Gozewijn A. Vlasblom v. Minister of National Revenue, [1987] 1 CTC 2243, 87 DTC 215

Tremblay, T.C.J.:—This appeal was heard on December 4, 1986 at the City of Ottawa, Ontario.

1. The Point at Issue

The point at issue is whether the appellant, a medical doctor, is correct in the computation of his income, for the 1984 taxation year, to deduct $5,500 as an amount of premium for a spousal Registered Retirement Savings Plan.

The respondent disallowed the said amount on the basis that such payment must be made within 60 days after the end of the taxation year and the appellant had paid by a cheque dated March 23, 1985.

2. The Burden of Proof

2.01 The burden of proof is on the appellant to show that the respondent’s assessment is incorrect. This burden of proof results particularly from several judicial decisions, including the judgment delivered by the Supreme Court of Canada in Johnston v. M.N.R., [1948] S.C.R. 486; [1948] C.T.C. 195; 3 D.T.C. 1182.

2.02 In the same judgment, the Court decided that the assumed facts on which the respondent based his assessment are also deemed to be correct. In the present case, the assumptions of facts are described in paragraphs 7(a) and (b) of the reply to notice of appeal as follows:

7. In so assessing the Appellant for his 1984 taxation year, the Respondent made the following assumptions of facts:

(a) the Appellant applied to M.D. Management Ltd. for a spousal Registered Retirement Savings Plan on February 18, 1985;

(b) by cheque dated March 23, 1985 the Appellant contributed an amount of $5,500.00 to the said Plan.

3. The Facts

The facts are not in dispute.

3.01 The appellant is a medical doctor who had a net professional income of over $75,000 in 1984.

3.02 In reporting his income for the 1984 taxation year, the appellant deducted the amount of $5,500 as a contribution made to a Registered Retirement Savings Plan (RRSP).

3.03 In his testimony, Gozewijn A. Vlasblom explained that on February 18, 1985, he applied for a Registered Retirement Savings Plan at M.D. Management Ltd. in Ottawa. He included a cheque in the amount of $5,500 and then, necessary funds were available in his bank account.

3.04 For an unknown reason, he mistakenly dated his cheque March 23, 1985, instead of February 18, 1985. He thinks he probably made an error of date with the one of the renewal of a medication of a patient or with his next appointment.

3.05 The appellant said he did not realize his mistake until he contacted M.D. Management Ltd. and requested an income tax receipt. In fact, the cheque was cashed on March 27, 1985 (Exhibit A-1).

3.06 According to the appellant, he successfully claimed RRSP deductions in the past.

4, Law — Cases at Law — Analysis

4.01 Law

The only provision of the Income Tax Act involved in this case is subsection 146(5). This provision reads as follows:

146. (5) 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 (I)), 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 irr 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% of his earned income for the year, or

(b) in any other case, the lesser of $5,500 and 20% 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.

[Emphasis is mine.]

4.02 Cases at Law

Counsel for the respondent referred the Court to the following cases at law:

1. Stubart Investments Ltd. v. The Queen, [1984] C.T.C. 294; 84 D.T.C. 6305 (S.C.C.);

2. The Queen v. B&] Music Ltd., [1983] C.T.C. 50; 83 D.T.C. 5074 (F.C.A.).

4.03 Analysis

4.03.1 The facts are not in dispute and provision 146(5) of the Act quoted above is clear, . . 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. . .”. March 23, 1985 is more than 60 days after the end of the year 1984, which is the taxation year involved in the instant case.

4.03.2 Legally, in civil law, can it be said that the payment made by the appellant on February 18, 1985 with a postdated cheque dated March 23, 1985, can be considered as a payment made on February 18, 1985?

At first glance, it is difficult to contend such affirmation because until March 23, 1985, the $5,500 was in the appellant’s bank account and remained at his disposal. He could have stopped payment on the postdated cheque at any time up to March 23, 1985, had he decided to allocate that sum differently.

In my opinion, the payment made by the appellant with the postdated cheque dated March 23, 1985 cannot be considered as a payment made on February 18, 1985.

4.03.3 The appellant, however, brought up his sincere intention to pay on February 18, 1985 and wondered whether the Court can construe the law on that basis. In a case of this nature, intention cannot be taken into account; ordinary interpretation of a taxation law must be given. The Income Tax Act is a taxation law.

A taxation law being part of public law, must be restrictively construed. Every taxation law is composed of taxing, charging sections and exemption (deduction) sections.

A taxing section of a taxation act must be restrictively construed in the sense that if it is ambiguous, it must be construed against the legislator and in favour of the taxpayer. Every obligation indeed imposed by the legislator must be clearly expressed because it restrains the citizen’s liberty.

However, once the obligation (the taxing section) is clearly expressed, the following principle applies: the taxation is the rule and the exemption, the exception. That principle itself causes the application of the following one.

An exemption section is restrictively construed in the sense that if it is ambiguous, it is construed in favour of the taxing authority and against the taxpayer so that less possible exemption is allowed or not at all.

4.03.4 In the instant case, provision 146(5) of the Act is an exemption (or deduction) section.

If it is ambiguous, it must be construed against the appellant. However, in my opinion, the provision is clear and the Court is bound by its wording.

The ordinary meaning must be given to the words and the interpretation of the words is to the effect that the actual payment made by the appellant was made on March 23, 1985 and thence not within 60 days after the end of the 1984 taxation year. Unfortunately for the appellant, the reassessment issued by the respondent must be maintained and the appeal dismissed.

5. Conclusion

For the reasons given above, the appeal is dismissed.

Appeal dismissed.