appeals on matters arising under the Act and other statutes. Subsection 171(1) of the Act regulates how the Court may exercise its original jurisdiction to hear and determine an appeal under the Act. Section 13 of the Tax Court of Canada Act simply grants the Court all powers, rights and privileges as are vested in a superior court of record in respect of witnesses, documents and other matters necessary or proper for the due exercise of its jurisdiction, that is, to hear and determine appeals, but section 13 does not increase the Court's jurisdiction to that of a superior court of record. The due exercise of this Court's jurisdiction on matters arising under the Act is to hear and determine an appeal from a tax assessment. I cannot overemphasize that the Court's original jurisdiction is to hear and determine appeals in matters arising under the Act; an action against the Crown based on the Act, but which [7] is not an appeal from an assessment, is not an appeal arising under the Act, which is within the jurisdiction of this Court.

While this Court does not have the jurisdiction that can be exercised in an action for an accounting, that does not end the matter. If, as the documents in evidence appear to unquestionably establish, the $3,733.11 was received by Revenue Canada, Mr. Smith is entitled to either have it applied to liability arising under the Act or to receive a refund. If this is not done he has other legal recourse. I must add that this being a point of serious contention might be purely speculative because in answer to a question asked from the bench Mr. Underwood said that he had not expressly taken the matter up with Revenue Canada prior to the hearing of this appeal.

The appeal is dismissed.

Appeal dismissed.