A
J
Frost:—It
was
agreed
at
the
commencement
of
the
hearing
of
the
Karl
F
Buchmann
case
that
the
appeal
of
Rose
Marie
Buchmann
(76-778)
would
be
heard
at
the
same
time
on
common
evidence.
Both
appeals
are
with
respect
to
the
appellants’
1974
taxation
year.
The
appellant
acquired
a
Canada
Trust
registered
retirement
savings
plan
into
which
he
made
a
number
of
payments.
Unfortunately
two
of
the
payments,
one
for
$2,000
in
1971
and
the
other
for
$2,000
in
1972,
were
over
the
limit
permitted
as
a
deduction
from
income
under
subsection
146(5)
of
the
Income
Tax
Act,
SC
1970-71-72,
c
63,
as
amended.
In
March
of
1974
the
appellant
withdrew
$5,386.50
which
amount
was
included
in
the
appellant’s
income
under
subsection
146(8)
and
paragraph
56(1)(h)
of
the
new
Act.
In
other
words
the
payment
of
$5,386.50
out
of
the
plan
was
taxed
in
full.
The
question
at
issue
in
this
appeal
is
whether
or
not
the
said
payment
out
of
the
registered
retirement
savings
plan,
and
received
by
the
appellant
in
1974,
is
fully
taxable
under
the
Act
(or
apportionable
between
capital
and
income).
It
was
clear
from
the
evidence
that
the
appellant
had
overpaid
his
premiums
and
that
he
received
no
credit
by
way
of
a
tax-free
benefit
with
respect
to
the
overpayments
when
they
subsequently
came
back
to
him
out
of
the
plan.
In
his
argument
the
appellant
contended
that
he
was
being
taxed
twice
on
the
same
money
contrary
to
the
spirit
and
intent
of
the
Income
Tax
Act.
He
contended
that
money
should
be
taxable
either
going
in
or
coming
out
of
a
plan
and
not
both
going
in
and
coming
out.
It
is
obvious
that
the
appellant
made
a
mistake
in
making
overpayments
into
his
plan.
The
maximum
limit
a
taxpayer
is
entitled
to
claim
as
a
deduction
is
determined
by
the
Income
Tax
Act.
Contractual
arrangements
do
not
have
any
bearing
on
the
question
of
tax
deductibility.
This
limitation,
however,
does
not
preclude
a
planholder
from
paying
excess
amounts
into
the
plan
for
investment
purposes
if
he
so
desires.
If
it
were
otherwise,
registered
retirement
savings
plans
could
be
used
for
tax
avoidance
purposes,
although
that
is
not
the
Situation
in
this
appeal.
Under
the
Act
the
planholder
must
eventually
either
withdraw
his
funds
or
use
them
to
purchase
an
annuity.
What
comes
out
of
a
plan
by
way
of
lump-sum
payments
on
withdrawal,
or
in
the
form
of
annuity
payments,
becomes
taxable
as
income
in
the
hands
of
the
recipient
under
the
taxing
provisions
of
the
Income
Tax
Act.
The
first
principle
of
taxation
is
that
a
taxpayer
pays
taxes
according
to
what
the
legislation
says
is
taxable.
It
is
the
letter
of
the
law
and
not
the
spirit
of
the
law
that
counts
in
tax
matters.
A
taxpayer
is
taxable
according
to
what
the
Act
says
is
taxable
and
not
otherwise.
In
the
case
at
bar
the
words
of
the
Income
Tax
Act
applicable
are
clear
and
cannot
be
misinterpreted
or
misconstrued.
Subsection
146(8)
of
the
new
Act
reads
as
follows:
146.
(8)
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.
No
amount
of
grammatical
analysis
or
fanciful
construction
can
alter
the
plain
unequivocal
meaning
of
these
words.
No
exogenous
illumination
is
required
to
realize
what
is
intended
and
none
ought
be
sought.
Further,
paragraph.
60(a)
of
the
Act
expressly
excludes
the
deduction
of
the
capital
element
of
annuity
payments
under
a
registered
retirement
savings
plan.
Reference
may
be
had
to
the
following
cases:
1.
Versailles
Sweets
Limited
v
Attorney
General
of
Canada,
1
DTC
47.
2.
Cape
Brandy
Syndicate
v
Inland
Revenue
Commissioners,
[1921]
1
KB
64.
3.
John
Carter
Colquhoun
(Surveyor
of
Taxes)
v
Henry
Brooks
(1889),
14
App
Cas
493.
4.
Commissioners
of
Inland
Revenue
v
Frank
Bernard
Sanderson,
[1921]
AC
38.
5.
Canadian
Eagle
Oil
Co,
Ltd
v
The
King,
[1944]
AC
205.
6.
The
Queen
v
The
Judge
of
the
City
of
London
Court,
[1891]
AC
273.
7.
Her
Majesty
the
Queen
v
Adolf
Scheller,
[1975]
CTC
601;
75
DTC
5406.
8.
Southern-Smith
v
Clancy,
[1941]
1
All
ER
111.
9.
Her
Majesty
the
Queen
v
Cecil
M
Langille,
[1977]
CTC
144;
77
DTC
5086.
10.
Estate
of
Garnel
L
Lewis,
Deceased
v
MNR,
[1971]
Tax
ABC
1150;
72
DTC
1014.
11.
Bert
W
Woon
v
MNR,
[1950]
CTC
263;
4
DTC
871.
In
my
opinion
the
language
of
the
Act
is
clear
and,
although
this
may
occasionally
lead
to
hardship
for
the
taxpayer,
the
Board
has
;_
in
this
case
no
alternative
but
to
adhere
to
the
letter
of
the
Act
and
dismiss
the
appeals.
The
words
of
the
Act
are
clear,
unequivocal
and
all-powerful.
The
appeals
are
therefore
dismissed.
Appeals
dismissed.
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