Lucien Lisiecki v. Minister of National Revenue, [1982] CTC 2445

The Chairman [TRANSLATION]:—The appeal of Mr Lucien Lisiecki came before me on November 30, 1981 in Rouyn, Quebec and concerns a tax assessment for 1978. In 1978 the appellant allegedly received benefits from a National Trust RRSP in the amount of $5,170.99.

The appellant decided not to include this income in his tax return for 1978 and the Minister included it by way of notice of assessment. In the confirmation he sent subsequently, following the taxpayer’s objection, it is stated that the withdrawal from the RRSP in the amount of $5,170.99 received from National Trust Company Ltd was duly included in computing his income pursuant to the provisions of paragraphs 56(1)(h), 146(1 )(b) and subsection 146(8) of the Income Tax Act.

In his notice of objection, in the appeal and at the hearing the taxpayer objected to the assessment on the ground that the premiums he paid did not help reduce his tax for 1977 and that consequently the Minister was not entitled to tax the amount he received in 1978.

It is obviously a question for the appellant of determining whether there is not double taxation, since the savings from which he apparently made the payment had already been taxed. The facts are not in dispute. It appears that in December 1977 the appellant paid the Bank of Commerce a premium of $5,000 to purchase or invest in a National Trust RRSP. In the same year, in December 1977, he paid another premium of $5,500 to the Mutual Bank of Canada. He continued in subsequent years, in 1978, to contribute to Mutual of Canada, but during 1977 he apparently paid a total of $10,500 into RRSPs.

In May 1978 the appellant received benefits of $5,170.99, being the original premium of $5,000 deposited plus interest. He had asked that the withdrawal occur in January 1978, but it could not take place until May.

As Mr Massé explained, the Income Tax Act sets out circumstances where premiums paid into an RRSP may be exempt from tax, on certain very specific conditions that are clearly set out in the Act. One of these conditions is that the maximum amount of premiums that can be paid into such a plan is $5,500.

The Act also provides, on the other hand, and is very clear and specific on this subject, that any benefits received from such a plan are always taxable. Thus according to the sections cited by the Minister in the confirmation and explained at somewhat greater length by his representative, it is clear that amounts withdrawn from an RRSP are subject to tax. Section 56 of the Act states the following:

Amounts to be included in income for year

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

Thus the amount $5,170.99 was received in 1978 and should have been included in income for that year; paragraph 56(1 )(h) of the Act reads as follows:

Registered retirement savings plan, etc — amounts required by section 146 in respect of a registered retirement savings plan or a registered retirement income fund to be included in computing the taxpayer’s income for the year.

It is clear that amounts coming out of such a plan must be taxed.

Paragraph 146(1 )(b) of the Act provides that benefits include:

any amount received out of or under a retirement savings plan . . .

A list of exceptions is then given, but none is applicable in the case we are concerned with.

Subsection 146(8) of the Act, which is also cited in the Minister’s confirmation and on which Mr Masse commented, reads as follows:

Benefits taxable. There shall be included in computing the income of a taxpayer for a taxation year all amounts received by him in the year as a benefit out of or under a registered retirement savings plan, other than an amount that is included in computing his income pursuant to paragraph (12)(b).

Paragraph (12)(b) does not apply either; the circumstances are not the same.

In Karl F Buchmann and Mrs Rose Marie Buchmann v MNR, [1978] CTC 2135; 78 DTC 1105, a case decided by my colleague Mr J Frost that is absolutely identical to the one before us, my colleague was not able either to conclude that a taxpayer who had paid a premium into an RRSP could be exempt from tax when the amount was withdrawn. He expressed himself eloquently and directly in that case.

On the question of the possibility of double taxation that seems to exist, I must confess that this is a question that has troubled me greatly in the past, and I am still somewhat uneasy about it in certain circumstances. I do not think that one’s income should be subject to double taxation and my judgments were based on that premise.

My decisions were appealed to the Federal Court of Appeal; that Court abided by the letter of the Act, which is very clear with respect to funds that can be received from a plan.

Thus in C M Langille v MNR, [1975] CTC 2367; 75 DTC 280, the federal Court held that the section of the Act is very clear and that the Board or even the Federal Court cannot disregard it; decisions must be made according to the letter of the Act.

In sum, even though this is unfortunate in the circumstances of the present case, it is clear from the point of view of the Act that the sum of $5,170.99 received by the appellant in 1978 should have been included in his income for the said year and that the Minister of National Revenue did not err in including it; I am obliged to dismiss the appeal.

Appeal dismissed.