Kenneth W Ridley v. Minister of National Revenue, [1982] CTC 2074, 82 DTC 1089

D E Taylor:—This is in connection with an appeal heard in Vancouver, British Columbia, on October 19, 1981, with respect to an income tax assessment for the year 1979 in which the Minister of National Revenue provided the following explanation:

YOUR CLAIM FOR “REGISTERED RETIREMENT SAVINGS PLAN PREMIUMS” HAS BEEN ADJUSTED TO $2,270.22 WHICH IS THE AMOUNT SHOWN ON YOUR RECEIPTS OR THE MAXIMUM ALLOWABLE.

The notice of appeal read:

When I filled in my original tax form I erroneously added my draw to my dividend and made a contribution to RRSP based on the total. As I have my own business my income is made up of a draw and a dividend. When the error was discovered I paid tax on the overcontribution. At the same time I was advised to fill in form T3012 to enable me to withdraw the excess contribution of $890.

When I came to fill in the form, it was discovered that according to the regulations I could only withdraw money from the RRSP into which it had been paid. During 1979 I transferred all my RRSP’s from Bank of Montreal and Vancouver City Savings and put them in Yorkshire Trust. Such a transfer is quite legal and provided for in your regulations.

If things stand as they are at the moment, I shall be double taxed on my excess contribution. On the one hand I' have already paid tax, and then I shall be taxed again when the money is withdrawn. I think this is completely wrong, since I was quite entitled to make the transfer.

I am not objecting to the assessment that was made, only to the unfair position in which I have been placed even though I did everything in accordance with the law. I think I should either get a refund of the extra tax I paid on this overcontribution, or be allowed to to carry the $890 over into my 1980 return and claim tax relief in that year.

The reply to notice of appeal read:

In reply to the Appellant’s Notice of Appeal received by the Tax Review Board on November 4, 1980 with respect to the Appellant’s 1979 taxation year, the Respondent, the Minister of National Revenue, says as follows:

A. STATEMENT OF FACTS

1. He admits that the Appellant made excess contributions in the amount of $890.00 to a registered retirement savings plan in his 1979 taxation year but otherwise does not admit the allegations of fact or law contained in the Notice of Appeal.

2. In the Appellant’s 1979 taxation. year, the Appellant contributed to the following registered retirement savings plan the following amounts:

(a) $160.49 with the Mutual Life Insurance Company of Canada;

(b) $3,000 with the Vancouver City Savings Credit Union;

3. In November of 1979, the Appellant transferred the above funds to a registered retirement savings plan with the Yorkshire Trust Company pursuant to the provisions of subsection 60(j) of the Income Tax Act.

4. In his return of income for the 1979 taxation year, the Appellant claimed as a deduction from income the amount of $3,160.49 pursuant to the provisions of subsection 60(j) of the Income Tax Act.

5. By way of a Notice of Reassessment dated July 8, 1980, the Respondent reassessed the Appellant by reducing the Appellant’s allowable deduction under the provisions of subsection 60(i) of the Income Tax Act from $3,160.49 to $2,270.22 on the basis that the latter amount was the maximum contribution allowable pursuant to the provisions of subsection 146(5) of the Income Tax Act.

6. In so reassessing the Appellant for his 1979 taxation year, the Respondent assumed that the Appellant’s maximum allowable deduction pursuant to the provisions of subsection 60(i) and 146(5) of the Income Tax Act was $2,270.22 and that the excess contributions made by the Appellant to the registered retirement savings plans in the amount of $890.27 are taxable as income upon receipt by the Appellant pursuant to the provisions of subsection 146(8) of the Income Tax Act which said amount is not deductible from income pursuant to the provisions of subsection 146(8.2) by virtue of the operation of paragraph 146(16)(e).

B. THE STATUTORY PROVISIONS UPON WHICH THE RESPONDENT RELIES AND THE REASONS WHICH HE INTENDS TO SUBMIT

7. He relies on subsections 60(j), 60(i), 146(5), 146(8.2) and paragraph 146(1)(c) and 146(16)(e) of the Income Tax Act, RSC. 1952, c 148 as amended by S 1, c 63, SC 1970-71-72.

8. He submits that he has correctly calculated the Appellant’s allowable deduction from income of registered retirement saving plan contributions pursuant to the provisions of subsections 60(i) and 146(5) of the Income Tax Act, and that the excess contributions made by the Appellant are taxable upon receipt by the Appellant.

There was no evidence provided which conflicted in any material way with the above information. It is noted however, that the taxpayer had filed as documentation in support of his original claim of $3,160.49, the premium receipts from the Mutual Life Insurance Company of Canada (“Mutual”) for $160.49, and from the Vancouver City Savings Credit Union (“Vancouver City”) for $3,000.

It was quickly apparent that the Board did not have in front of it an appeal against the assessment notice referenced above, but in fact a complaint from the taxpayer based upon his understanding that if he now proceeded to withdraw from Yorkshire Trust Company (“Yorkshire”) the overcontribution of $890.27, he would be taxable thereon. The prospect of double taxation was raised and, based upon the Minister’s arrangement of the facts and the law, that is a possibility. However, as I understand the law, the Board can only be invited to settle a dispute when the issue is simply whether or not the Minister has assessed the tax according to the proper interpretation of a relevant and applicable section of the Income Tax Act. In this case, therefore, the Board can only quash the purported appeal.

The above action by the Board is not to be regarded as agreement or disagreement with the interpretation placed on the Act as quoted by the Minister in the reply to notice of appeal, or the view allegedly expressed by the Minister’s representatives — that the excess contribution could only be withdrawn from the original RRSP. That issue might only be possible of determination when and if the amount in question is withdrawn and, as threatened, taxed by the Minister. While it was not referenced at the hearing, I would note for consideration (but without additional comment) section 204.1 of the Act which reads:

(1) Where, at the end of any month after May, 1976, an individual has an excess amount for a year in respect of registered retirement savings plans, he shall, in respect of that month, pay a tax under this Part equal to 1% of that portion of the aggregate of all such excess amounts that has not been paid by such plans to the individual before the end of that month.

The purported appeal is quashed.

Appeal quashed.