Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues:
Whether a "proper court judgment and order" is required before subsection 224(1) of the Act can be used to garnishee a payment to a "tax debtor".
Position: No.
Reasons: Subsection 224(1) of the Act provides that the requirement to make a payment under a garnishment is legally valid when the garnishment is delivered in writing and the CCRA has shown that a liability to make a payment under the Income Tax Act exists.
XXXXXXXXXX 2002-011679
A. Seidel, CMA
(613) 957-2058
February 28, 2002
Dear XXXXXXXXXX:
Re: Garnishment
This is in response to your letter dated December 28, 2001 concerning the application of subsection 224(1) of the Income Tax Act (the "Act").
One of your staff members has indicated that a lawful garnishee against any Canadian citizen requires "a proper court judgment and order". The staff member has indicated that this conclusion is supported by the Federal Court - Trial Division decision in Her Majesty the Queen v. Cyrus J. Moulton Inc., 76 DTC 6239 (the "Moulton Case").
Subsection 224(1) of the Act provides that the Minister may, in writing, require a person who is, or will be within one year, liable to make a payment to a tax debtor, to pay the moneys otherwise payable to the tax debtor to the Receiver General on account of the tax debtor's liability under the Act. A "tax debtor" is a person that is liable to make a payment under the Act.
The issue that was addressed by the Federal Court in the Moulton Case was whether the Minister has established that the tax debtor was liable to make a payment under the Act. It did not address the issue of whether a lawful garnishee required "a proper court judgment and order".
It is therefore our view that subsection 224(1) of the Act applies whenever the Minister has established that a person is liable to make a payment under the Act and the Minister
has provided a written requirement to the person that is, or will be within one year, liable to make a payment to the tax debtor.
We hope that our comments are of assistance.
Yours truly,
John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch
- 2 -
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2002
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2002
Email this Content